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
first quarter of Fiscal 2022. For presentation purposes herein, all references
to periods ended June 2021 and June 2020 relate to the fiscal periods ended on
July 3, 2021 and June 27, 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 months ended June 2021 foreign currency amounts below
reflect the changes in foreign exchange rates from the three months ended June
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 months ended June 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.
In North America, over 95% of VF-operated retail stores were open at the
beginning of the first quarter of Fiscal 2022, 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. 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 has 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 isolated product
delays. The resurgence of COVID-19 lockdowns in key sourcing countries has
resulted in additional manufacturing capacity constraints during the first
quarter. Additionally, port delays, equipment availability and other logistics
challenges have contributed to product delays. VF is working with its suppliers
to minimize disruption and is employing expedited
25 VF Corporation Q1 FY22 Form 10-Q
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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 June 2021, VF had approximately $1.9 billion of cash and equivalents and
short-term investments. Additionally, VF had approximately $2.2 billion
available for borrowing against its Global Credit Facility, subject to certain
restrictions including a $750.0 million minimum liquidity requirement.
Other actions VF has taken to support its business in response to the COVID-19
pandemic include the Company's decision to temporarily pause its share
repurchase program. The Company currently has $2.8 billion remaining under its
current share repurchase authorization. The Company paid a cash dividend of
$0.49 per share during the three months ended June 2021, and has declared a cash
dividend of $0.49 per share that is payable in the second quarter of Fiscal
2022. Subject to approval by its Board of Directors, VF intends to continue to
pay its regularly scheduled dividend and is not contemplating the suspension of
its dividend at this time.
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 FIRST QUARTER OF FISCAL 2022

•Revenues were up 104% to $2.2 billion compared to the three months ended June 2020, primarily due to recovery from the significant negative impact of COVID-19 on the the prior year period, and included an 8% favorable impact from foreign currency and a 14% contribution from the Supreme acquisition. •Active segment revenues increased 128% to $1.3 billion compared to the three months ended June 2020, including a $145.7 million contribution from the Supreme acquisition and an 8% favorable impact from foreign currency. •Outdoor segment revenues increased 81% to $617.8 million compared to the three months ended June 2020, including a 9% favorable impact from foreign currency. •Work segment revenues increased 69% to $274.7 million compared to the three months ended June 2020, including a 3% favorable impact from foreign currency. •Direct-to-consumer revenues were up 97% over the 2020 period, including a 7% favorable impact from foreign currency and a 27% contribution from the Supreme acquisition. E-commerce revenues increased 25% in the current period, including a 5% favorable impact from foreign currency and a 29% contribution from the Supreme acquisition. Excluding the Supreme acquisition, the decrease in e-commerce revenues was primarily due to the shift in consumer spending during significant temporary store closures in the prior year period due to COVID-19. Direct-to-consumer revenues accounted for 49% of VF's net revenues for the three months ended June 2021. •International revenues increased 84% compared to the three months ended June 2020, including a 16% favorable impact from foreign currency. Greater China (which includes Mainland China, Hong Kong and Taiwan) revenues increased 19%, including a 10% favorable impact from foreign currency. International revenues represented 45% of VF's net revenues for the three months ended June 2021. •Gross margin increased 360 basis points to 56.5% compared to the three months ended June 2020, primarily driven by reduced promotional activity. •Earnings (loss) per share was $0.39 compared to $(0.71) in the 2020 period. The increase was primarily driven by recovery from the significant negative impact of COVID-19 on the prior year period.

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