VF Reports First Quarter Fiscal 2019 Results; Raises Full Year Fiscal 2019 Outlook

GREENSBORO, N.C. (ots) -

- Revenue from continuing operations increased 23 percent (up 21
percent in constant dollars) to $2.8 billion; revenue from
continuing operations increased 12 percent (up 10 percent in
constant dollars) excluding the revenue contribution from
acquisitions;
- Active segment revenue increased 25 percent (up 22 percent in
constant dollars) including a 35 percent (32 percent in constant
dollars) increase in Vans® brand revenue; Outdoor segment
revenue increased 6 percent (up 3 percent in constant dollars)
including an 8 percent (5 percent in constant dollars) increase
in The North Face® brand revenue and a 6-percentage point
revenue growth contribution from acquisitions;
- International revenue increased 27 percent (up 22 percent in
constant dollars), including a 13-percentage point revenue
growth contribution from acquisitions;
- Direct-to-consumer revenue increased 22 percent (up 20 percent
in constant dollars), including a 6-percentage point revenue
growth contribution from acquisitions; Digital revenue increased
54 percent (up 50 percent in constant dollars), including a
21-percentage point revenue growth contribution from
acquisitions;
- Gross margin from continuing operations increased 70 basis
points to 50.3 percent; on an adjusted basis, gross margin
increased 90 basis points to 50.5 percent; excluding the impact
of acquisitions, on an adjusted basis, gross margin increased
170 basis points to 51.3 percent;
- Earnings per share from continuing operations was $0.40.
Adjusted earnings per share from continuing operations increased
62 percent (up 56 percent in constant dollars) to $0.43,
including a $0.04 contribution from acquisitions;
- Full year fiscal 2019 revenue is now expected to be in the range
of $13.6 billion to $13.7 billion, reflecting an increase of 10
percent to 11 percent; and,
- Full year fiscal 2019 adjusted earnings per share is now
expected to be in the range of $3.52 to $3.57, reflecting an
increase of 12 percent to 14 percent.

VF Corporation (NYSE: VFC) today reported financial results for
its first quarter ended June 30, 2018. All per share amounts are
presented on a diluted basis. This release refers to "reported" and
"constant dollar" amounts, terms that are described under the heading
"Constant Currency - Excluding the Impact of Foreign Currency."
Unless otherwise noted, "reported" and "constant dollar" 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 first quarter results were strong, driven by continued broad
based acceleration across our core brands and platforms," said Steve
Rendle, Chairman, President and Chief Executive Officer. "We are
executing well against our 2021 growth plan and continuing on our
journey to reshape the portfolio and transform VF into a purpose-led,
performance driven, consumercentric organization focused on and
committed to delivering superior returns to shareholders."

Reportable Segment Change

In light of recently completed acquisitions, divestitures, and
organizational realignments, the company has changed its reporting
structure to better support and assess the operations of the
business. The company's new reportable segments are Outdoor, Active,
Work and Jeans. In this release, the company has recast historical
financial information to reflect the new reportable segments. The
recast historical financial information is included in the attached
supplemental financial tables.

Constant Currency - 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 impacts from foreign currency exchange rates. This
release also refers to "constant dollar" amounts, which exclude the
impact of translating foreign currencies into U.S. dollars.
Reconciliations of GAAP measures to constant currency 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 April 30, 2018, the company completed the sale of its Nautica®
brand business. Accordingly, the company has classified the assets
and liabilities of the Nautica® brand business as held-for-sale
through the date of 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 income from discontinued operations
was $0.4 million in the first quarter of fiscal 2019, which includes
the operating results of the Nautica® brand business during the
period through the date of sale.

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 $19 million in the first quarter
of fiscal 2019.

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. Measurement period
adjustments related to the provisional net charge resulted in a
benefit of approximately $3 million in the first quarter of fiscal
2019.

Combined, the above net charges negatively impacted earnings per
share by $0.03 during the first quarter of fiscal 2019. 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.

First Quarter Fiscal 2019 Income Statement Review

- Revenue increased 23 percent (up 21 percent in constant dollars)
to $2.8 billion, including a $249 million revenue contribution
from the Williamson-Dickie, Icebreaker® and Altra® acquisitions.
Excluding acquisitions, revenue increased 12 percent (up 10
percent in constant dollars), driven by broad-based strength
across VF's international and direct-to-consumer platforms and
Active and Work segments.
- Gross margin improved 70 basis points to 50.3 percent, as
benefits from a mix-shift toward higher margin businesses and
continued focus on fundamentals were partially offset by the
impact of acquisitions. On an adjusted basis, gross margin
increased 90 basis points to 50.5 percent. Adjusted gross
margin, excluding acquisitions, increased 170 basis points to
51.3 percent.
- Operating income on a reported basis was $231 million. On an
adjusted basis, operating income increased 57 percent to $250
million, including an $20 million contribution from
acquisitions. Operating margin on a reported basis increased 130
basis points to 8.3 percent. Adjusted operating margin increased
200 basis points to 9.0 percent. Adjusted operating margin,
excluding acquisitions, increased 210 basis points to 9.1
percent.
- Earnings per share was $0.40 on a reported basis. On an adjusted
basis, earnings per share increased 62 percent (56 percent in
constant dollars) to $0.43, including a $0.04 contribution from
acquisitions.

Balance Sheet Highlights

Inventories were up 20 percent compared with the same period last
year. Excluding the impact of acquisitions, inventories increased 2
percent. The company has $4 billion remaining under its current share
repurchase authorization.

Adjusted Full Year Fiscal 2019 Outlook

The following outlook for fiscal year 2019 is on an adjusted basis
and has been updated to include the following:

- Revenue is now expected to be in the range of $13.6 billion to
$13.7 billion, reflecting an increase of 10 percent to 11
percent, and includes more than a $150 million negative impact
from unfavorable foreign currency exchange rates relative to the
prior outlook. This compares to the previous expectation of
revenue between $13.45 billion and $13.55 billion, which
reflected a 9 percent to 10 percent increase. By segment,
revenue for Outdoor is expected to increase 6 percent to 8
percent; revenue for Active is expected to increase 13 percent
to 14 percent; revenue for Work is expected to increase more
than 35 percent; and, revenue for Jeans is expected to be about
flat compared to the prior year.
- International revenue is now expected to increase between 12
percent and 13 percent versus the previous expectation of a 13
percent to 15 percent increase. By geographic region, Europe
revenue is expected to increase 12 percent to 13 percent
(previously 13 percent to 15 percent); Asia Pacific revenue is
expected to increase 14 percent to 15 percent (previously 15
percent to 17 percent); and, Americas (non-U.S.) revenue is
expected to increase 9 percent to 10 percent (previously 10
percent to 12 percent).
- Direct-to-consumer revenue is now expected to increase between
11 percent and 13 percent versus the previous expectation of an
8 percent to 10 percent increase. Digital revenue is now
expected to increase more than 30 percent versus the previous
expectation of a more than 25 percent increase.
- Gross margin is still expected to approximate 51 percent.
- Operating margin is now expected to increase 70 basis points to
about 13.4 percent, versus the previous expectation of about
13.2 percent.
- Earnings per share is now expected to be in the range of $3.52
to $3.57, reflecting an increase of 12 percent to 14 percent,
and includes about a $0.06 negative impact from unfavorable
foreign currency exchange rates relative to the prior outlook.
This compares to the previous expectation of $3.48 to $3.53,
which reflected an increase of between 11 percent and 13
percent.
- Cash flow from operations is now expected to exceed $1.7 billion
(up from $1.6 billion previously).
- Other full year assumptions include an effective tax rate of
approximately 16.5 percent (down from 17 percent previously) 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 September 20, 2018 to shareholders of record on
September 10, 2018.

Webcast Information

VF will host its first quarter fiscal 2019 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.

Presentation

A presentation on first quarter fiscal 2019 results will be
available at ir.vfc.com beginning at approximately 7:30 a.m. Eastern
Time today and will be archived 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.

Contact:
Fabrizia Greppi
Senior Director, Corporate Communications, EMEA
VF International SAGL
T: +41 (0)91 649.2071
M: + 41 (0)79 9111943
fabrizia_greppi@vfc.com
www.vfc.com

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