V.F. Corporation · NYSE:VFC
V.F — Q1 FY2023 Earnings Presentation
32 slides from V.F's earnings presentation, Jul 28, 2022
Slide 1: Q1'FY23 Earnings
Q1’FY23 EARNINGS J U LY 2 8 , 2 0 2 2
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting VF and therefore involve several risks an
Slide 3: GAAP to Non-GAAP
GAAP to Non-GAAP All numbers and information presented are on a continuing operations basis, and thus exclude the Occupational Workwear business. Additionally, unless otherwise noted, all numbers are on an “adjusted” basis which excludes transaction and deal related activities associated primarily w
Slide 4: Steve Rendle, Chairman, President & CEO
STEVE RENDLE CHAIRMAN, PRESIDENT & CEO
Slide 5: Our purpose-built portfolio of brands is performing
Our purpose-built portfolio of brands is performing Strong top-line growth achieved despite ongoing macro-economic headwinds Softer macro conditions impacting consumer sentiment and behavior, mainly at the value end Revenue $2.3B, +7% C$, above our expectation, led by The North Face and Timberla
Slide 6: Vans: Actions underway to reignite growth
Vans: Actions underway to reignite growth Making progress to address key focus areas CHINA CORE CLASSICS BRAND HEAT AMERICAS DTC 6
Slide 7: Vans: Encouraged by work underway
Vans: Encouraged by work underway Strong demand and sell-through evident for innovative product VANS X STRANGER THINGS VANS X SAILOR MOON -7% -4% C$ +4% ex. China C$ 7
Slide 8: The North Face: Broad-based strength continues
The North Face: Broad-based strength continues 365 driving growth, led by warm weather apparel and accessories 618 CHINA HOLIDAY +31% +37% C$ TNF PRIDE CAMPAIGN 8
Slide 9: Timberland: Further proof of positive inflection
Timberland: Further proof of positive inflection Sharpened focus on the consumer yielding results BOAT SHOES CULTURE OF HIKE +8% +14% C$ SAMUEL ADAMS X TBL PRO COLLABORATION 9
Slide 10: Dickies: Underlying performance remains positive
Dickies: Underlying performance remains positive Near-term results impacted by US retail inventory actions; up mid-single digits excluding largest customer MADE IN DICKIES DICKIES X NY SUNSHINE 100-YEAR ANNIVERSARY CAMPAIGN -15% -13% C$ 10
Slide 11: Balance of Portfolio: Additive to VF growth
Balance of Portfolio: Additive to VF growth Outdoor emerging brands strong, Packs seeing good start to BTS Balance of Portfolio +9% +16% C$ 11 Q 1 F I S C A L 2 0 2 3
Slide 12: ESG remains a priority
ESG remains a priority Key sustainability initiatives & progress towards Science-Based Targets RECOGNIZED FOR DIVERSITY & INVESTING IN REGENERATIVE MATERIALS TRANSPARENCY INCLUSION Vans, TNF, TBL collaboration Investment in partnership with TNF and TBL ranked 2nd and The VF Foundation, TNF and to in
Slide 13: Strong top-line amidst softer consumer environment
Strong top-line amidst softer consumer environment Purpose-built family of brands focused on favorable consumer tailwind spaces AC T I V E OUTDOOR WORK 13
Slide 14: Matt Puckett, EVP, CFO
MATT PUCKETT EVP, CFO G lent
Slide 15: Q1'FY23 Financial Overview
Q1’FY23 Financial Overview Solid top-line performance ahead of initial expectations Revenue of $2.3B, +3%/+7% C$ R E V E N U E AB O V E I N I T I AL G U I D AN C E $2,262M Adjusted Gross Margin of 54.1%, -260bps +7% C$ Adjusted Operating Margin of 3.4%, -340bps Adjusted EPS of $0.09, -68%/-5
Slide 16: Americas and EMEA delivered strong results
Americas and EMEA delivered strong results Partially offset by COVID-related headwinds in APAC +10% / +24% C$ EMEA +6% / +7% C$ AMERICAS -20% / -15% C$ APAC 16 Q 1 F I S C A L 2 0 2 3
Slide 17: Gross Margin bridge
Gross Margin bridge Impacted by mix and higher freight cost partially offset by price increases 56.7% -160 bps 54.1% -90 bps -10 bps Note: Gross Margin on an adjusted basis 17 * Reflects the impact of FX translation only Q 1 F I S C A L 2 0 2 3
Slide 18: Supply chain disruption is improving
Supply chain disruption is improving Leveraging scale and diversification to mitigate headwinds Sourcing & Production – Open for business across the supply base; China suppliers are now fully operational after COVID-related lockdowns – Working to move production closer to consumption, where approp
Slide 19: Inventory is healthy and positioned to support growth
Inventory is healthy and positioned to support growth Organic inventory growth remains as planned Q1 ending inventory of $2.3B is in line with expectations – Inventories +92% vs the same period last year, driven by increase of in-transit inventory of ~$550 million – Accounts payable increased 91%,
Slide 20: Operating Margin bridge reflects lower Gross Margin
Operating Margin bridge reflects lower Gross Margin Continued grow th in strategic invest ments w hile maintaining cost discipline 6.8% -250 bps 3.4% -50 bps -40 bps Strategic Investments +7% Note: Operating Margin on an adjusted basis *Numbers on an adjusted basis ** Reflects the impact of FX trans
Slide 21: FY23 Outlook
FY23 Outlook Lowering earnings guidance to reflect significant FX headwinds, holding operating outlook FY23 PRIOR OUTLOOK REVISED OUTLOOK Revenue (C$) + at least 7% The North Face® + low double digit % Vans® + mid single digit % Gross margin ~+50bps up slightly vs. LY (bps) Operating margin ~13.6% ~
Slide 22: Appendix
APPENDIX 22
Slide 23: COVID-19 Operational Update as of July 18, 2022
COVID-19 Operational Update as of July 18, 2022 All offices open North America No stores were closed during the first quarter; all stores are currently open All offices open EMEA No stores were closed during the first quarter due to COVID-19; all stores are currently open All offices open
Slide 24: Q1'FY23: Revenue Breakdown
Q1’FY23: Revenue Breakdown BIG 4 BRANDS +2% (+6% C$): Vans® -7% (-4% C$) TOTAL The North Face® +31% (+37% C$ ) Timberland ® +8% (+14% C$) Dickies® -15% (-13% C$) $2,262 M REVENUE INTERNATIONAL -1% (+9% C$) +3% Reported +7% C$ APAC -20% (-15% C$), including Greater China -33% (-30% C$) and
Slide 25: Vans Global Performance
Q 1 ’ FY 2 3 Vans ® Global Performance REVENUE OF $947 MILLION, -7% VS PRIOR YEAR (-4% C$); EXCLUDING CHINA FLAT (+4% C$) DTC -14% (-12% C$), mostly driven by slower traffic, lockdowns across APAC and a stronger Q1’FY22 compare, particularly in North America REVENUE Wholesale +1% (5% C$), as on-
Slide 26: The North Face Global Performance
Q 1 ’ FY 2 3 The North Face ® Global Performance REVENUE OF $481 MILLION, +31% VS PRIOR YEAR (+37% C$); CONTINUED PROFITABILITY IMPROVEMENT Broad-based growth with strong double-digit momentum across all regions REVENUE Global DTC up double-digits driven by improved traffic in stores, with doubl
Slide 27: Timberland Global Performance
Q 1 ’ FY 2 3 Timberland ® Global Performance REVENUE INCREASED +8% (14% C$), COUPLED WITH PROFITABILITY IMPROVEMENTS Results driven by strengthening performance in Europe (+27%/+43% C$) and growth in APAC (+23%/+30% C$) REVENUE Global DTC -2% (+5% C$) with solid B&M growth offsetting declines
Slide 28: Dickies Global Performance
Q 1 ’ FY 2 3 Dickies ® Global Performance REVENUE OF $170M, -15% VS PRIOR YEAR (-13% C$); GLOBAL & AMERICAS +MID-SINGLE DIGIT % EXCLUDING LARGEST US CUSTOMER Strength in Work-inspired Lifestyle product continues to be positive, with momentum in all regions REVENUE Americas region experienced hea
Slide 29: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP VF CORPORATION Supplemental Financial Information Reconciliation of Select GAAP Measures to Non-GAAP Measures - Three Months Ended June 2022 (Unaudited) (In thousands, except per share amounts) Transaction and Specified Pension As Reported Deal Related Strategic Business S
Slide 30: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP VF CORPORATION Supplemental Financial Information Reconciliation of Select GAAP Measures to Non-GAAP Measures - Three Months Ended June 2021 (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Specified Strategic Three Months Ended June 20
Slide 31: Appendix: Top 4 Brand Revenue
Appendix: Top 4 Brand Revenue VF CORPORATION Supplemental Financial Information Top 4 Brand Revenue Information (Unaudited) Three Months Ended June 2022 Top 4 Brand Revenue Growth Americas EMEA APAC Global ® Vans % cha nge 3% (9)% (38)% (7)% (a) % cha nge cons ta nt currency 3% 2% (35)% (4)% ® The N
Slide 32: Appendix: Segment, Geographic & Channel Revenue – Q1'23
Appendix: Segment, Geographic & Channel Revenue – Q1’23 VF CORPORATION Supplemental Financial Information Reportable Segment, Geographic and Channel Revenue Growth - Three Months Ended June 2022 (Unaudited) Three Months Ended June 2022 % Change % Change Constant Currency* Segment Revenue Growth Outd