VF Reports Fourth Quarter and Full Year Fiscal 2021 Results; Provides Initial Fiscal 2022 Outlook

Rhea-AI Summary

VF Corporation (NYSE: VFC) reported its fourth quarter and full-year results ending April 3, 2021. The company emphasized its successful navigation of fiscal 2021, driven by strategic actions to protect employees and investments aimed at transformation and organic growth. The financial results reflect stable performance amid challenges, aligning with both reported and adjusted metrics. CEO Steve Rendle expressed satisfaction with the company's resilience and proactive measures during the year, highlighting a strong commitment to future growth.

Positive

• Strong strategic actions taken to protect employees and enterprise.
• Focus on transformation and organic growth initiatives.

Negative

• No specific earnings or revenue figures disclosed.
• Lack of detailed financial metrics may impact investor confidence.

VF Corporation (NYSE: VFC) today reported financial results for its fourth quarter and full year ended April 3, 2021. All per share amounts are presented on a diluted basis. This release refers to “reported” and “constant dollar” amounts, terms that are described under the heading “Constant Currency - Excluding the Impact of Foreign Currency.” Unless otherwise noted, “reported” and “constant dollar” amounts are the same. This release also refers to “continuing” and “discontinued” operations amounts, which are concepts described under the heading “Discontinued Operations - Occupational Workwear Business.” Unless otherwise noted, results presented are based on continuing operations. This release also refers to “adjusted” amounts, a term that is described under the heading “Adjusted Amounts - Excluding Transaction and Deal Related Expenses and Costs Related to Specified Strategic Business Decisions.” Unless otherwise noted, “reported” and “adjusted” amounts are the same.

“I could not be more pleased with how our organization navigated fiscal 2021," said Steve Rendle, Chairman, President and Chief Executive Officer. "Early in the year we took important actions to protect our people and the enterprise, while maintaining investments to drive our transformation and accelerate organic growth. At the same time, we took bold, forward-looking actions to spark additional growth and value creation. As a result, we are exiting this year in a position of strength with broad based momentum across the portfolio."

Constant Currency - Excluding the Impact of Foreign Currency

This release refers to “reported” amounts in accordance with U.S. generally accepted accounting principles (“GAAP”), which include translation and transactional impacts from foreign currency exchange rates. This release also refers to “constant dollar” amounts, which exclude the impact of translating foreign currencies into U.S. dollars. Reconciliations of GAAP measures to constant currency amounts are presented in the supplemental financial information included with this release, which identifies and quantifies all excluded items, and provides management’s view of why this information is useful to investors.

Discontinued Operations - Occupational Workwear Business

On January 21, 2020, VF announced its decision to explore the divestiture of its Occupational Workwear business. The Occupational Workwear business is comprised primarily of the following brands and businesses: Red Kap^®, VF Solutions^®, Bulwark^®, Workrite^®, Walls^®, Terra^®, Kodiak^®, Work Authority^® and Horace Small^®. The business also includes a license for certain Dickies^® occupational workwear products that have historically been sold through the business-to-business channel.

As of March 28, 2020, the Occupational Workwear business met the held-for-sale and discontinued operations accounting criteria, which continued to be met as of April 3, 2021. Accordingly, the company has reported the related held-for-sale assets and liabilities as assets and liabilities of discontinued operations and included the operating results and cash flows of the business in discontinued operations for all periods presented. In late April 2021, VF entered into a definitive agreement to sell its Occupational Workwear business.

Adjusted Amounts - Excluding Transaction and Deal Related Expenses and Costs Related to Specified Strategic Business Decisions

The adjusted amounts in this release exclude transaction and deal related expenses associated primarily with the acquisition and integration of the Supreme^® brand. Total transaction and deal related expenses were approximately $12 million in the fourth quarter of fiscal 2021 and $19 million in fiscal 2021.

The adjusted amounts in this release exclude costs related to VF's business model transformation, a transformation initiative for our Asia-Pacific regional operations, certain cost optimization activities and other charges indirectly related to the strategic review of the Occupational Workwear business and costs related to strategic business decisions in South America. Total costs were approximately $38 million in the fourth quarter of fiscal 2021 and $115 million in fiscal 2021. Adjusted amounts for fiscal 2021 also exclude approximately $42 million of noncash non-operating expenses related to the release of certain currency translation amounts associated with the wind down activities in South America.

Combined, the above items negatively impacted earnings per share by $0.11 during the fourth quarter of fiscal 2021 and $0.40 during fiscal 2021. All adjusted amounts referenced herein exclude the effects of these amounts.

Free cash flow represents cash flow from operating activities, less capital expenditures.

Reconciliations of measures calculated in accordance with GAAP to adjusted amounts are presented in the supplemental financial information included with this release, which identifies and quantifies all excluded items, and provides management’s view of why this information is useful to investors.

COVID-19 Outbreak Update

As the global impact of COVID-19 continues, VF remains first and foremost focused on a people-first approach that prioritizes the health and well-being of its employees, customers, trade partners and consumers around the world. To help mitigate the spread of COVID-19 and in response to public health advisories and governmental actions and regulations, VF has modified its business practices, including the temporary closing of offices and retail stores, instituting travel bans and restrictions and implementing health and safety measures including social distancing and quarantines.

The majority of VF's supply chain is currently operational. Suppliers are complying with local public health advisories and governmental restrictions which has resulted in isolated product delays. VF is working with its suppliers to minimize disruption. VF's distribution centers are operational in accordance with local government guidelines while maintaining enhanced health and safety protocols.

In North America, approximately 15 percent of stores were closed at the end of the third quarter. The majority of the closures were Vans^® stores, predominantly based in California. In addition, other stores were operating with reduced capacity. Since that time, most stores have re-opened, including all VF-owned stores in California, with less than 5 percent of stores closed at the end of the fourth quarter. Currently less than 5 percent of stores remain closed.

In the EMEA region, approximately 50 percent of stores were closed at the end of the third quarter. Since that time additional stores have been re-closed, with approximately 60 percent of stores closed at the end of the fourth quarter. Some stores in the EMEA region have re-opened since the end of the quarter and currently approximately 20 percent of stores are closed.

Nearly all of VF's owned retail stores in the APAC region, including Mainland China, were open during the quarter and remain open.

VF is continuing to monitor the COVID-19 outbreak globally and will comply with guidance from government entities and public health authorities to prioritize the health and well-being of its employees, customers, trade partners and consumers. As COVID-19 uncertainty continues, VF expects ongoing disruption to its business operations.

Fourth Quarter Fiscal 2021 Income Statement Review

• Revenue increased 23 percent (up 19 percent in constant dollars) to $2.6 billion. Excluding the impact of acquisitions, revenue increased 16 percent (up 12 percent in constant dollars) driven by VF's largest brands, e-commerce growth and an increase in the APAC region, which experienced a significant negative impact from COVID-19 in the prior year period. The fourth quarter of fiscal 2021 also included an extra week when compared to the fiscal 2020 period due to VF's 53-week fiscal 2021.
• Gross margin decreased 100 basis points to 52.1 percent, primarily driven by elevated promotional activity to clear excess inventory and the timing of net foreign currency transaction activity. On an adjusted basis, gross margin decreased 120 basis points, including a 60 basis point positive impact from acquisitions, to 52.7 percent.
• Operating income on a reported basis was $122 million. On an adjusted basis, operating income increased 98 percent to $173 million, including a $34 million contribution from acquisitions. Operating margin on a reported basis increased to 4.7 percent. Adjusted operating margin increased 260 basis points, including a 100 basis point positive impact from acquisitions, to 6.7 percent.
• Earnings per share was $0.16 on a reported basis. On an adjusted basis, earnings per share increased 169 percent (up 150 percent in constant dollars) to $0.27, including a $0.06 contribution from acquisitions.

Full Year Fiscal 2021 Income Statement Review

• Revenue decreased 12 percent (down 14 percent in constant dollars) to $9.2 billion. On an adjusted basis, excluding the impact of acquisitions, revenue decreased 13 percent (down 15 percent in constant dollars), driven by store closures and lower consumer demand as a result of the COVID-19 outbreak and related government actions and regulations. The fourth quarter of fiscal 2021 also included an extra week when compared to the fiscal 2020 period due to VF's 53-week fiscal 2021.
• Gross margin decreased 260 basis points to 52.7 percent, primarily driven by elevated promotional activity to clear excess inventory and the timing of net foreign currency transaction activity, partially offset by favorable mix shift toward higher margin businesses. On an adjusted basis, gross margin decreased 220 basis points, including a 10 basis point positive impact from acquisitions, to 53.3 percent.
• Operating income on a reported basis was $608 million. On an adjusted basis, operating income decreased 45 percent (down 47 percent in constant dollars) to $742 million, including a $34 million contribution from acquisitions. Operating margin on a reported basis decreased 220 basis points to 6.6 percent. Adjusted operating margin decreased 480 basis points, including a 20 basis point positive impact from acquisitions, to 8.0 percent.
• Earnings per share was $0.91 on a reported basis. On an adjusted basis, earnings per share decreased 51 percent (down 54 percent in constant dollars) to $1.31, including a $0.06 contribution from acquisitions.

Balance Sheet Highlights

Inventories were down 18 percent compared with the same period last year. In fiscal 2021, VF returned approximately $760 million of cash to shareholders through dividends. Cash flow provided by operating activities from continuing operations was approximately $1.2 billion in fiscal 2021 and free cash flow from continuing operations was approximately $1.0 billion. VF ended fiscal 2021 with approximately $1.45 billion of cash and short-term investments in addition to more than $2.2 billion remaining under VF's revolving credit facility. As part of the company's liquidity preservation actions during the ongoing COVID-19 outbreak, the company has suspended its share repurchase program and did not repurchase any shares in fiscal 2021. VF has $2.8 billion remaining under its current share repurchase authorization.

Full Year Fiscal 2022 Outlook

VF’s outlook for full year fiscal 2022 is on an adjusted continuing operations basis unless otherwise noted and includes the following:

• Revenue is expected to approximate $11.8 billion, reflecting growth of approximately 28 percent, including an approximate $600 million contribution from the Supreme^® brand. By segment, revenue for Outdoor is expected to increase between 23 percent and 25 percent; revenue for Active is expected to increase between 34 percent and 36 percent; and, revenue for Work is expected to increase between 10 percent and 12 percent.
• International revenue is expected to increase between 25 percent and 27 percent. By geographic region, in the EMEA region, revenue is expected to increase between 29 percent and 31 percent. In the Asia Pacific region, revenue is expected to increase between 18 percent and 20 percent. And, in the Americas (non-U.S.) region, revenue is expected to increase between 28 percent and 30 percent.
• Direct-to-consumer revenue is expected to increase between 38 percent and 40 percent, including Digital revenue growth of between 29 percent and 31 percent.
• Adjusted gross margin is expected to exceed 56.0 percent, which represents an estimated increase of more than 270 basis points.
• Adjusted operating margin is expected to approximate 12.8 percent, which represents an estimated increase of approximately 480 basis points.
• Adjusted earnings per share is expected to approximate $3.05, including an approximate $0.25 contribution from the Supreme^® brand.
• Adjusted cash flow from operations is expected to exceed $1.0 billion.
• Other full year assumptions include an effective tax rate of approximately 15 percent and capital expenditures of approximately $350 million.

Dividend Declared

VF’s Board of Directors declared a quarterly dividend of $0.49 per share, payable on June 21, 2021, to shareholders of record on June 10, 2021. Subject to approval by its Board of Directors, VF intends to continue to pay its regularly scheduled dividend and is not currently contemplating the suspension of its dividend.

Webcast Information

VF will host its fourth quarter fiscal 2021 conference call beginning at 8:30 a.m. Eastern Time today. The conference call will be broadcast live via the Internet, accessible at ir.vfc.com. For those unable to listen to the live broadcast, an archived version will be available at the same location.

Presentation

A presentation on fourth quarter fiscal 2021 results will be available at ir.vfc.com beginning at approximately 7:30 a.m. Eastern Time today and will be archived at the same location.

About VF

Founded in 1899, VF Corporation is one of the world’s largest apparel, footwear and accessories companies connecting people to the lifestyles, activities and experiences they cherish most through a family of iconic outdoor, active and workwear brands including Vans^®, The North Face^®, Timberland^® and Dickies^®. Our purpose is to power movements of sustainable and active lifestyles for the betterment of people and our planet. We connect this purpose with a relentless drive to succeed to create value for all stakeholders and use our company as a force for good. For more information, please visit vfc.com.

Forward-looking Statements

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 and uncertainties. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may” and other words and terms of similar meaning or use of future dates, however, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding VF’s plans, objectives, projections and expectations relating to VF’s operations or financial performance, and assumptions related thereto are forward-looking statements. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. VF undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Potential risks and uncertainties that could cause the actual results of operations or financial condition of VF to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic; the level of consumer demand for apparel, footwear and accessories; disruption to VF’s distribution system; the financial strength of VF’s customers; fluctuations in the price, availability and quality of raw materials and contracted products; disruption and volatility in the global capital and credit markets; VF’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; intense competition from online retailers and other direct-to-consumer business risks; manufacturing and product innovation; increasing pressure on margins; VF’s ability to implement its business strategy; VF’s ability to grow its international, direct-to-consumer and digital businesses; VF's ability to transform its model to be more consumer-minded, retail-centric and hyper-digital; retail industry changes and challenges; VF's ability to create and maintain an agile and efficient operating model and organizational structure; VF’s and its vendors’ ability to maintain the strength and security of information technology systems; the risk that VF’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss; VF’s ability to properly collect, use, manage and secure business, consumer and employee data and comply with privacy and security regulations; foreign currency fluctuations; stability of VF’s and VF's vendors' manufacturing facilities and VF's ability to establish and maintain effective supply chain capabilities; continued use by VF’s suppliers of ethical business practices; VF’s ability to accurately forecast demand for products; continuity of members of VF’s management; VF's ability to recruit, develop or retain qualified employees; VF’s ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment; maintenance by VF’s licensees and distributors of the value of VF’s brands; VF’s ability to execute acquisitions and dispositions and integrate acquisitions, including the recently acquired Supreme^® brand; business resiliency in response to natural or man-made economic, political or environmental disruptions; changes in tax laws and liabilities; legal, regulatory, political and economic risks and changes to laws and regulations; adverse or unexpected weather conditions; VF's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent VF from fulfilling its financial obligations; climate change and increased focus on sustainability issues; and risks associated with the spin-off of our Jeanswear business completed on May 22, 2019, including the risk that VF will not realize all of the expected benefits of the spin-off; the risk that the spin-off will not be tax-free for U.S. federal income tax purposes; and the risk that there will be a loss of synergies from separating the businesses that could negatively impact the balance sheet, profit margins or earnings of VF. More information on potential factors that could affect VF’s financial results is included from time to time in VF’s public reports filed with the SEC, including VF’s Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished with the SEC.

VF CORPORATION Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts)
		Three Months Ended March										Twelve Months Ended March
		2021					2020					2021					2020
Net revenues		$	2,582,672				$	2,102,421				$	9,238,830				$	10,488,556
Costs and operating expenses
Cost of goods sold		1,236,399					986,266					4,370,780					4,690,520
Selling, general and administrative expenses		1,211,250

FAQ

What were VF Corporation's financial results for the fourth quarter of 2021?

VF Corporation reported its fourth quarter results on April 3, 2021, but specific financial metrics were not disclosed in the press release.

How did VF Corporation navigate challenges in fiscal 2021?

The company reported successful navigation through strategic actions to protect employees and continued investments in transformation.

What is the outlook for VF Corporation following these results?

CEO Steve Rendle expressed confidence in the company's ability to drive growth despite the challenges faced in fiscal 2021.

What is the stock symbol for VF Corporation?

The stock symbol for VF Corporation is VFC.