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VF Reports First Quarter Fiscal 2022 Results & Raises Full Year Fiscal 2022 Outlook

Revenue at VF Corporation from continuing operations increased 104% to $2.2 billion; excluding acquisitions, revenue increased 90% in the first quarter of fiscal 2022.

Q1 2022 Financal summary

Active segment revenue increased 128% including a 110% increase in Vans brand revenue and a 26% revenue growth contribution from acquisitions; Outdoor segment revenue increased 81% including a 93% increase in The North Face brand revenue; Work segment revenue increased 69% including a 61% increase in Dickies brand revenue.

Supplemental Financial Information (Q1 2022)

International revenue increased 84% including a 10% revenue growth contribution from acquisitions; Europe revenue increased 126%; Greater China revenue increased 19%, including a 23% increase in Mainland China.

Q1 2022 Geographical & Channel Revenue nfo

Direct-to-Consumer revenue increased 97% including a 27% revenue growth contribution from acquisitions; Digital revenue increased 25% versus the prior year including a 29% revenue growth contribution from acquisitions; excluding acquisitions, Digital revenue increased 72% versus the first quarter of fiscal 2020.

Operating income from continuing operations on a reported basis was $203 million; on an adjusted basis, operating income from continuing operations increased 164% to $148 million including a $32 million contribution from acquisitions.

Full year fiscal 2022 revenue is now expected to be at least $12.0 billion, reflecting growth of at least 30%, including an approximate $600 million contribution from the Supreme brand.

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. 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 freight as needed. VF’s distribution centres are operational in accordance with local government guidelines while maintaining enhanced health and safety protocols.

In North America, less than 5 percent of stores were closed at the beginning of the first quarter. All stores have since reopened and currently all stores are open.

In the EMEA region, approximately 60 percent of stores were closed at the beginning of the first quarter. All stores have since reopened and currently all stores are open.

Nearly all of VF’s owned retail stores in the APAC region, including Mainland China, were open at the beginning of the first quarter. Additional stores have since re-closed and currently 5% of stores are closed.

First Quarter Fiscal 2022 Income Statement Review
Revenue increased 104 percent (up 96 percent in constant dollars) to $2.2 billion. Excluding the impact of acquisitions, revenue increased 90 percent (up 83 percent in constant dollars) driven by VF’s largest brands and the EMEA and North American regions, which experienced a significant negative impact from COVID-19 in the prior year period.

Gross margin increased 360 basis points to 56.5 percent, primarily driven by reduced promotional activity. On an adjusted basis, gross margin increased 260 basis points, including a 30 basis point positive impact from acquisitions, to 56.7 percent.

Operating income on a reported basis was $203 million. On an adjusted basis, operating income increased 164 percent (160 percent in constant dollars) to $148 million, including a $32 million contribution from acquisitions.

Operating margin on a reported basis was 9.2 percent. Adjusted operating margin increased 2820 basis points, including a 110 basis point positive impact from acquisitions, to 6.8 percent.

Balance Sheet Highlights
Inventories were down 13 percent compared with the same period last year. During the quarter, VF returned approximately $192 million of cash to shareholders through dividends. As part of the company’s liquidity preservation actions during the ongoing COVID-19 outbreak, the company has suspended its share repurchase program. VF has $2.8 billion remaining under its current share repurchase authorisation.

Full Year Fiscal 2022 Outlook
VF’s full year outlook assumes no material deterioration to the company’s current business operations as a result of COVID-19, governmental actions and regulations. VF’s full year fiscal 2022 outlook has been updated and includes the following:

Revenue is now expected to be at least $12.0 billion, reflecting growth of at least 30 percent, including an approximate $600 million contribution from the Supreme^®brand. This compares to the previous expectation of approximately $11.8 billion, reflecting growth of approximately 28 percent. By segment, revenue for Outdoor is now expected to increase between 24 percent and 26 percent versus the previous expectation of a 23 to 25 percent increase; revenue for Active is now expected to increase between 37 percent and 39 percent versus the previous expectation of a 34 to 36 percent increase; revenue for Work is now expected to increase between 16 and 18 percent versus the previous expectation of a 10 to 12 percent increase.

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 now expected to increase between 39 percent and 41 percent versus the previous expectation of 38 percent and 40 percent, including Digital revenue growth of between 29 percent and 31 percent.

Adjusted operating margin is now expected to increase more than 500 basis points to more than 13.0 percent, versus the previous expectation of approximately 12.8 percent.

Adjusted cash flow from operations is expected to exceed $1.0 billion.

Brand Performance: Vans

Q1 2022 Global Performance