V.F. Corporation · NYSE:VFC

V.F — Q4 2020 Earnings Presentation

51 slides from V.F's earnings presentation, May 15, 2020

  1. Slide 1: Q4 Fiscal 2020 Earnings Presentation

    Q4 Fiscal 2020 E A R N I N G S P R E S E N TAT I O N May 15, 2020

  2. 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

  3. 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 and Jeans businesses. Additionally, unless otherwise noted, all numbers are on an “adjusted” basis which excludes transaction and deal related expenses associated w

  4. Slide 4: Our Purpose

    Our Purpose VF POWERS MOVEMENTS OF SUSTAINABLE AND ACTIVE LIFESTYLES FOR THE BETTERMENT OF PEOPLE AND OUR PLANET Q 4 F I S C A L 2 0 2 0 4

  5. Slide 5: Fiscal 2024 Global Business Strategy

    Fiscal 2024 Global Business Strategy DRIVE AND ELEVATE DISTORT TO OPTIMIZE OUR DIRECT ASIA PORTFOLIO CHANNELS ACCELERATE CONSUMER-MINDED, RETAIL- CENTRIC, HYPER-DIGITAL BUSINESS MODEL TRANSFORMATION Q 4 F I S C A L 2 0 2 0 5

  6. Slide 6: COVID-19 Update

    COVID-19 Update

  7. Slide 7: COVID-19 Operational Update

    COVID-19 Operational Update  Offices will open no earlier than June 1st  Currently no retail stores have opened in the US; prepared to begin a phased reopening subject to government and North America healthcare authorities’ guidelines to allow proper training and preparation of the retail environm

  8. Slide 8: Liquidity and Mitigation Initiatives Underway

    Liquidity and Mitigation Initiatives Underway PORTFOLIO RESILIENCY  Recent debt offering provides additional liquidity  Occupational Work divestiture provides potential Balance Sheet Diversification for additional liquidity Flexibility  Disciplined working capital management Free Cash Flow  Temp

  9. Slide 9: $7+ Million in COVID-19 Relief Support

    $7+ MILLION in COVID-19 Relief Support PPE Factory and Cash Product Products in Worker Donations Donations Production Support 9

  10. Slide 10: COVID-19 Relief Support by Brand

    COVID-19 Relief Support by Brand Up to $4 Million $1 Million 1,475 7,000 Vans® “Foot the Bill” The North Face® pairs of Timberland PRO® 3.4 Million Kipling® waistpacks small business support Explore Fund donation nursing shoes and Dickies® isolation gowns donated to frontline Timberland® boots donat

  11. Slide 11: Consolidated DTC Revenue Trends

    Consolidated DTC Revenue Trends Total China Total EMEA Total Americas 40% 20% 20% 20% 0% 0% 0% -20% -20% Brick & Mortar -20% -40% -40% (B&M) -40% -60% -60% -60% -80% -80% -80% -100% -100% -100% 60% 40% 80% 40% 60% 20% Digital 20% 40% 0% 0% 20% -20% -20% 0% -40% -40% -20% Q 4 F I S C A L 2 0 2 0 11 *

  12. Slide 12: Q4'20 Business & Financial Performance

    Q4’20 Business & Financial Performance

  13. Slide 13: Q4'20: Business Performance

    Q4’20: Business Performance Revenue Adjusted Gross Margin Vans® $2.1B 53.9% -7% / -6% C$ -11% / -10% C$ -100bps The North Face® DTC China -14% / -13% C$ -11% / -10% C$ -33% / -31% C$ Digital +8% / +9% C$ Q 4 F I S C A L 2 0 2 0 13

  14. Slide 14: Q4'20 Financial Performance

    Q4’20 Financial Performance Adjusted Adjusted Adjusted Operating Earnings Revenue Gross Margin Margin Per Share* $2.1B 53.9% 4.1% $0.10 -11% / -10% C$ -100bps -350bps -70% *On a diluted basis Q 4 F I S C A L 2 0 2 0 14

  15. Slide 15: Q4'20: Financial Summary

    Q4’20: Financial Summary $ in millions; except EPS Q4’19 Q4'20 YOY CHANGE REVENUE $2,357 $2,102 -11% ADJUSTED GROSS MARGIN 54.9% 53.9% -100bps ADJUSTED OPERATING INCOME $179 $87 -51% ADJUSTED OPERATING MARGIN 7.6% 4.1% -350bps ADJUSTED NET INCOME $132 $40 -70% ADJUSTED EPS – DILUTED $0.33 $0.10 -70%

  16. Slide 16: Q4'20: Strategic Growth Drivers

    Q4'20: Strategic Growth Drivers Big 4 Brands International DTC -11% -11% -11% -10% C$ -9% C$ -10% C$ Q 4 F I S C A L 2 0 2 0 16

  17. Slide 17: Q4'20: Revenue Breakdown

    Q4’20: Revenue Breakdown REVENUE -10% C$ TOTAL BIG 4 BRANDS -11% (-10% C$), with Vans® -7% (-6% C$), The North Face® -14% (-13% C$), Timberland ® -19% (-18% C$), and Dickies® -3% $2,102 M REVENUE (-2% C$) -11% Reported -11% INTERNATIONAL -11% (-9% C$), with China -33% (-31% C$) and EMEA -7% (-5% C$)

  18. Slide 18: Q4'20: Big Four Brand Revenue

    Q4'20: Big Four Brand Revenue -7% -14% -19% -3% -6% C$ -13% C$ -18% C$ -2% C$ Q 4 F I S C A L 2 0 2 0 18

  19. Slide 19: Q4'20: Gross Margin Bridge

    Q4'20: Gross Margin Bridge +30 bps -130bps 54.9% NM NM 53.9% Note: Gross Margin on an adjusted basis *Numbers on an adjusted organic basis ** Reflects the impact of FX translation only Q 4 F I S C A L 2 0 2 0 19

  20. Slide 20: Q4'20: Operating Margin Bridge

    Q4'20: Operating Margin Bridge 7.6% -100 bps -30 bps -220 bps NM NM 4.1% Strategic Investments -5% Note: Operating Margin on an adjusted basis *Numbers on an adjusted organic basis Q 4 F I S C A L 2 0 2 0 20 ** Reflects the impact of FX translation only

  21. Slide 21: Q4'20 Brand Performance

    Q4’ 20 Brand Performance \

  22. Slide 22: Q4'20: Vans | Global Performance

    Q4'20: Vans® | Global Performance REVENUE DECREASED -7% (-6% C$) -7%  Revenue decline due to DTC store closures and reduced Wholesale shipments as a result of COVID-19  DTC -10% with +10% (+12% C$) growth in DTC Digital and +6% total comp*  Wholesale -4% (-2% C$) due to lower shipments as a resul

  23. Slide 23: Q4'20: Vans | Regional Performance

    Q4'20: Vans® | Regional Performance AM E R I C AS - 8 % ( - 7 % C $ ) EUROPE -5% (-2% C$) AP A C - 8 % ( - 5 % C $ ) DTC -14% (-12% C$) WHOLESALE -14% DTC DTC (-12% C$) -11% -1% WHOLESALE WHOLESALE (+2% C$) -3% -2% (-2% C$) (+1% C$)  US DTC Digital was up double-digits for the quarter;  Strength i

  24. Slide 24: Q4'20: The North Face | Global Performance

    Q4'20: The North Face ® | Global Performance REVENUE DECREASED -14% (-13% C$) -14%  Revenue decline due to DTC store closures and reduced Wholesale shipments as a result of COVID-19  DTC -9%, including +9% (+10% C$) growth in DTC Digital​ and +1% total comp*  Urban Exploration product territory p

  25. Slide 25: Q4'20: The North Face | Regional Performance

    Q4'20: The North Face ® | Regional Performance AM E R I C AS - 2 1 % EUROPE +1% (+4% C$) AP A C - 2 6 % DTC WHOLESALE +6% -34% WHOLESALE (+9 % C$) (-33% C$) DTC -1% WHOLESALE -13% (+2 % C$) DTC -30% (-29% C$) -21%  DTC B&M and Wholesale impacted by traffic  Wholesale strength driven by UK and Germ

  26. Slide 26: Q4'20: Timberland | Global Performance

    Q4'20: Timberland ® | Global Performance -19% REVENUE DECREASED -19% (-18% C$)  Revenue decline due to DTC store closures and reduced Wholesale shipments as a result of COVID-19  Growth in Timberland PRO® driven by apparel  Declines in Timberland Tree driven by Footwear partially mitigated by rel

  27. Slide 27: Q4'20: Timberland | Regional Performance

    Q4'20: Timberland ® | Regional Performance AM E R I C AS - 1 0 % EUROPE -20% (-18% C$) AP A C - 3 4 % DTC -15% DTC WHOLESALE (-14% C$) WHOLESALE -17% -47% -2 1 % (-15 C$) WHOLESALE (-1 9 % C$) -9 % DTC -25%  Positive growth in Women’s Footwear and Timberland  DTC Digital business was flat C$, foll

  28. Slide 28: Q4'20: Dickies | Global Performance

    Q4'20: Dickies® | Global Performance -3% REVENUE DECREASED -3% (-2% C$) AS COVID-19 IMPACTS MITIGATED IN PART BY STRENGTH IN AMERICAS & DTC DIGITAL  Revenue impacted by reduced Wholesale shipments as a result of COVID-19  DTC +2% (+3% C$), including +13% (+14% C$) growth in DTC Digital​  Continue

  29. Slide 29: Q4'20: Dickies | Regional Performance

    Q4'20: Dickies® | Regional Performance AM E R I C AS + 6 % ( + 7 % C $ ) EUROPE flat (+2% C$) AP A C - 3 5 % DTC DTC WHOLESALE -4% -9% -61% WHOLESALE (-8% C$) (-60% C$) +1% (+3% C$) DTC WHOLESALE +13% 8% (+14% C$)  Strong performance from Digital Wholesale  Lifestyle product portfolio performing w

  30. Slide 30: FY'20 Business & Financial Performance

    FY’20 Business & Financial Performance

  31. Slide 31: FY'20 Evolution

    FY’20 Evolution 3Q YTD F O U R T H Q U AR T E R F U L L Y E AR ($ millions) 2019 2020 2019 2020 2019 2020 ADJUSTED REVENUE $ 7,909 $ 8,372 $ 2,357 $ 2,102 $ 10,267 $ 10,474 % Growth +6% -11% +2% % Organic Growth (x FX) +9% -10% +4% ADJUSTED GROSS PROFIT $ 4,333 $ 4,679 $ 1,295 $ 1,134 $ 5,628 $ 5,81

  32. Slide 32: Dickies | FY'20 Revenue from Continuing Operations

    Dickies® | FY’20 Revenue from Continuing Operations BY REGION B Y C H AN N E L EMEA Wholesale USA 16% 81% 62% Total Brand FY’20 Revenue: $730M DTC: Stores Occupational Workwear Exit: ($85M) 4% APAC 18% Continuing Ops Revenue: $645M DTC: Digital 15% Non-US Americas 4% Q 4 F I S C A L 2 0 2 0 32

  33. Slide 33: FY'20: Business Highlights

    FY’20: Business Highlights Adjusted Revenue Adjusted Gross Margin Vans® $10.5B 55.5% +10% / +11% C$ +2% / +3% C$ +70bps diversified growth in all regions / +3%* / +4%* C$ +50bps* channels / product families The North Face® DTC China +3% / +5% C$ +5% / +6% C$ +10% / +14% C$ all regions & channels gro

  34. Slide 34: FY'20 Financial Highlights

    FY’20 Financial Highlights Adjusted Adjusted Adjusted Adjusted Operating Earnings Revenue Gross Margin Margin Per Share** $10.5B 55.5% 12.8% $2.68 +2% / +3% C$ +70bps +30bps +5% / +7% C$ +3%* / +4%* C$ +50bps* +30bps* +6%* / +8%* C$ *Organic **On a diluted basis Q 4 F I S C A L 2 0 2 0 34

  35. Slide 35: FY'20: Financial Summary

    FY’20: Financial Summary $ in millions; except EPS FY’19 FY'20 YOY CHANGE YOY CHANGE* ADJUSTED REVENUE $10,267 $10,474 +2% +3% ADJUSTED GROSS MARGIN 54.8% 55.5% +70bps +50bps ADJUSTED OPERATING INCOME $1,288 $1,345 +4% +5% ADJUSTED OPERATING MARGIN 12.5% 12.8% +30bps +30bps ADJUSTED NET INCOME $1,01

  36. Slide 36: FY'20: Strategic Growth Drivers

    FY'20: Strategic Growth Drivers Big 4 Brands International DTC +4% +1% +5% +5% C$ +4% C$ +6% C$ Q 4 F I S C A L 2 0 2 0 36

  37. Slide 37: FY'20: Revenue Breakdown

    FY’20: Revenue Breakdown REVENUE +4%* C$ TOTAL BIG 4 BRANDS +4% (+5% C$), led by +10% (+11% C$) growth at Vans® , +3% (+5% C$) growth at The North Face® and +3% (+4% C$) growth at $10,474 M REVENUE Dickies® +2% Reported +2% INTERNATIONAL +1% (+4% C$), with China +10% (+14% C$) and EMEA flat* (+3%* C

  38. Slide 38: FY'20: Big Four Brand Revenue

    FY'20: Big Four Brand Revenue +10% +3% -6% +3% +11% C$ +5% C$ -5% C$ +4% C$ Q 4 F I S C A L 2 0 2 0 38

  39. Slide 39: FY'20: Gross Margin Bridge

    FY'20: Gross Margin Bridge +20 bps 55.5% +20 bps NM +30 bps 54.8% Note: Gross Margin on an adjusted basis *Numbers on an adjusted organic basis ** Reflects the impact of FX translation only Q 4 F I S C A L 2 0 2 0 39

  40. Slide 40: FY'20: Operating Margin Bridge

    FY'20: Operating Margin Bridge +60bps -90 bps +50 bps +10bps NM 12.8% 12.5% Strategic Investments +6% Note: Operating Margin on an adjusted basis *Numbers on an adjusted organic basis Q 4 F I S C A L 2 0 2 0 40 ** Reflects the impact of FX translation only

  41. Slide 41: FY'21 Update

    FY’21 Update

  42. Slide 42: VF's Evolving Distribution Footprint

    VF’s Evolving Distribution Footprint International Wholesale Digital Wholesale FY’20 US Wholesale DTC: Digital Revenue Top 5 US Accounts DTC: Stores Shift toward Digital to accelerate in FY21 Q 4 F I S C A L 2 0 2 0 42

  43. Slide 43: FY'21 Expected Business Evolution

    FY’21 Expected Business Evolution 1Q21 2Q21 3Q21 4Q21  North America and EMEA  North America and EMEA  North America and EMEA  On a normalized basis, begin to reopen continue to steadily improve stabilize North America and EMEA  Continued steady  APAC stabilizes  APAC begins to return to begi

  44. Slide 44: FY'21 Cash Evolution

    FY’21 Cash Evolution Net proceeds from Occupational Work divestiture incremental to $3.0B ($2.2B) liquidity estimates below >$600M (~$750M) >$3.0B $1.0B $1.4B FY’21 Beginning 4/7/20 Term Debt Revolver & FY’21 Free Dividend FY’21 Ending Cash Revolver Draw Offer CP Paydown Cash Flow Payments Cash Tota

  45. Slide 45: Appendix

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  46. Slide 46: 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 and Twelve Months Ended March 2020 (Unaudited) (In thousands, except per share amounts) Pension Settlement Relocation and Goodwill Charge, Impact of Debt A

  47. Slide 47: 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 and Twelve Months Ended March 2019 (Unaudited) (In thousands, except per share amounts) Relocation and Other Impact of As Reported Transaction and Deal Str

  48. Slide 48: Appendix: Top 4 Brand Revenue

    Appendix: Top 4 Brand Revenue VF CORPORATION Supplemental Financial Information Top 4 Brand Revenue Information (Unaudited) Three Months Ended March 2020 Twelve Months Ended March 2020 Top 4 Brand Revenue Growth Americas EMEA APAC Global Americas EMEA APAC Global ® Vans % change (8)% (5)% (8)% (7)%

  49. Slide 49: Appendix: Segment, Geographic & Channel Revenue – Q4'20

    Appendix: Segment, Geographic & Channel Revenue – Q4’20 VF CORPORATION Supplemental Financial Information Reportable Segment, Geographic and Channel Revenue Growth - Three Months Ended March 2020 (Unaudited) Three Months Ended March 2020 % Change % Change Constant Currency Segment Revenue Growth Out

  50. Slide 50: Appendix: Segment, Geographic & Channel Revenue – FY'20

    Appendix: Segment, Geographic & Channel Revenue – FY’20 VF CORPORATION Supplemental Financial Information Reportable Segment, Geographic and Channel Revenue Growth - Twelve Months Ended March 2020 (Unaudited) Twelve Months Ended March 2020 % Change Constant % Change Constant % Change Constant % Chan

  51. Slide 51: Q 4 F I S C A L 2 0 2 0 51

    Q 4 F I S C A L 2 0 2 0 51

V.F. — Q4 2020 Earnings Presentation on 6ix