V.F. Corporation · NYSE:VFC
V.F — Q2 FY2023 Earnings Presentation
30 slides from V.F's earnings presentation, Oct 26, 2022
Slide 1: Q2'FY23 Earnings
Q2’FY23 EARNINGS OCTOBER 26, 2022 Internal Use
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 Internal Use
Slide 5: Balanced delivery amidst evolving backdrop
Balanced delivery amidst evolving backdrop Strong portfolio of brands well-positioned against macro-economic headwinds Consumer sentiment and behavior continues to rapidly evolve – More promotional environment, mainly in North America, reflects elevated inventory levels in the market Revenue $3.
Slide 6: Q2'FY23 Big Four Brand Revenue
Q2’FY23 Big Four Brand Revenue +1% C$ (-5%) -13% +8% -4% -19% -8% C$ +14% C$ +3% C$ -15% C$ 6 Q 2 F I S C A L 2 0 2 3
Slide 7: H1'FY23 Big Four Brand Revenue
H1’FY23 Big Four Brand Revenue +3% C$ (-2%) -10% +15% flat -17% -6% C$ +21% C$ +7% C$ -14% C$ 7 Q 2 F I S C A L 2 0 2 3
Slide 8: Q2 strength in Outdoor Emerging Brands and Packs
Q2 strength in Outdoor Emerging Brands and Packs Balance of Portfolio +4% +13% C$ 8 Q 2 F I S C A L 2 0 2 3
Slide 9: H1 Business and Revenue Highlights
H1 Business and Revenue Highlights Delivering growth across most VF brands; leveraging strengths to manage near- term challenges HIGHLIGHTS CHALLENGES Broad-based portfolio performance Early in Vans reset (-6%) – H1 revenue excluding Vans +11% Covid impacting GDP growth in Greater – Outdoor Em
Slide 10: Confident in our strategies to deliver long-term returns
Confident in our strategies to deliver long-term returns Balanced delivery of Q2 against a more variable and softer consumer backdrop – Generating results in line with our expectations across much of the business Full-year revenue outlook unchanged, profitability contemplates current market envi
Slide 11: Matt Puckett, EVP, CFO
MATT PUCKETT E V P, C F O Internal Use
Slide 12: Q2'FY23 Financial Overview
Q2’FY23 Financial Overview Balanced delivery amidst uncertain backdrop Revenue of $3.1B, -4%/+2% C$ T O T AL R E V E N U E ( $ M ) Adjusted Gross Margin of 51.5%, -240bps $3,198 +2% C$ $3,081 Adjusted Operating Margin of 12.3%, -440bps Adjusted Diluted EPS of $0.73, -34%/-27% C$ – Non-operat
Slide 13: EMEA momentum continues with APAC improving; Americas impacted by Vans
EMEA momentum continues with APAC improving; Americas impacted largely by weaker results in Vans -4% / +12% C$ EMEA -3% / -3% C$ AMERICAS -6% / +2% C$ APAC 13 Q 2 F I S C A L 2 0 2 3
Slide 14: Gross Margin Bridge
Gross Margin Bridge Impacted primarily by higher discounts, increased promotional activity and increased costs, partially offset by planned price increases 53.9% flat 51.5% -220 bps -20 bps Note: Gross Margin on an adjusted basis 14 * Reflects the impact of FX translation only Q 2 F I S C A L 2 0 2
Slide 15: Supply chain situation is improving
Supply chain situation is improving Mitigating ongoing headwinds through agility, scale and diversification Sourcing & Production – Open for business across the supply base and continued recovery from the widespread lockdowns in China during Q1 – Further reduction in elevated production lead times a
Slide 16: Elevated inventories from higher levels of core products
Elevated inventories from higher levels of core products Q2 ending net inventory of $2.7B – Inventories +88% vs the same period last year, partially driven by an increase of in-transit inventory of ~$510 million – Accounts payable increased +91% vs LY, largely driven by the increase of in-transit
Slide 17: Operating Margin Bridge reflects lower Gross Margin
Operating Margin Bridge reflects lower Gross Margin Continued growth in strategic investments while maintaining cost discipline 16.7% -220 bps 12.3% -180 bps -40 bps Strategic Investments +9% Note: Operating Margin on an adjusted basis *Numbers on an adjusted basis, excluding FX ** Reflects the impa
Slide 18: FY23 Outlook
FY23 Outlook Adopting a more cautious outlook for the balance of the year FY23 PREVIOUS GUIDANCE* UPDATED GUIDANCE Revenue (C$) +5% to +6% +5% to +6% The North Face® +> low double-digit % at least +12% Vans® down mid-single digit % down mid-single digit % Adjusted gross margin down ~50bps
Slide 19: Confident in our strategy and ability to execute
Confident in our strategy and ability to execute Committed to being a growth company consisting of growth brands Continuing to invest in our portfolio of brands and in our strategic platforms Actively managing the business to withstand and mitigate near-term challenges Well-positioned to del
Slide 20: Appendix
APPENDIX 20
Slide 21: COVID-19 Operational Update as of October 18, 2022
COVID-19 Operational Update as of October 18, 2022 All offices open North America No stores were closed during the second quarter; all stores are currently open All offices open EMEA No stores were closed during the second quarter due to COVID-19; all stores are currently open All offices
Slide 22: Q2'FY23: Revenue Breakdown
Q2’FY23: Revenue Breakdown BIG 4 BRANDS -5% (+1% C$): Vans® -13% (-8% C$) TOTAL The North Face® +8% (+14% C$ ) Timberland ® -4% (+3% C$) Dickies® -19% (-15% C$) $3,081 M REVENUE INTERNATIONAL -5% (+8% C$) -4% Reported +2% C$ APAC -6% (+2% C$), including Greater China -15% (-10% C$) and Mai
Slide 23: Vans Global Performance
Q 2 ’ FY 2 3 Vans ® Global Performance REVENUE OF $952 MILLION, -13% VS PRIOR YEAR (-8% C$, -5% EX. CHINA) DTC -11% (-8% C$) driven by softer traffic in the Americas and continued COVID impacts in China Wholesale -15% (-9% C$); challenged by extended COVID lockdowns in APAC and higher inventory
Slide 24: The North Face Global Performance
Q 2 ’ FY 2 3 The North Face ® Global Performance REVENUE OF $951 MILLION, +8% VS PRIOR YEAR (+14% C$) Broad-based momentum with double-digit C$ growth across all regions and global channels Global DTC accelerated to 23% growth, led by Full Price stores and accelerating double-digit growth in e-c
Slide 25: Timberland Global Performance
Q 2 ’ FY 2 3 Timberland ® Global Performance REVENUE OF $524 MILLION, -4% VS PRIOR YEAR (+3% C$); EX. WHOLESALE SHIPMENT TIMING, +MSD% VS PRIOR YEAR Global performance driven by continued strength in EMEA, partially offset by supply challenges in Americas and continued COVID impacts in APAC REVENU
Slide 26: Dickies Global Performance
Q 2 ’ FY 2 3 Dickies ® Global Performance REVENUE OF $186 MILLION, -19% VS PRIOR YEAR (-15% C$) Americas performance continued to be impacted by the largest US retail account (-10% impact on global Q2 sales); though consumer demand drove Dickies across other channels Americas Work-Inspired busines
Slide 27: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP a) Transaction and deal related activities reflect activities associated with the acquisition of Supreme Holdings, Inc. ("Supreme") and include integration costs of $0.3 million for the six months ended September 2022. The transaction and deal related activities resulted i
Slide 28: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP (a) Transaction and deal related activities include activities associated with the acquisition of Supreme Holdings, Inc. ("Supreme") for the three and six months ended September 2021. Transaction and deal related activities include a decrease in the estimated fair value of
Slide 29: Appendix: Top 4 Brand Revenue
Appendix: Top 4 Brand Revenue 29 *Refer to constant currency definition on previous pages Q 2 F I S C A L 2 0 2 3
Slide 30: Appendix: Segment, Geographic & Channel Revenue – Q2'23
Appendix: Segment, Geographic & Channel Revenue – Q2’23 (a) Royalty revenues are included in the wholesale channel for all periods. * Constant Currency Financial Information: VF is a global company that reports financial information in U.S. dollars in accordance with GAAP. Foreign currency exchange