V.F. Corporation · NYSE:VFC
V.F — Q3 2019 Earnings Presentation
41 slides from V.F's earnings presentation, Jan 18, 2019
Slide 1: Q3 Fiscal 2019 Earnings Presentation
Q3 FISCAL 2019 EARNINGS PRESENTATION January 18, 2019
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Certain statements included in this presentation 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 ris
Slide 3: GAAP to Non-GAAP
GAAP TO NON-GAAP All numbers presented in this presentation, unless otherwise noted, are on an adjusted continuing operations basis which includes the contribution from the Icebreaker® and Altra® acquisitions (“acquisitions”) and excludes transaction and deal related costs, including the losses on s
Slide 4: Our Purpose
OUR PURPOSE VF POWERS MOVEMENTS OF SUSTAINABLE AND ACTIVE LIFESTYLES FOR THE BETTERMENT OF PEOPLE AND OUR PLANET 4
Slide 5: Our Aspiration
OUR ASPIRATION VF WILL GROW BY CREATING AMAZING PRODUCTS AND BRAND EXPERIENCES THAT TRANSFORM AND IMPROVE THE LIVES OF CONSUMERS WORLDWIDE, WHILE DELIVERING SUPERIOR RETURNS TO OUR SHAREHOLDERS 5
Slide 6: 2021 Global Business Strategy
2021 GLOBAL BUSINESS STRATEGY Purpose / Aspiration CHOICES CAPABILITIES Design & Innovation Reshape Demand Creation & 4 Portfolio Brand Experience Transform TSR Insights & Analytics Distort Asia Model Retail Excellence CHOICES Elevate Demand & Supply DTC, Prioritizing Chain Agility Digital Talent 6
Slide 7: Business & Financial Highlights
BUSINESS & FINANCIAL HIGHLIGHTS 7
Slide 8: Q3'19: Business Highlights
Q3’19: BUSINESS HIGHLIGHTS ADJUSTED REVENUE VANS® GROSS MARGIN $3.9B 52.2% +25% / +27% C$ strong growth in all regions / +8% / +10% C$ driven by mix-shift toward channels / product families +7%* / +9%* C$ higher margin businesses THE NORTH FACE® DTC CHINA +14% / +16% C$ +9%* / +11%* C$ +18%* / +23%*
Slide 9: Q3'19: Financial Highlights
Q3’19: FINANCIAL HIGHLIGHTS ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE** $3.9B 52.2% 16.6% $1.31 +8% / +10% C$ +60bps +270bps +30% / +31% C$ +7%* / +9%* C$ +50bps* +280bps* +28%* / +30%* C$ *Organic **On a diluted basis 9
Slide 10: Q3'19: Financial Summary
Q3’19: FINANCIAL SUMMARY $ in millions; except EPS Q3’18 Q3’19 YOY CHANGE YOY CHANGE* REVENUE $3,649 $3,940 +8% +7% ADJUSTED GROSS MARGIN 51.6% 52.2% +60bps +50bps ADJUSTED OPERATING INCOME $506 $656 +30% +28% ADJUSTED OPERATING MARGIN 13.9% 16.6% +270bps +280bps ADJUSTED NET INCOME $406 $526 +29% +
Slide 11: Q3'19: Strategic Growth Drivers
Q3’19: STRATEGIC GROWTH DRIVERS BIG 3 BRANDS INTERNATIONAL DTC WORK +14% +4%* +9%* +5%* +16% C$ +8%* C$ +11%* C$ *Organic 11
Slide 12: Revenue Breakdown
Q3’19: REVENUE BREAKDOWN BIG 3 BRANDS +14% (+16% C$), led by 25% (27% TOTAL C$) growth at Vans® and 14% (16% C%) growth at $3,940 M The North Face® +8% Reported REVENUE INTERNATIONAL increased 4%* (+8%* C$), led by 18%* (23%* C$) growth in China +7%* DTC increased 9%* (11%*C$) with DIGITAL +21%* WOR
Slide 13: Q3'19: Gross Margin Bridge
Q3’19: GROSS MARGIN BRIDGE +80 bps NM +10 bps 52.2% 51.6% -30 bps *Gross Margin on an adjusted basis 13
Slide 14: Q3'19: Operating Margin Bridge
Q3’19: OPERATING MARGIN BRIDGE +40 bps 16.6% +170 bps +10 bps -10 bps Strategic Investments +60 bps +5% 13.9% *Operating Margin on an adjusted basis 14
Slide 15: RemainCo + Kontoor Brands
Q3’19: REMAINCO + KONTOOR BRANDS VF RemainCo Kontoor Brands Total VF Q3’19 YTD Q3’19 YTD Q3’19 YTD REVENUE $3,231 $8,595 $709 $2,041 $3,940 $10,636 - % Change +11% +19% -5% -3% +8% +14% - % Change C$ +13% +20% -3% -2% +10% +15% - % Change* C$ +12% +11% -3% -2% +9% +8% OPERATING PROFIT** $667 $1,566
Slide 16: Brand Highlights
BRAND HIGHLIGHTS 16
Slide 17: Top Five Brand Revenue
Q3’19: TOP FIVE BRAND REVENUE +25% +14% +1% -2% -9% +27% C$ +16% C$ +3% C$ Flat C$ -7% C$ 17
Slide 18: Q3'19: Vans
Q3’19: VANS ® GLOBAL PERFORMANCE REVENUE INCREASED 25% (27% C$) WITH STRONG GROWTH ACROSS REGIONS, CHANNELS & +25% PRODUCT CATEGORIES DTC increased 24% with >20% total comp, including 50% growth in DTC digital Wholesale increased 26% driven by strong holiday performance globally GROWTH REMAINS B
Slide 19: Vans Regional Performance
Q3’19: VANS ® REGIONAL PERFORMANCE AMERICAS +28% (+29% C$) EUROPE +6% (+10% C$) APAC +37% (+41% C$) WHOLESALE WHOLESALE WHOLESALE +30% DTC +4% DTC +55% DTC +27% +10% +21% Growth fueled by strong holiday sales Revenue growth driven by ~45% growth in Strong growth across channels led by across c
Slide 20: Q3'19: The North Face
Q3’19: THE NORTH FACE ® GLOBAL PERFORMANCE REVENUE INCREASED 14% (+16% C$) WITH STRENGTH ACROSS ALL REGIONS & CHANNELS +14% DTC increased 10%, including 9% total comp and nearly 20% growth in DTC digital Wholesale increased 19% driven by strength in all regions Strong performance in outerwear,
Slide 21: The North Face Regional Performance
Q3’19: THE NORTH FACE ® REGIONAL PERFORMANCE AMERICAS +15% (+15% C$) EUROPE +8% (+12% C$) APAC +23% (+27% C$) WHOLESALE WHOLESALE +38% DTC DTC DTC +24% WHOLESALE +9% +9% +18% +8% Double-digit growth in Mountain Sports & Strong momentum in Mountain Sports & Mountain Lifestyle & Urban Exploratio
Slide 22: Q3'19: Timberland
Q3’19: TIMBERLAND ® GLOBAL PERFORMANCE REVENUE +1% (+3% C$) DRIVEN BY BALANCED GROWTH FROM DTC & WHOLESALE WITH STRENGTH +1% FROM AMERICAS AND TIMBERLAND PRO DTC digital increased 15% Diversification of business continues; Double-digit growth in Non-Classic footwear in both men’s & women’s Tim
Slide 23: Timberland Regional Performance
Q3’19: TIMBERLAND ® REGIONAL PERFORMANCE AMERICAS +7% (+7% C$) EUROPE -5% (-2% C$) APAC -3% (flat C$) WHOLESALE DTC WHOLESALE DTC -6% DTC WHOLESALE -3% -8% -1% +12% +4% Footwear diversification strategy continues Revenue decline due to softness across the China increased ~25% with balanced wit
Slide 24: Q3'19: Wrangler
Q3’19: WRANGLER ® GLOBAL PERFORMANCE -2% REVENUE -2% (FLAT C$) DRIVEN BY IMPACT OF CUSTOMER BANKRUPTCY; EXCLUDING IMPACT OF CUSTOMER BANKRUPTCY REVENUE INCREASED 1% C$ OUTLOOK: Fiscal 2019 revenue now expected to be ~flat (+1% C$), including low-single-digit growth in Q4 BY CHANNEL BY REGION EMEA DT
Slide 25: Wrangler Regional Performance
Q3’19: WRANGLER ® REGIONAL PERFORMANCE AMERICAS -1% (Flat C$) EUROPE -6% (-2% C$) APAC -10% (-1% C$) DTC DTC +2% -15% WHOLESALE -10% WHOLESALE WHOLESALE -2% -4% Excluding impact of customer Wholesale decline driven by softness in Ongoing macroeconomic and geopolitical bankruptcy, revenue incre
Slide 26: Q3'19: Lee
Q3’19: LEE ® GLOBAL PERFORMANCE -9% REVENUE -9% (-7% C$) IMPACTED BY CUSTOMER BANKRUPTCY; EXCLUDING IMPACT OF CUSTOMER BANKRUPTCY REVENUE DECLINED 4% C$ OUTLOOK: Fiscal 2019 revenue now expected to decline ~5% (down 3% C$), returning to growth on a C$ basis in Q4 BY CHANNEL BY REGION EMEA -6% (-2% C
Slide 27: Lee Regional Performance
Q3’19: LEE ® REGIONAL PERFORMANCE AMERICAS -13% (-12% C$) EUROPE -6% (-2% C$) APAC +4% (+9% C$) DTC -12% DTC +1% WHOLESALE WHOLESALE WHOLESALE DTC -16% -3% +4% +3% Excluding impact of customer bankruptcy, Revenue decline due to softness in core China increased 8% on a C$ basis revenue declined
Slide 28: Q3'19: Work Performance
Q3’19: WORK PERFORMANCE REVENUE INCREASED 5%*, DRIVEN BY BALANCED GROWTH ACROSS NEARLY ALL BRANDS +5%* DICKIES® MOMENTUM CONTINUES WITH STRENGTH IN INTERNATIONAL, LIFESTYLE AND DTC OUTLOOK: Fiscal 2019 revenue now expect to increase between 5%* and 6%* +6% +10% +2% +6% +20% *Organic. Work growth rat
Slide 29: Financial Outlook
7 Gy Gen FINANCIAL OUTLOOK
Slide 30: Fiscal Year 2019: Outlook
FISCAL YEAR 2019: OUTLOOK ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE* “At Least” $3.73** “At Least” $13.8B 51.0% ~13.6% +19% / +20% C$ +12% / +13% C$ PREVIOUSLY +11% PREVIOUSLY 51.0% PREVIOUSLY ~13.5% PREVIOUSLY $3.65 *On a diluted basis. **Includes an additi
Slide 31: Fiscal Year 2019 Revenue Outlook: 1H vs. 2H
FISCAL YEAR 2019 REVENUE OUTLOOK: 1H vs. 2H $ in millions; except EPS 1H’19 2H’19 FISCAL 2019 REVENUE $6,969 ~$7,104 ~$13,800 - % Change +18% ~+6% ~+12% - % Change C$ +18% ~+9% ~+13% - % Change* C$ +8% ~+8% ~+8% ADJUSTED GROSS MARGIN* 50.3% ~51.6% ~51.0% - % Change +30bps +40bps +30bps ADJUSTED OPER
Slide 32: Fiscal Year 2019 Revenue Outlook: Segments
FI SCAL YEAR 2019 REVENUE OUTLOOK: SEGMENTS OUTDOOR ACTIVE WORK JEANS +8% +16% +39% -3% +3%* (+4%* C$) (+17% C$) +5%* to +6%* (-1% C$) PREVIOUSLY +7% to +8% PREVIOUSLY +14% to +15% PREVIOUSLY >+35% PREVIOUSLY -1% to -2% *Organic. 32
Slide 33: Fiscal Year 2019 Revenue Outlook: Brands
FI SCAL YEAR 2019 REVENUE OUTLOOK: BRANDS +23% +8% ~Flat ~Flat -5% +25% C$ +9% C$ +1% C$ +1% C$ -3% C$ PREVIOUSLY +18% to +19% PREVIOUSLY +7% to +8% PREVIOUSLY +2% to +4% PREVIOUSLY +1% PREVIOUSLY -3% to -4% 33
Slide 34: Fiscal Year 2019 Revenue Outlook: Regions
FI SCAL YEAR 2019 REVENUE OUTLOOK: REGIONS +7% (+9% C$) EMEA +13% U.S. +14% (+16% C$) APAC +13% (+20% C$) AMERICAS (non-U.S.) 34
Slide 35: Fiscal Year 2019 Revenue Outlook: Channels
FI SCAL YEAR 2019 REVENUE OUTLOOK: CHANNELS DIRECT-TO- DIRECT-TO- CONSUMER - WHOLESALE CONSUMER DIGITAL +11% +13% >30% +12% C$ +14% C$ PREVIOUSLY +9% to +10% PREVIOUSLY +12% to +14% 35
Slide 36: Appendix
APPENDIX 36
Slide 37: Appendix: GAAP to Non-GAAP
APPENDIX: GAAP TO NON-GAAP VF CORPORATION S upplemental Financial Information Reconciliation of S elect GAAP Measures to Non-GAAP Measures - Three Months Ended December 2018 (Unaudited) (In thousands, except per share amounts) Relocation and As Reported Transaction and Deal other Impact of Contribut
Slide 38: 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 December 2017 (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Contribution from Three Months Ended Decem
Slide 39: Appendix: GAAP to Non-GAAP
APPENDIX: GAAP TO NON-GAAP VF CORPORATION S upplemental Financial Information Reportable S egment, Geographic and Channel Revenue Growth (Unaudited) Three Months Ended December 2018 % Change Constant % Change Constant Currency and % Change Currency % Change Organic (a) Organic (a) S egment Revenue G
Slide 40: Appendix: GAAP to Non-GAAP
APPENDIX: GAAP TO NON-GAAP VF CORPORATION S upplemental Financial Information Top 5 Brand Revenue Information (Unaudited) Three Months Ended December 2018 Top 5 Brand Revenue Growth Americas EMEA APAC Global Vans ® % change 28 % 6% 37 % 25 % % change constant currency 29 % 10 % 41 % 27 % The North F
Slide 41: VFC.com
qi § NAMA YZ Z \ VFC.com | BV wt Se CSS 2 OH FS) = _ ae