VF Reports Results for Transition Period Ended March 31, 2018

• Revenue from continuing operations increased 22 percent (up 17 percent currency neutral) to $3.0 billion; revenue from continuing operations increased 12 percent (up 8 percent currency neutral) excluding the revenue contribution from the Williamson-Dickie acquisition;
• Outdoor & Action Sports revenue increased 19 percent (up 13 percent currency neutral); Vans^® brand revenue increased 45 percent (up 39 percent currency neutral) and The North Face^® brand revenue increased 11 percent (up 7 percent currency neutral);
• International revenue increased 27 percent (up 16 percent currency neutral), including an 8-percentage point revenue growth contribution from the Williamson-Dickie acquisition;
• Direct-to-consumer revenue increased 34 percent (up 29 percent currency neutral), including a 5-percentage point revenue growth contribution from the Williamson-Dickie acquisition; Digital revenue increased 61 percent (up 54 percent currency neutral), including a 13-percentage point revenue growth contribution from the Williamson-Dickie acquisition;
• Gross margin from continuing operations increased 20 basis points to 50.5 percent; on an adjusted basis, gross margin increased 50 basis points (up 20 basis points currency neutral) to 50.8 percent; excluding the impact of the Williamson-Dickie acquisition, on an adjusted basis, gross margin increased 160 basis points (up 140 basis points currency neutral) to 51.9 percent;
• Earnings per share from continuing operations was $0.65. Adjusted earnings per share from continuing operations increased 30 percent (up 22 percent currency neutral) to $0.67, including a $0.03 contribution from the Williamson-Dickie acquisition;
• Full year fiscal 2019 revenue is expected to be in the range of $13.45 billion to $13.55 billion, reflecting growth of approximately 9 percent to 10 percent; and,
• Full year fiscal 2019 adjusted earnings per share is expected to be in the range of $3.48 to $3.53, reflecting growth between 11 percent and 13 percent.

GREENSBORO, N.C.--(BUSINESS WIRE)-- VF Corporation (NYSE: VFC) today reported financial results for its three-month transition period ended March 31, 2018. As previously disclosed, VF's Board of Directors authorized a change in the company's fiscal year end to the Saturday closest to March 31 from the Saturday closest to December 31. As a result, throughout this press release, we refer to the three-month period ended March 31, 2018 as the “transition period.” All per share amounts are presented on a diluted basis. This release refers to “reported” and “currency neutral” amounts, terms that are described under the heading “Currency Neutral - Excluding the Impact of Foreign Currency.” Unless otherwise noted, “reported” and “currency neutral” amounts are the same. This release also refers to “continuing” and “discontinued” operations amounts, which are concepts described under the heading “Discontinued Operations - Nautica^® Brand Business and Licensing Business.” Unless otherwise noted, results presented are based on continuing operations. This release also refers to “adjusted” amounts, terms that are described under the heading “Adjusted Amounts - Excluding Williamson-Dickie, Icebreaker^® and Altra^® Transaction and Deal Related Expenses and the Provisional Impact of U.S. Tax Legislation.” Unless otherwise noted, “reported” and “adjusted” amounts are the same.

“VF's transition period results were strong as the broad-based growth acceleration that began in the second half of 2017 continued,” said Steve Rendle, Chairman, President and Chief Executive Officer. “Our core growth engines are driving strong global momentum as we begin to enter the acceleration phase of our 2021 strategy. VF is in the midst of a transformation to become a purpose-led, consumer-centric organization. We are evolving and adapting to a rapidly changing marketplace and remain committed to delivering top quartile returns for our shareholders.”

Currency Neutral - 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 “currency neutral” amounts, which exclude both the impact of translating foreign currencies into U.S. dollars and the impact of currency rate changes on foreign currency denominated transactions. Reconciliations of GAAP measures to currency neutral 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 - Nautica^® Brand Business and Licensing Business

On March 19, 2018, the company announced it had reached an agreement to sell its Nautica^® brand business to Authentic Brands Group (ABG), LLC. and the sale was completed on April 30, 2018. Accordingly, the company has classified the assets and liabilities of the Nautica^® brand business as held-for-sale and has included the operating results of this business in discontinued operations for all periods presented.

On April 28, 2017, the company completed the sale of its Licensed Sports Group (LSG) business, including the Majestic^® brand. In conjunction with the LSG divestiture, VF executed its plan to entirely exit the licensing business and completed the sale of the assets of the JanSport^® brand collegiate business in the fourth quarter of 2017. Accordingly, the company has removed the assets and liabilities of the licensing business as of the dates noted above and included the operating results of these businesses in discontinued operations for all periods presented.

The company’s after-tax net loss from discontinued operations was approximately $8 million in the transition period, which includes an increase in the estimated loss on the sale of the Nautica^® brand business recorded in the fourth quarter of 2017, and the operating results of the Nautica^® brand business during the transition period.

Adjusted Amounts - Excluding Williamson-Dickie, Icebreaker^® and Altra^® Transaction and Deal Related Expenses and the Provisional Impact of U.S. Tax Legislation

This release refers to adjusted amounts that exclude transaction and deal related expenses associated with the acquisitions of Williamson-Dickie, Icebreaker^® and Altra^®. Total transaction and deal related expenses were approximately $14 million in the transition period.

Adjusted amounts in this release also exclude the provisional amounts recorded due to recent U.S. tax legislation. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act ("Tax Act"). The Tax Act reduces the federal tax rate on U.S. earnings to 21 percent and moves from a global taxation regime to a modified territorial regime. As part of the legislation, U.S. companies are required to pay tax on historical earnings generated offshore that have not been repatriated to the U.S. Additionally, revaluation of deferred tax asset and liability positions at the lower federal base rate of 21 percent is also required. The transitional impact of the Tax Act resulted in a provisional net charge of approximately $465 million for the fourth quarter of 2017, which was further adjusted by a $5 million benefit in the transition period.

Combined, the above net charges negatively impacted earnings per share by $0.02 during the transition period. All adjusted amounts referenced herein exclude the effects of these amounts.

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.

Transition Period Income Statement Review

• Revenue increased 22 percent (up 17 percent currency neutral) to $3.0 billion, including a $233 million revenue contribution from the Williamson-Dickie acquisition. Excluding the Williamson-Dickie acquisition, revenue increased 12 percent (up 8 percent currency neutral), driven by broad-based strength across VF’s international and direct-to-consumer platforms and Outdoor & Action Sports coalition.
• Gross margin improved 20 basis points to 50.5 percent, as benefits from a mix-shift toward higher margin businesses and changes in foreign currency were partially offset by the impact of the Williamson-Dickie acquisition. On an adjusted basis, gross margin increased 50 basis points to 50.8 percent. Excluding the impact of the Williamson-Dickie acquisition, adjusted gross margin increased 160 basis points to 51.9 percent. Changes in foreign currency positively impacted gross margin by 20 basis points on a reported basis.
• Operating income on a reported basis was $311 million. On an adjusted basis, operating income increased 14 percent to $330 million, including a $16 million contribution from the Williamson-Dickie acquisition. Operating margin on a reported basis decreased 140 basis points to 10.2 percent. Adjusted operating margin declined 80 basis points to 10.8 percent. Adjusted operating margin, excluding the Williamson-Dickie acquisition, declined 40 basis points to 11.2 percent. Changes in foreign currency positively impacted operating margin by 20 basis points on a reported basis.
• Earnings per share was $0.65 on a reported basis. On an adjusted basis, earnings per share increased 30 percent (22 percent currency neutral) to $0.67, including a $0.03 contribution from the Williamson-Dickie acquisition.

Balance Sheet and Cash Flow Highlights

Inventories were up 17 percent compared with the same period in 2017. Excluding the impact of the Williamson-Dickie acquisition, inventories increased less than 2 percent. During the transition period, VF repurchased approximately 3 million shares for $250 million. The company has $4 billion remaining under its current share repurchase authorization.

Full Year Fiscal 2019 Outlook

VF’s full year fiscal 2019 outlook includes the following:

• Revenue is expected to be in the range of $13.45 billion to $13.55 billion, reflecting growth of approximately 9 percent to 10 percent. By coalition, revenue for Outdoor & Action Sports is expected to increase 8 percent to 10 percent; revenue for Jeanswear is expected to be about flat compared to prior year; and Imagewear revenue is expected to increase more than 35 percent.
• International revenue is expected to increase 13 percent to 15 percent. By geographic region, European revenue is expected to increase 13 percent to 15 percent. In the Asia Pacific region, revenue is expected to increase 15 percent to 17 percent. And, in the Americas (non-U.S.) region, revenue is expected to increase 10 percent to 12 percent.
• Direct-to-consumer revenue is expected to increase 8 percent to 10 percent, including more than 25 percent growth in digital.
• Gross margin is expected to be about 51 percent.
• Operating margin is expected to increase 50 basis points to about 13.2 percent.
• Adjusted earnings per share is expected to be in the range of $3.48 to $3.53, reflecting growth between 11 percent and 13 percent.
• Cash flow from operations is expected to exceed $1.6 billion.
• Other full year assumptions include an effective tax rate of approximately 17 percent and capital expenditures of approximately $275 million.

Dividend Declared

VF’s Board of Directors declared a quarterly dividend of $0.46 per share, payable on June 18, 2018 to shareholders of record on June 8, 2018.

Webcast Information

VF will host its transition period 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.

About VF

VF Corporation (NYSE: VFC) outfits consumers around the world with its diverse portfolio of iconic lifestyle brands, including Vans^®, The North Face^®, Timberland^®, Wrangler^® and Lee^®. Founded in 1899, VF is one of the world’s largest apparel, footwear and accessories companies with socially and environmentally responsible operations spanning numerous geographies, product categories and distribution channels. VF is committed to delivering innovative products to consumers and creating long-term value for its customers and shareholders. For more information, visit www.vfc.com.

Forward-looking Statements

Certain statements included in this release and attachments 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. 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. 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 in this release include, but are not limited to: foreign currency fluctuations; the level of consumer demand for apparel, footwear and accessories; disruption to VF’s distribution system; VF's reliance on a small number of large customers; 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, manufacturing and product innovation; increasing pressure on margins; VF's ability to implement its business strategy; VF's ability to grow its international and direct-to-consumer businesses; VF’s and its customers’ and vendors’ ability to maintain the strength and security of information technology systems; stability of VF's manufacturing facilities and foreign suppliers; 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 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 and integrate acquisitions; changes in tax laws and liabilities; legal, regulatory, political and economic risks; and adverse or unexpected weather conditions. 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 Securities and Exchange Commission, including VF's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

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VF Corporation
Joe Alkire, 336-424-7711
Vice President, Corporate Development, Investor Relations and
Financial Planning & Analysis
or
Craig Hodges, 336-424-5636
Senior Director, Corporate Communications

Source: VF Corporation

Released May 4, 2018