乱伦巴士

乱伦巴士 Corporation Reports Third Quarter Fiscal 2024 Results and Announces Strategic Portfolio Review

DENVER--(BUSINESS WIRE)-- 乱伦巴士 Corporation (NYSE: 乱伦巴士C) today reported financial results for its third quarter (Q3'FY24) ended December 30, 2023, announcing a quarterly per share dividend of $0.09 and reiterating FY24 free cash flow guidance.

Bracken Darrell, President and CEO, said: "Our third quarter top-line performance was disappointing. However, we are confident the actions we are implementing as part of Reinvent will enable 乱伦巴士 to stabilize and then grow revenue and improve operational performance across brands and regions. We have already begun to see the impact of our efforts to right-size the company鈥檚 cost structure and improve its inventory position, resulting in stronger than expected cash flow and expanded gross margin in the quarter. This quarter marked the beginning of the next phase of our transformation plan: resetting the marketplace for Vans, reviewing our brand portfolio and continuing to build the organization of the future. As we approach the end of this fiscal year, my confidence in 乱伦巴士鈥檚 future is rising."

Q3'FY24 Financial and Operating Highlights

• Revenue down 16% (down 17% in constant dollars) to $3.0 billion
  • The quarter was negatively impacted by a shift in timing of wholesale deliveries, which was most pronounced for The North Face^庐 and the EMEA region
• Loss per share $(0.11) versus Q3'FY23 earnings per share $1.31; adjusted earnings per share $0.57 versus Q3'FY23 adjusted earnings per share $1.12
• The North Face^庐 down 10% (down 11% in constant dollars); in the first nine months of FY'24 revenue is up 4% (up 3% in constant dollars)
  • APAC region up 26% (up 28% in constant dollars), including Greater China up 31% (up 32% in constant dollars)
• Vans^庐 down 28% (down 29% in constant dollars), inclusive of deliberate actions taken to right-size inventories in the Wholesale channel
• Americas region down 24% (down 25% in constant dollars)
• International business down 5% (down 8% in constant dollars)
  • APAC region up 2% (up 3% in constant dollars), including Greater China up 5% (up 7% in constant dollars)
  • EMEA region revenue down 7% (down 12% in constant dollars)
• Inventories at the end of Q3'FY24 down 17% relative to last year
• Net debt at the end of Q3'FY24 reduced by approximately $640 million relative to last year

Reinvent

During the quarter, the company continued to execute the Reinvent transformation program, which aims to enhance focus on brand-building and to improve operating performance. The initial four priorities of Reinvent are to improve North America results, deliver the Vans turnaround, reduce costs and strengthen the balance sheet. The company will continue to pursue opportunities to simplify and streamline its processes and invest in the business to drive brand heat and accelerate a return to growth.

Strategic Portfolio Review

Consistent with the goals of Reinvent, 乱伦巴士 has initiated an in-depth strategic review of the brand assets within the portfolio, in alignment with the Board of Directors, to ensure the company owns the brands that it believes create the greatest long-term value.

FY24 Outlook

The company reaffirmed its free cash flow guidance for FY24 of approximately $600 million.

Q3'FY24 Income Statement Review

• Revenue $3.0 billion, down 16% (down 17% in constant dollars)
• Gross margin 55.1%, up 20 basis points; adjusted gross margin 55.3%, up 40 basis points
  • Adjusted gross margin tailwinds of approximately 175 basis points from favorable mix, partially offset by headwinds of approximately 135 basis points of unfavorable rate impact, largely driven by transactional foreign exchange rates
• Operating margin (1.1)%, down 1,570 basis points; adjusted operating margin 9.3%, down 560 basis points
  • Adjusted operating margin contraction driven by 610 basis points of deleverage, partially offset by 40 basis points of favorable constant currency gross margin impact and 10 basis points of translational foreign currency exchange rate benefits
• Loss per share $(0.11) versus Q3'FY23 earnings per share $1.31; adjusted earnings per share $0.57 versus Q3'FY23 adjusted earnings per share $1.12

Balance Sheet Highlights

• Inventories decreased by $333 million during Q3鈥橣Y24, down 17% relative to last year
• Net debt at the end of Q3'FY24 reduced by approximately $640 million relative to last year

Shareholder Returns

• Return of $35 million to shareholders through cash dividends in Q3'FY24
• 乱伦巴士鈥檚 Board of Directors declared a quarterly dividend of $0.09 per share. This dividend will be payable on March 20, 2024, to shareholders of record at the close of business on March 11, 2024. Subject to approval by its Board of Directors, 乱伦巴士 intends to continue to pay quarterly dividends.

Webcast Information

乱伦巴士 will host its third quarter fiscal 2024 conference call beginning at 4:30 p.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 乱伦巴士

Founded in 1899, 乱伦巴士 Corporation is one of the world鈥檚 largest apparel, footwear and accessories companies connecting people to the lifestyles, activities and experiences they cherish most through a family of iconic outdoor, active and workwear brands including Vans^庐, The North Face^庐, Timberland^庐 and Dickies^庐. Our purpose is to power movements of sustainable and active lifestyles for the betterment of people and our planet. We connect this purpose with a relentless drive to succeed to create value for all stakeholders and use our company as a force for good. For more information, please visit vfc.com.

Financial Presentation Disclosure

All per share amounts are presented on a diluted basis. This release refers to 鈥渞eported鈥� and 鈥渃onstant dollar鈥� amounts, terms that are described under the heading below 鈥淐onstant Currency - Excluding the Impact of Foreign Currency.鈥� Unless otherwise noted, 鈥渞eported鈥� and 鈥渃onstant dollar鈥� amounts are the same. This release also refers to 鈥渁djusted鈥� amounts, a term that is described under the heading below 鈥淎djusted Amounts - Excluding Reinvent, Noncash Impairment Charges, Tax and Legal Items, and Transaction and Deal Related Activities.鈥� Unless otherwise noted, 鈥渞eported鈥� and 鈥渁djusted鈥� amounts are the same.

Constant Currency - Excluding the Impact of Foreign Currency

This release refers to 鈥渞eported鈥� amounts in accordance with U.S. generally accepted accounting principles (鈥淕AAP鈥�), which include translation and transactional impacts from foreign currency exchange rates. This release also refers to 鈥渃onstant dollar鈥� 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鈥檚 view of why this information is useful to investors.

Adjusted Amounts - Excluding Reinvent, Noncash Impairment Charges, Tax and Legal Items, and Transaction and Deal Related Activities

The adjusted amounts in this release exclude costs related to Reinvent, 乱伦巴士's transformation program. Costs related to Reinvent were approximately $51 million in the third quarter and first nine months of fiscal 2024.

The adjusted amounts in this release exclude noncash goodwill impairment charges related to the Timberland^庐 and Dickies^庐 reporting units of approximately $257 million in the third quarter and first nine months of fiscal 2024.

The adjusted amounts in this release exclude the impact to tax expense resulting from the decision by the U.S. Court of Appeals for the First Circuit on September 8, 2023 that upheld the U.S. Tax Court鈥檚 decision in favor of the Internal Revenue Service regarding the timing of income inclusion associated with 乱伦巴士鈥檚 acquisition of The Timberland Company in September 2011. The adjusted amounts also exclude the impact to tax expense resulting from the decision by the General Court on September 20, 2023 that confirmed the decision of the European Union that Belgium鈥檚 excess profit tax regime amounted to illegal State aid. The net impact to tax expense was an increase of approximately $696 million, excluding the reversal of accrued interest income, in the first nine months of fiscal 2024, as a result of these two rulings.

The adjusted amounts in this release exclude legal settlement gains of approximately $29 million recorded in the third quarter and first nine months of fiscal 2024.

The adjusted amounts in this release exclude transaction and deal related activities associated with the review of strategic alternatives for the Global Packs business, consisting of the Kipling^庐, Eastpak^庐 and JanSport^庐 brands. Total transaction and deal related activities include costs of approximately $1 million in the third quarter of fiscal 2024 and $2 million in the first nine months of fiscal 2024.

Combined, the above items negatively impacted earnings per share by $0.68 during the third quarter of fiscal 2024 and $2.48 during the first nine months of fiscal 2024. 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鈥檚 view of why this information is useful to investors. The company also provides guidance on a non-GAAP basis as we cannot predict certain elements which are included in reported GAAP results.

Forward-looking Statements

Certain statements included in this release 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 乱伦巴士 and therefore involve several risks and uncertainties. You can identify these statements by the fact that they use words such as 鈥渨ill,鈥� 鈥渁nticipate,鈥� "believe," 鈥渆stimate,鈥� 鈥渆xpect,鈥� 鈥渟hould,鈥� and 鈥渕ay鈥� and other words and terms of similar meaning or use of future dates, however, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding 乱伦巴士鈥檚 plans, objectives, projections and expectations relating to 乱伦巴士鈥檚 operations or financial performance, and assumptions related thereto are forward-looking statements. 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. 乱伦巴士 undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Potential risks and uncertainties that could cause the actual results of operations or financial condition of 乱伦巴士 to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: the level of consumer demand for apparel and footwear; disruption to 乱伦巴士鈥檚 distribution system; changes in global economic conditions and the financial strength of 乱伦巴士鈥檚 customers, including as a result of current inflationary pressures; fluctuations in the price, availability and quality of raw materials and finished products; disruption and volatility in the global capital and credit markets; 乱伦巴士鈥檚 response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; 乱伦巴士's ability to maintain the image, health and equity of its brands; intense competition from online retailers and other direct-to-consumer business risks; third-party manufacturing and product innovation; increasing pressure on margins; 乱伦巴士鈥檚 ability to grow its international, direct-to-consumer and digital businesses; 乱伦巴士鈥檚 ability to find and amplify consumer tailwinds, build brands on multiple growth horizons and leverage platforms for speed to scale and efficiency; retail industry changes and challenges; 乱伦巴士鈥檚 ability to execute its transformation and other business strategies, such as the Reinvent transformation program, including cost reduction and productivity initiatives and the update and maintenance of an agile and efficient operating model and organizational structure; any inability of 乱伦巴士 or third parties on which we rely, to maintain the strength and security of information technology systems; the fact that 乱伦巴士鈥檚 facilities and systems, and those of third parties on which we rely, are frequent targets of cyber-attacks of varying levels of severity, and may be vulnerable to such attacks, and any inability or failure by us or such third parties to anticipate or detect data or information security breaches or other cyber-attacks, including the cyber incident that was reported by 乱伦巴士 in December 2023, could result in data or financial loss, reputational harm, business disruption, damage to our relationships with customers, consumers, employees and third parties on which we rely, litigation, regulatory investigations, enforcement actions or other negative impacts; any inability by 乱伦巴士 or third parties on which we rely to properly collect, use, manage and secure business, consumer and employee data and comply with privacy and security regulations; foreign currency fluctuations; stability of 乱伦巴士鈥檚 vendors鈥� manufacturing facilities and 乱伦巴士鈥檚 ability to establish and maintain effective supply chain capabilities; continued use by 乱伦巴士鈥檚 suppliers of ethical business practices; 乱伦巴士鈥檚 ability to accurately forecast demand for products; actions of activist and other shareholders; 乱伦巴士鈥檚 ability to recruit, develop or retain key executive or employee talent or successfully transition executives; continuity of members of 乱伦巴士鈥檚 management; changes in the availability and cost of labor; 乱伦巴士鈥檚 ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment such as the impairment charges related to the Timberland^庐 and Dickies^庐 reporting unit goodwill and Supreme^庐 reporting unit goodwill and indefinite-lived trademark intangible asset; maintenance by 乱伦巴士鈥檚 licensees and distributors of the value of 乱伦巴士鈥檚 brands; 乱伦巴士鈥檚 ability to execute acquisitions and dispositions, integrate acquisitions and manage its brand portfolio; business resiliency in response to natural or man-made economic, public health, political or environmental disruptions; changes in tax laws and additional tax liabilities, including for the timing of income inclusion associated with our acquisition of the Timberland^庐 brand in 2011; legal, regulatory, political, economic, and geopolitical risks, including those related to the current conflicts in Ukraine and the Middle East; changes to laws and regulations; adverse or unexpected weather conditions, including any potential effects from climate change; 乱伦巴士's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent 乱伦巴士 from fulfilling its financial obligations; 乱伦巴士's ability to pay and declare dividends or repurchase its stock in the future; climate change and increased focus on environmental, social and governance issues; 乱伦巴士's ability to execute on its sustainability strategy and achieve its sustainability related goals and targets; risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic; and tax risks associated with the spin-off of our Jeanswear business completed in 2019. More information on potential factors that could affect 乱伦巴士鈥檚 financial results is included from time to time in 乱伦巴士鈥檚 public reports filed with the SEC, including 乱伦巴士鈥檚 Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished with the SEC.

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Investor Contact:
Allegra Perry
ir@vfc.com

Media Contact:
Colin Wheeler
corporate_communications@vfc.com

Source: 乱伦巴士 Corporation

Released February 6, 2024