VF Corporation (together with its subsidiaries, collectively known as "VF" or
the "Company") uses a 52/53 week fiscal year ending on the Saturday closest to
March 31 of each year. The Company's current fiscal year runs from April 4, 2021
through April 2, 2022 ("Fiscal 2022"). Accordingly, this Form 10-Q presents our
third quarter of Fiscal 2022. For presentation purposes herein, all references
to periods ended December 2021 and December 2020 relate to the fiscal periods
ended on January 1, 2022 and December 26, 2020, respectively. References to
March 2021 relate to information as of April 3, 2021.
All per share amounts are presented on a diluted basis and all percentages shown
in the tables below and the following discussion have been calculated using
unrounded numbers.
References to the three and nine months ended December 2021 foreign currency
amounts below reflect the changes in foreign exchange rates from the three and
nine months ended December 2020 and their impact on translating foreign
currencies into U.S. dollars. VF's most significant foreign currency exposure
relates to business conducted in euro-based countries. Additionally, VF conducts
business in other developed and emerging markets around the world with exposure
to foreign currencies other than the euro.
On December 28, 2020, VF acquired 100% of the outstanding shares of Supreme
Holdings, Inc. ("Supreme"). The business results for Supreme have been included
in the Active segment.
All references to contributions from acquisition below represent the operating
results of Supreme for the three and nine months ended December 2021. Refer to
Note 4 to VF's consolidated financial statements for additional information on
the acquisition.
On June 28, 2021, VF completed the sale of its Occupational Workwear business.
The Occupational Workwear business was 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 included
the license of certain Dickies® occupational workwear products that have
historically been sold through the business-to-business channel. The results of
the Occupational Workwear business and the related cash flows have been reported
as discontinued operations in the Consolidated Statements of Operations and
Consolidated Statements of Cash Flows, respectively, through the date of sale.
The related held-for-sale assets and liabilities have been reported as assets
and liabilities of discontinued operations in the Consolidated Balance Sheets,
through the date of sale. These changes have been applied to all periods
presented.
Refer to Note 5 to VF's consolidated financial statements for additional
information on discontinued operations.
Unless otherwise noted, amounts, percentages and discussion for all periods
included below reflect the results of operations and financial condition from
VF's continuing operations.
RECENT DEVELOPMENTS


Impact of COVID-19


As the global impact of the novel coronavirus ("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
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. VF has also implemented
measures that are designed to ensure the health, safety and well-being of
associates employed in its distribution, fulfillment and manufacturing centers
around the world.
At the beginning of the first quarter of Fiscal 2022, over 95% of VF-operated
retail stores were open in North America, with all VF-owned retail stores
reopened by the end of the first quarter. In the Europe region, approximately
60% of VF-operated retail stores were closed at the beginning of the first
quarter of Fiscal 2022, with all stores reopened by the end of the first
quarter. In the Asia-Pacific region, nearly all VF-operated retail stores were
open at the beginning of the first quarter of Fiscal 2022; however,
approximately 5% reclosed by the end of the first quarter. In comparison, at the
beginning of the first quarter of Fiscal 2021, all VF-operated retail stores in
North America and in the Europe region were closed. By the end of the first
quarter of Fiscal 2021, approximately 75% and 90% of VF-operated retail
stores were open in North America and the Europe region, respectively. In the
Asia-Pacific region, approximately 5% of VF-owned retail stores were closed at
the beginning of the first quarter of Fiscal 2021, with all opened by the end of
the first quarter of Fiscal 2021.
At the beginning of the second quarter of Fiscal 2022, all VF-operated retail
stores in North America and in the Europe region were open and remained open
during the quarter. In the Asia-Pacific region, approximately 5% of VF-operated
retail stores were closed at the beginning of the second quarter of Fiscal 2022
with nearly all stores open at the end of the second quarter. In comparison, at
the beginning of the second quarter of Fiscal 2021, approximately 75% of the
VF-operated retail stores in North America were open, and over 95% were open at
the end of the second quarter of Fiscal 2021. During the second quarter of
Fiscal 2021, nearly all of the VF-operated retail stores in the Europe and
Asia-Pacific regions were open.
At the beginning of the third quarter of Fiscal 2022, all VF-operated retail
stores in North America were open and remained open during the quarter. In the
Europe region, all VF-operated stores were open at the beginning of the third
quarter of Fiscal 2022; however, approximately 6% of stores reclosed by the end
of the third quarter. In the Asia-Pacific region, nearly all VF-operated stores
were open at the beginning of the third quarter of Fiscal 2022, and all stores
were open by the end of the third quarter. In comparison, at the beginning of
the third quarter of
29 VF Corporation Q3 FY22 Form 10-Q
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Fiscal 2021, approximately 95% of the VF-operated retail stores in North America
were open, however due to stores that reclosed, approximately 85% of stores were
open at the end of the third quarter of Fiscal 2021. In the Europe region,
nearly all VF-operated retail stores were open at the beginning of the third
quarter of Fiscal 2021, however due to stores that reclosed, approximately 50%
of stores were open at the end of the third quarter of Fiscal 2021. During the
third quarter of Fiscal 2021, nearly all of the VF-operated retail stores in the
Asia-Pacific regions were 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, retail store reclosures may occur.
Consistent with VF's long-term strategy, the Company's digital platform remains
a high priority through which its brands stay connected with consumer
communities while providing experiential content. Prior to the COVID-19
pandemic, consumer spending had started shifting to brand e-commerce sites and
other digital platforms, which accelerated due to changes in the retail
landscape resulting from the COVID-19 pandemic.
COVID-19 has also impacted some of VF's suppliers, including third-party
manufacturers, logistics providers and other vendors. At this time, the majority
of VF's supply chain is operational. Suppliers are complying with local health
advisories and governmental restrictions which has resulted in product delays.
The resurgence of COVID-19 lockdowns in key sourcing countries has resulted in
additional manufacturing capacity constraints during Fiscal 2022; however, the
situation has improved over time. Additionally, Fiscal 2022 has been impacted by
continued port congestion, lengthened transit times, equipment availability and
other logistics challenges. These issues have caused significant product delays,
which has resulted in challenges to timely meet customer demand in Fiscal 2022.
VF is working with its suppliers to minimize disruption and is employing
expedited freight as needed. VF's distribution centers are operational in
accordance with local government guidelines while maintaining enhanced health
and safety protocols.
The COVID-19 pandemic is ongoing and dynamic in nature, and has driven global
uncertainty and disruption. While we are not able to determine the ultimate
length and severity of the COVID-19 pandemic, we expect ongoing disruption to
our business.
Enterprise Protection Strategy


VF has taken a number of actions to advance its Enterprise Protection Strategy
in response to the COVID-19 pandemic.
At December 2021, VF had approximately $1.3 billion of cash and equivalents.
Additionally, VF had approximately $2.2 billion available for borrowing against
its Global Credit Facility, subject to certain restrictions.
Actions VF has taken to support its business in response to the COVID-19
pandemic included the Company's decision to temporarily pause its share
repurchase program on April 7, 2020. The Company decided to reinstate the
program during the third quarter of Fiscal 2022 and completed $300.0 million of
repurchases during the period, which leaves VF with $2.5 billion remaining under
its share repurchase authorization. The Company paid cash dividends of $0.50 per
share and $1.48 per share during the three and nine months ended December 2021,
respectively, and has declared a cash dividend of $0.50 per share that is
payable in the fourth quarter of Fiscal 2022. Subject to approval by its Board
of Directors, VF intends to continue to pay its regularly scheduled dividend.
The Company has also commenced a multi-year initiative designed to enable our
ability to accelerate and advance VF's business model transformation. One of the
key objectives of this initiative is to deliver global cost savings over a
three-year period that will be used to support the transformation agenda and
highest-priority growth drivers. As VF continues to actively monitor the
situation and advance our business model transformation, we may take further
actions that affect our operations.
We believe the Company has sufficient liquidity and flexibility to operate and
continue to execute our strategy during the disruptions caused by the COVID-19
pandemic and related governmental actions and regulations and health authority
advisories, and meet its obligations as they become due. However, due to the
uncertainty of the duration and severity of the COVID-19 pandemic, governmental
actions in response to the pandemic, and the impact on us and our consumers,
customers and suppliers, there is no certainty that the measures we take will be
sufficient to mitigate the risks posed by COVID-19. See Part I, "Item 1A. Risk
Factors" in the Fiscal 2021 Form 10-K for additional discussion.
HIGHLIGHTS OF THE THIRD QUARTER OF FISCAL 2022



•Revenues were up 22% to $3.6 billion compared to the three months ended
December 2020, including the recovery from the negative impact of COVID-19 on
the prior year period and a 7% contribution from the Supreme acquisition.
•Outdoor segment revenues increased 23% to $1.9 billion compared to the three
months ended December 2020.
•Active segment revenues increased 25% to $1.4 billion compared to the three
months ended December 2020, including a $193.2 million (17%) contribution from
the
Supreme acquisition and a 1% unfavorable impact from foreign currency.
•Work segment revenues increased 6% to $285.1 million compared to the three
months ended December 2020, including a 1% favorable impact from foreign
currency.
•Direct-to-consumer revenues were up 30% over the 2020 period, including a 13%
contribution from the Supreme acquisition. E-commerce revenues increased 21% in
the current period, including an 18% contribution from the Supreme acquisition.
Direct-to-consumer revenues
                                             VF Corporation Q3 FY22 Form 10-Q 30

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accounted for 55% of VF's net revenues for the three months ended December 2021.
•International revenues increased 19% compared to the three months ended
December 2020, including a 1% unfavorable impact from foreign currency. Greater
China (which includes Mainland China, Hong Kong and Taiwan) revenues decreased
6%, including a 3% favorable impact from foreign currency. International
revenues represented 46% of VF's net revenues for the three months ended
December 2021.
•Gross margin increased 140 basis points to 56.1% compared to the three months
ended December 2020, primarily driven by reduced promotional activity, which was
partially offset by increased expedited freight costs.
•Earnings per share was $1.32 compared to $0.83 in the 2020 period. The increase
was primarily driven by recovery from the negative impact of COVID-19 on the
prior year period and contribution from the Supreme acquisition.

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