V.F. Corporation · NYSE:VFC
V.F — Q2 2019 Earnings Presentation
39 slides from V.F's earnings presentation, Oct 19, 2018
Slide 1: Q2 Fiscal 2019 Earnings Presentation
Q2 FISCAL 2019 EARNINGS PRESENTATION October 19, 2018
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 Williamson-Dickie, Icebreaker® and Altra® acquisitions (“acquisitions”)and excludes transaction and deal related costs, includi
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: Q2'19: Business Highlights
Q2’19: BUSINESS HIGHLIGHTS ADJUSTED REVENUE VANS® $3.9B / +15% GROSS MARGIN +26% / +27% C$ +6%* / +7%* C$ 50.2% strong growth in all regions / driven by mix-shift toward channels / product families higher margin businesses THE NORTH FACE® DTC CHINA +5% / +7% C$ +13%* / +14%* C$ +12%* / +15%* C$ doub
Slide 9: Q2'19: Financial Highlights
Q2’19: FINANCIAL HIGHLIGHTS ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE** $3.9B 50.2% 17.7% $1.43 +15% Flat +60bps +19% +6%* / +7%* C$ +70bps* +100bps* +13%* / +14%* C$ *Organic **On a diluted basis 9
Slide 10: Q2'19: Financial Summary
Q2’19: FINANCIAL SUMMARY $ in millions; except EPS Q2’18 Q2’19 YOY CHANGE YOY CHANGE* REVENUE $3,393 $3,907 +15% +6% ADJUSTED GROSS MARGIN 50.2% 50.2% Flat +70bps ADJUSTED OPERATING INCOME $580 $690 +19% +12% ADJUSTED OPERATING MARGIN 17.1% 17.7% +60bps +100bps ADJUSTED NET INCOME $477 $576 +21% +14
Slide 11: Q2'19: Strategic Growth Drivers
Q2’19: STRATEGIC GROWTH DRIVERS BIG 3 BRANDS INTERNATIONAL DTC WORK +11% +4%* +13%* +5%* +12% C$ +7%* C$ +14%* C$ *Organic 11
Slide 12: Revenue Breakdown
Q2’19: REVENUE BREAKDOWN TOTAL BIG 3 BRANDS +11%, led by 26% growth at Vans® and 5% growth at The North Face® $3,907 M INTERNATIONAL increased 4%*, led by 12%* +15% Reported REVENUE growth in China +6%* DTC DIGITAL increased 31%* WORK increased 5%* with balanced, broad- based growth BY SEGMENT BY CH
Slide 13: Gross Margin Bridge
Q2’19: GROSS MARGIN BRIDGE +10 bps NM +60 bps 50.2% 50.2% -70 bps *Gross Margin on an adjusted basis 13
Slide 14: Operating Margin Bridge
Q2’19: OPERATING MARGIN BRIDGE +80 bps NM +70 bps -50 bps 17.7% 17.1% Strategic -40 bps Investments +8% *Operating Margin on an adjusted basis 14
Slide 15: Brand Highlights
BRAND HIGHLIGHTS 15
Slide 16: Q2'19: Top Five Brand Revenue
Q2’19: TOP FIVE BRAND REVENUE +26% +5% -2% -5% -9% +27% C$ +7% C$ -1% C$ -3% C$ -7% C$ 16
Slide 17: Q2'19: Vans - Global Performance
Q2’19: VANS ® GLOBAL PERFORMANCE REVENUE INCREASED 26% WITH STRONG GROWTH ACROSS REGIONS, CHANNELS & PRODUCT +26% CATEGORIES DTC increased 29% with >25% total comp, including >55% growth in DTC digital Wholesale increased 23% driven by strong back-to-school performance globally GROWTH REMAINS BA
Slide 18: Q2'19: Vans - Regional Performance
Q2’19: VANS ® REGIONAL PERFORMANCE AMERICAS +34% EUROPE +8% APAC +26% WHOLESALE +5% DTC WHOLESALE WHOLESALE +18% +25% +40% DTC DTC +27% +31% Growth fueled by strong back to school Revenue growth driven by acceleration of Broad-based strength across the region; performance DTC; mid-teen total c
Slide 19: Q2'19: The North Face - Global Performance
Q2’19: THE NORTH FACE ® GLOBAL PERFORMANCE REVENUE INCREASED 5% (7% C$) WITH STRENGTH FROM DTC/DIGITAL ACROSS REGIONS +5% Direct-to-consumer increased 13%, including double digit total comp and >35% growth in DTC digital Wholesale increased 3% driven by strength from EMEA, partially offset by sh
Slide 20: Q2'19: The North Face - Regional Performance
Q2’19: THE NORTH FACE ® REGIONAL PERFORMANCE AMERICAS: +2% EUROPE +16% APAC +1% DTC +11% DTC DTC +20% +13% WHOLESALE WHOLESALE WHOLESALE -2% -5% +17% Continued momentum in seasonal Strong performance in women’s, lifestyle As expected, wholesale decline driven by product categories, including l
Slide 21: Q2'19: Timberland - Global Performance
Q2’19: TIMBERLAND ® GLOBAL PERFORMANCE REVENUE DECLINE IMPACTED BY CUSTOMER BANKRUPTCY, TIMING OF SHIPMENTS -2% Wholesale declined 2% due primarily to shipment timing in EMEA; customer bankruptcy in Timberland PRO ® Direct-to-consumer declined 3%, partially offset by >25% growth in digital Div
Slide 22: Q2'19: Timberland - Regional Performance
Q2’19: TIMBERLAND ® REGIONAL PERFORMANCE AMERICAS -3% EUROPE -2% APAC +3% DTC DTC +8% -7% WHOLESALE DTC WHOLESALE WHOLESALE -9% -1% +16% -5% Excluding impact of customer bankruptcy Wholesale decline due to shipment timing China up nearly 100% with balanced growth Timberland PRO® increased high
Slide 23: Q2'19: Wrangler - Global Performance
Q2’19: WRANGLER ® GLOBAL PERFORMANCE -5% REVENUE DECLINE DRIVEN BY FX AND IMPACT OF CUSTOMER BANKRUPTCY/ EXCLUDING CURRENCY AND IMPACT OF CUSTOMER BANKRUPTCY REVENUE ABOUT FLAT OUTLOOK: Continue to expect about 1% revenue growth in fiscal 2019 BY CHANNEL BY REGION EMEA DTC -18% -4% APAC -9% WHOLESAL
Slide 24: Q2'19: Wrangler - Regional Performance
Q2’19: WRANGLER ® REGIONAL PERFORMANCE AMERICAS -3% EUROPE -18% APAC -9% DTC DTC Flat -18% WHOLESALE -9% WHOLESALE WHOLESALE -3% -18% Excluding impact of customer Wholesale decline compounded by Revenue declined 1% C$ bankruptcy, revenue in line with the prior consolidation of key accounts O
Slide 25: Q2'19: Lee - Global Performance
Q2’19: LEE ® GLOBAL PERFORMANCE -9% REVENUE IMPACTED BY CUSTOMER BANKRUPTCY, SHIPMENT TIMING IN CHINA OUTLOOK: Revenue now expected to decline between 3% and 4% in fiscal 2019 BY CHANNEL BY REGION EMEA -11% DTC -5% WHOLESALE USA -9% -8% APAC -10% NON-US AMERICAS -10% 25
Slide 26: Q2'19: Lee - Regional Performance
Q2’19: LEE ® REGIONAL PERFORMANCE AMERICAS -8% EUROPE -11% APAC -10% DTC -23% DTC DTC -7% +2% WHOLESALE WHOLESALE WHOLESALE -10% -10% -8% Continued strength in core men’s Wholesale decline compounded by Wholesale decline due in part to shipment business offset by softness in women’s consolidat
Slide 27: Q2'19: Work Performance
Q2’19: WORK PERFORMANCE REVENUE INCREASED 5%*, DRIVEN BY BALANCED GROWTH ACROSS NEARLY ALL BRANDS +5%* EXCLUDING THE IMPACT OF CUSTOMER BANKRUPTCY, TIMBERLAND PRO® INCREASED HIGH SINGLE DIGITS DICKIES® MOMENTUM CONTINUES WITH STRENGTH IN INTERNATIONAL, LIFESTYLE AND DTC OUTLOOK: Continue to expect 4
Slide 28: Financial Outlook
FINANCIAL OUTLOOK \. 9 WA 1s 1
Slide 29: Fiscal Year 2019: Outlook
FISCAL YEAR 2019: OUTLOOK ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE* “At least” $13.7B “At least” +11% 51.0% ~13.5% $3.65 +16% PREVIOUSLY +10% to +11% PREVIOUSLY 13.4% PREVIOUSLY $3.52 to $3.57 *On a diluted basis. **Updated outlook includes >$100 million ne
Slide 30: Fiscal Year 2019 Revenue Outlook: Segments
FI SCAL YEAR 2019 REVENUE OUTLOOK: SEGMENTS OUTDOOR ACTIVE WORK JEANS +7% to +8% +14% to +15% >+35% -1% to -2% PREVIOUSLY +6% to +8% PREVIOUSLY +13% to +14% PREVIOUSLY ~FLAT 30
Slide 31: Fiscal Year 2019 Revenue Outlook: Brands
FI SCAL YEAR 2019 REVENUE OUTLOOK: BRANDS +18% to +19% +7% to +8% +2% to +4% +1% -3% to -4% PREVIOUSLY >+15% PREVIOUSLY +6% to +8% PREVIOUSLY ~Flat 31
Slide 32: Fiscal Year 2019 Revenue Outlook: Regions
FI SCAL YEAR 2019 REVENUE OUTLOOK: REGIONS +12% to +13% EMEA +8% to +10% U.S. +14% to +15% APAC +9% to +10% AMERICAS (non-U.S.) 32
Slide 33: Fiscal Year 2019 Revenue Outlook: Channels
FI SCAL YEAR 2019 REVENUE OUTLOOK: CHANNELS DIRECT-TO- DIRECT-TO- CONSUMER - WHOLESALE CONSUMER DIGITAL +9% to +10% +12% to +14% >+30% PREVIOUSLY +11% to +13% 33
Slide 34: Appendix
APPENDIX 34
Slide 35: 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 September 2018 (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Relocation and other Impact of Tax Contri
Slide 36: 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 September 2017 (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Related (a) Three Months Ended September
Slide 37: 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 S eptember 2018 (a) % Change % Change Organic S egment Revenue Growth Outdoor 6% 1% Active 19 % 19 % Work 125 % 5% Jeans (7)% (7)% O
Slide 38: Appendix: GAAP to Non-GAAP
APPENDIX: GAAP TO NON-GAAP VF CO RPO RATIO N Supple me ntal Financial Information Top 5 Brand Re ve nue Information (Unaudite d) Three Months Ended S eptember 2018 Top 5 Brand Revenue Growth Americas EMEA APAC Global Vans ® % change 34 % 8% 26 % 26 % % change constant currency 36 % 9% 28 % 27 % ® Th
Slide 39: VFC.com
VFC.com 39