V.F. Corp. (VFC) Cuts Outlook for Q3 and FY23, Introduces Fiscal Year 2027 Long-term Strategic Plan

September 28, 2022 9:16 AM EDT

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(Updated - September 28, 2022 9:18 AM EDT)

VF Corporation (NYSE: VFC), a leading portfolio of active-lifestyle brands including Vans®, The North Face®, Timberland® and Dickies®, today is hosting its 2022 Investor Day in Denver, Colorado. In connection with the event, the company is introducing a FY27 long-term strategic growth plan and financial targets.

“Our new five-year growth plan demonstrates how we will leverage VF’s proven strengths and distinct model to deliver superior returns to shareholders over the long term,” said VF Chairman, President and CEO, Steve Rendle. “The global economic environment has dramatically changed since we held our last Investor Day in late 2019. Despite significant disruptions during the past three years, VF has successfully navigated the challenges to become a more agile and focused enterprise that is advancing a clear vision to be the world’s most dynamic portfolio of iconic, deeply loved, active-lifestyle brands.”

“While economic uncertainties persist, we are actively addressing challenges within our business, and we remain confident in our ability to generate consistent, sustainable growth across our brand portfolio over the long term. We will continue to deepen our engagement with consumers, expand into new categories and markets, leverage our powerful business platforms, and lean on the seasoned leaders and talented teams who are driving our strategies. VF and our brands remain well-positioned to continue our journey of broad-based growth and success.”

Long-Term Strategic Growth Plan

At the event, members of VF’s executive leadership team will present a detailed overview of the Company’s strategies, which outline its commitment to driving consistent, sustainable and profitable growth. The strategic choices include:

  • Find and Amplify Consumer Tailwinds:​ The Company will innovate within its existing brand portfolio while also strategically expanding into adjacencies that complement its current brands and tap into consumer growth spaces.
  • Build Brands on Multiple Growth Horizons:​ The Company will gain market share by building and managing brands at different stages of growth across the portfolio, as well as through M&A and business development to benefit both individual brands and the enterprise.
  • Leverage Platforms for Speed to Scale and Efficiency: The Company will leverage its strategic platforms, which provide a unique set of large-scale capabilities to enable its brands to connect more directly with consumers and operate more efficiently, including consumer data and analytics, direct-to-consumer (DTC) centric supply chain, digitally enabled seamless consumer experience and international platforms.
  • Resource for Portfolio Agility and Performance: The Company will continue to manage its business with organizational agility and dynamically allocate capital and deploy people to drive its highest-priority strategic and growth-focused initiatives​.

FY27 Financial Targets

  • Revenue through FY27 is expected to grow at a five-year CAGR of mid- to high single digit % (in constant dollars) with all brands, regions and channels contributing to growth over that time.
    • The North Face® brand revenue five-year CAGR expected to be up high single to low double-digit % (in constant dollars).
    • Vans® brand revenue five-year CAGR expected to be up mid-single digit % (in constant dollars).
    • Timberland® brand revenue five-year CAGR expected to up mid-single digit % (in constant dollars).
    • Dickies® brand revenue five-year CAGR expected to up high single digit % (in constant dollars).
    • Supreme® brand revenue five-year CAGR expected to up high single to low double-digit % (in constant dollars).
    • Outdoor emerging brands1 revenue five-year CAGR expected to up mid- to high teens % (in constant dollars).
  • Operating margin is expected to reach approximately 15% by FY27, representing a low double-digit 5-year operating profit CAGR (in constant dollars), driven by both gross margin expansion and SG&A leverage.
  • Tax rate is expected to be 17% to 18% in FY27, increasing gradually from approximately 16% in FY23.
  • EPS is expected to grow at a five-year CAGR of high-single to low double-digit % (in constant dollars), (vs FY22 adjusted EPS of $3.18).
  • Free cash flow2 generation is projected to be approximately $5.5 billion (cumulative from FY23 to FY27) with a total of approximately $7 billion in cash expected to be available to return to shareholders through dividends and share repurchases.
  • Organic TSR through FY27 is anticipated to grow at a five-year CAGR of between low double-digit and low teens %.

Q2’FY23 and FY23 Financial Outlook

(Consensus sees Q3 EPS of $1.00 and FY23 EPS of $3.04)

  • Q2’FY23 revenue expected to be up low single digit % (in constant dollars) and adjusted EPS expected to be in the range of $0.70 to $0.75.
  • VF is revising its FY23 outlook due to lower-than-expected Q2’FY23 results, coupled with ongoing uncertainty in the current environment, weaker than anticipated back-to-school performance at Vans® and increasing inventories leading to a more promotional environment in North America in the fall; the revised outlook includes the following:
    • Total VF revenue is expected to be up about +5% to 6% (in constant dollars) versus previous outlook of at least +7%.
      • Vans® brand revenue is expected to be down mid-single digit % (in constant dollars) versus previous outlook of up mid-single digit %.
      • The North Face® brand revenue is expected to deliver at least low double-digit % growth (in constant dollars) versus previous outlook of up low double digit %.
    • Adjusted gross margin is expected to be down approximately 50 basis points versus previous outlook of up slightly.
    • Adjusted operating margin is expected to be approximately 12% versus previous outlook of approximately 13.2%.
    • Adjusted EPS is expected to be in the range of $2.60 to $2.70, versus $3.18 in the prior year and compared to previous outlook of $3.05 to $3.15.
    • Adjusted cash flow from operations of approximately $1.0 billion (versus previous outlook of approximately $1.2 billion) are anticipated; Capital expenditures expected to be approximately $240 million (versus previous outlook of approximately $250 million).
  • VF's FY23 outlook assumes the following:
    • No additional significant COVID-19 related lockdowns in any key commercial or production regions.
    • No significant worsening in global inflation rates and consumer sentiment.

Supreme Impairment

The Company is testing the Supreme Trademark and Goodwill values during the second quarter due to a triggering event that is the result of higher interest rates and foreign currency fluctuations, which are expected to negatively affect the estimated fair values. As a result, and driven by these non-operating factors, the company expects to record a non-cash charge during Fiscal Q2 in the range of $300 million to $450 million.

Webcast Information

The event is being broadcast live via the internet, accessible at beginning at approximately 10:30am until 2:30pm ET today. An archived version will be available at the same location following the event.


All presentations will be available at beginning at approximately 10:15am ET today and will be archived at the same location.

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