What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-02-08 compared with 2022-11-02 · 253 added, 213 removed, 285 unchanged (62% of the section changed)

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The Company's current fiscal year runs from April 3, 2022 through April 1, 2023 ("Fiscal 2023").

Accordingly, this Form 10-Q presents our second quarter of Fiscal 2023.

For presentation purposes herein, all references to periods ended September 2022 and September 2021 relate to the fiscal periods ended on October 1, 2022 and October 2, 2021, respectively.

Accordingly, this Form 10-Q presents our third quarter of Fiscal 2023.

For presentation purposes herein, all references to periods ended December 2022 and December 2021 relate to the fiscal periods ended on December 31, 2022 and January 1, 2022, respectively.

References to March 2022 relate to information as of April 2, 2022.

All per share amounts are presented on a diluted basis and all percentages shown in the tables below and the following discussion have been calculated using unrounded numbers.

References to the three and six months ended September 2022 foreign currency amounts below reflect the changes in foreign exchange rates from the three and six months ended September 2021 and their impact on translating foreign currencies into U.S.

References to the three and nine months ended December 2022 foreign currency amounts and impacts below reflect the changes in foreign exchange rates from the three and nine months ended December 2021 when translating foreign currencies into U.S.

VF’s most significant foreign currency exposure relates to business conducted in euro-based countries.

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RECENT DEVELOPMENTS

Executive Leadership Transition

On December 2, 2022, the Board of Directors appointed Benno Dorer, a member of the Board, as Interim President and Chief Executive Officer of the Company, effective immediately.

In addition, Richard Carucci, a member of the Board, was appointed as Interim Chairman of the Board on the same date.

Dorer and Mr.

Carucci succeed Steve Rendle, who, by mutual agreement with the Board, retired as President and Chief Executive Officer of the Company and Chairman of the Board on the same date.

Dividend Update

On February 2, 2023, the Board of Directors declared a quarterly dividend of $0.30 per share that is payable during the fourth quarter of Fiscal 2023, which represents a 41% reduction when compared to the dividend of $0.51 per share paid in the third quarter of Fiscal 2023.

The decrease in the dividend is an action taken to strengthen the Company's financial position, accelerate the return to target leverage ratios and provide additional financial flexibility to navigate the current macroeconomic challenges and maintain investments to advance its greatest value creation opportunities.

Subject to approval by its Board of Directors, VF intends to continue to pay quarterly dividends.

Macroeconomic Environment

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dollar has resulted in unfavorable foreign currency exchange rate changes, which have significantly impacted the results of our international businesses.

The Company is also operating in a higher interest

rate environment, resulting in increased borrowing costs.

There is ongoing uncertainty around the global economy and macroeconomic environment, which we expect to continue and cause disruption and near-term challenges for our business.

Russia-Ukraine Conflict

In response to the ongoing conflict in Ukraine, all VF-operated retail locations within Russia are currently closed.

In response to the ongoing conflict in Ukraine, all VF-operated retail locations within Russia are permanently closed.

Limited wholesale shipments to both Russia and Ukraine have resumed.

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Risk Factors” in the Fiscal 2022 Form 10-K.

Impact of COVID-19

Impact of COVID-19 and Supply Chain Update

The coronavirus ("COVID-19") pandemic significantly impacted global economic conditions, as well as VF's business operations and financial performance during Fiscal 2022 and continues to impact Fiscal 2023.

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At this time, the majority of VF's supply chain is operational.

Suppliers are complying with local health advisories and governmental restrictions which has resulted in product delays.

The resurgence of COVID-19 lockdowns in key sourcing countries resulted in additional manufacturing capacity constraints and logistical challenges during Fiscal 2022 and the first and second quarters of Fiscal 2023;

however, the situation has improved over time.

Suppliers are complying with local

29 VF Corporation Q3 FY23 Form 10-Q

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health advisories and governmental restrictions which has resulted in product delays.

The resurgence of COVID-19 lockdowns in key sourcing countries resulted in additional manufacturing capacity constraints and logistical challenges during Fiscal 2022 and Fiscal 2023.

VF has worked with its suppliers to minimize disruption and employed expedited freight as needed.

VF's distribution centers are operational in accordance with local government guidelines while maintaining enhanced health and safety protocols.

Although the situation has improved over time, during the high-volume third quarter lead times across the supply chain coupled with higher volatility on the distribution and logistics network, particularly in the Americas, and event-driven spikes in demand, led to inconsistent on-time delivery performance and higher cancellations with our wholesale partners and inefficiencies in support of our direct-to-consumer business.

VF's distribution centers are operational in accordance with local government guidelines.

The COVID-19 pandemic is ongoing and dynamic in nature, and has driven global uncertainty and disruption.

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Risk Factors” in the Fiscal 2022 Form 10-K.

29 VF Corporation Q2 FY23 Form 10-Q

HIGHLIGHTS OF THE SECOND QUARTER OF FISCAL 2023

• Revenues were down 4% to $3.1 billion compared to the three months ended September 2021, including a 6% unfavorable impact from foreign currency.

• Outdoor segment revenues increased 3% to $1.6 billion compared to the three months ended September 2021, including a 7% unfavorable impact from foreign currency.

• Active segment revenues decreased 9% to $1.3 billion compared to the three months ended September 2021, including a 5% unfavorable impact from foreign currency.

• Work segment revenues decreased 11% to $265.2 million compared to the three months ended September 2021, including a 2% unfavorable impact from foreign currency.

HIGHLIGHTS OF THE THIRD QUARTER OF FISCAL 2023

• Revenues were down 3% to $3.5 billion compared to the three months ended December 2021, including a 6% unfavorable impact from foreign currency.

• Outdoor segment revenues increased 4% to $2.0 billion compared to the three months ended December 2021, including a 6% unfavorable impact from foreign currency.

• Active segment revenues decreased 11% to $1.3 billion compared to the three months ended December 2021, including a 5% unfavorable impact from foreign currency.

• Work segment revenues decreased 6% to $268.9 million compared to the three months ended December 2021, including a 3% unfavorable impact from foreign currency.

• Direct-to-consumer revenues were down 2% over the 2021 period, including a 5% unfavorable impact from foreign currency.

E-commerce revenues decreased 7% in the current period, including a 6% unfavorable impact from foreign currency.

Direct-to-consumer revenues accounted for 37% of VF's net revenues for the three months ended September 2022.

• International revenues decreased 5% compared to the three months ended September 2021, including a 13% unfavorable impact from foreign currency.

E-commerce revenues were flat in the current period, including a 6% unfavorable impact from foreign currency.

Direct-to-consumer revenues accounted for 55% of VF's net revenues for the three months ended December 2022.

• International revenues decreased 3% compared to the three months ended December 2021, including an 11% unfavorable impact from foreign currency.

Greater China (which includes Mainland China, Hong Kong and Taiwan) revenues decreased 11%, including a 10% unfavorable impact from foreign currency.

International revenues represented 49% of VF's net revenues for the three months ended September 2022.

• VF recorded goodwill and intangible asset impairment charges of $229.0 million and $192.9 million, respectively, in the three months ended September 2022 related to the Supreme reporting unit.

• Gross margin decreased 230 basis points to 51.4% compared to the three months ended September 2021, primarily driven by higher costs and increased discounts and other promotional activity, partially offset by price increases.

• Earnings (loss) per share was $(0.31) compared to $1.18 in the 2021 period.

The decrease was primarily driven by the goodwill and intangible asset impairment charges related to the Supreme reporting unit and lower profitability in the Active segment in the three months ended September 2022.

International revenues represented 46% of VF's net revenues for the three months ended December 2022.

• Gross margin decreased 120 basis points to 54.9% compared to the three months ended December 2021, primarily driven by higher promotional activity, partially offset by price increases.

• Earnings per share was $1.31 compared to $1.32 in the 2021 period.

The decrease was primarily driven by lower profitability in the Active segment for the three months ended December 2022, which was offset by a $0.24 discrete tax benefit in the quarter.

ANALYSIS OF RESULTS OF OPERATIONS

Consolidated Statements of Operations

The following table presents a summary of the changes in net revenues for the three and six months ended September 2022 from the comparable period in 2021:

(In millions) Three Months Ended September Six Months Ended September

The following table presents a summary of the changes in net revenues for the three and nine months ended December 2022 from the comparable period in 2021:

(In millions) Three Months Ended December Nine Months Ended December

Net revenues — 2021 $ 3,624.4 $ 9,017.2

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Net revenues — 2022 $ 3,530.7 $ 8,872.9

VF reported a 4% and 1% decrease in revenues for the three and six months ended September 2022, respectively, compared to the 2021 periods.

The revenue decrease in both periods was primarily driven by declines in the Active segment and a 6% and 5% unfavorable impact from foreign currency in the three and six months ended September 2022, respectively.

Revenues in the Active segment during the three months ended September 2022 were impacted by weakness in the Americas region, primarily driven by declines in the Vans ® brand.

Revenues in the Active

segment during the three and six months ended September 2022 were also impacted by declines in the Asia-Pacific region, which has been negatively impacted by COVID-19 resurgence that has caused disruption and consumption pressure in the region, particularly in Mainland China.

VF reported a 3% and 2% decrease in revenues for the three and nine months ended December 2022, respectively, compared to the 2021 periods.

The revenue decrease in both periods was primarily driven by declines in the Active segment and a 6% unfavorable impact from foreign currency in both the three and nine months ended December 2022.

Revenues in the Active segment during the three and nine months ended December 2022 were impacted by weakness in the Americas region, primarily driven by declines in the Vans ® brand.

Revenues in the Active segment during the three and nine months ended

December 2022 were also impacted by declines in the Asia-Pacific region, which has been negatively impacted by COVID-19 resurgence that has caused disruption and consumption pressure in the region, particularly in Mainland China.

The decrease in both periods was partially offset by global growth in the Outdoor segment.

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VF Corporation Q3 FY23 Form 10-Q 30

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The following table presents the percentage relationships to net revenues for components of the Consolidated Statements of Operations:

Three Months Ended September Six Months Ended September

Three Months Ended December Nine Months Ended December

2022 2021 2022 2021

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Operating margin 14.6 % 18.7 % 5.5 % 16.0 %

Gross margin decreased 230 and 240 basis points in the three and six months ended September 2022, respectively, compared to the 2021 periods.

The decreases were primarily driven by higher costs and increased discounts and other promotional activity, partially offset by price increases.

The decrease for the six months ended September 2022 was also attributed to unfavorable mix as wholesale and Outdoor segment revenues, which generally have lower margins, represented a larger portion of VF consolidated revenues for the periods compared.

Selling, general and administrative expenses as a percentage of total revenues increased 440 and 430 basis points during the three and six months ended September 2022, respectively, compared to the 2021 periods.

Selling, general and administrative expenses increased $91.0 million and $210.1 million in the three and six months ended September 2022, respectively, compared to the 2021 periods, including $35.0 million and $108.0 million decreases in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition, which were recognized in the selling, general and administrative expense line item in the three and six months ended September 2021, respectively.

The increase was also due to higher corporate restructuring charges, direct-to-consumer and distribution costs, and investments in information technology in the three and six months ended September 2022.

Net interest expen se decreased $0.5 million and $2.0 million during the three and six months ended September 2022, respectively, compared to the 2021 periods.

The decrease in net interest expense in both the three and six months ended September 2022 was primarily due to the repayment of the $1.0 billion in aggregate principal of the 2.050% Senior Notes due April 2022, partially offset by higher short-term borrowings in the three and six months ended September 2022.

Total outstanding debt averaged $5.3 billion in the six months ended September 2022 and $5.9 billion in the same period in 2021, with weighted average interest rates of 2.3% and 2.1% in the six months ended September 2022 and 2021, respectively.

Other income (expense), net decreased $16.8 million and $120.6 million during the three and six months ended September 2022, respectively, compared to the 2021 periods.

The decrease in both the three and six months ended September 2022 was primarily driven by lower net periodic pension income and higher foreign currency losses compared to the 2021 periods.

The decrease in the six months ended September 2022 included a

$91.8 million pension settlement charge, which resulted from the purchase of a group annuity contract and transfer of a portion of the assets and liabilities associated with the U.S.

qualified defined benefit pension plan to an insurance company.

VF recorded goodwill and intangible asset impairment charges of $229.0 million and $192.9 million, respectively, in the three and six months ended September 2022 related to the Supreme reporting unit.

During the three months ended September 2022, due to continued increases in the federal funds rate and strengthening of the U.S.

Gross margin decreased 120 and 190 basis points in the three and nine months ended December 2022, respectively, compared to the 2021 periods.

The decreases were primarily driven by increased discounts and other promotional activity and higher material costs, partially offset by price increases.

The decrease in the three months ended December 2022 was also partially offset by lower freight costs and favorable channel mix in the Outdoor and Work segments.

The decrease in the nine months ended December 2022 was also partially attributed to unfavorable channel mix driven by the Active segment.

Selling, general and administrative expenses as a percentage of total revenues increased 290 and 380 basis points during the three and nine months ended December 2022, respectively, compared to the 2021 periods.

Selling, general and administrative expenses increased $68.2 million and $278.4 million in the three and nine months ended December 2022, respectively, compared to the 2021 periods, including $50.0 million and $158.0 million decreases in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition, which were recognized in the selling, general and administrative expense line item in the three and nine months ended December 2021, respectively.

The increase was also due to higher advertising costs and higher corporate restructuring charges in the three and nine months ended December 2022.

The increase in the nine months ended December 2022 was also due to higher investments in information technology.

VF recorded goodwill and intangible asset impairment charges of $229.0 million and $192.9 million, respectively, in the nine months ended December 2022 related to the Supreme reporting unit.

During the second quarter of Fiscal 2023, due to continued increases in the federal funds rate and strengthening of the U.S.

dollar relative to other currencies, the Company determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.

The impairment related to an increase in the market-based discount rates used in the valuations and the negative impact of foreign currency exchange rate changes on financial projections.

The effective income tax rate for the six months ended September 2022 was 11.3% compared to 13.1% in the 2021 period.

The six months ended September 2022 included a net discrete tax expense of $5.1 million, which primarily related to unrecognized tax benefits and interest.

Net interest expen se increased $16.8 million and $14.9 million during the three and nine months ended December 2022, respectively, compared to the 2021 periods.

The increase in net interest expense in both the three and nine months ended December 2022 was primarily due to higher short-term commercial paper borrowings, borrowings under the delayed draw Term Loan Agreement (the "DDTL Agreement") and an increase in borrowing rates.

The increase was partially offset by repayment of $1.0 billion in aggregate principal of the 2.050% Senior Notes due April 2022.

Total outstanding debt averaged $6.5 billion in the nine months ended December 2022 and $5.7 billion in the same period in 2021, with weighted average

interest rates of 2.3% and 2.1% in the nine months ended December 2022 and 2021, respectively.

Loss on debt extinguishment of $3.6 million was recorded in the three and nine months ended December 2021, as a result of the early redemption of $500.0 million in aggregate principal amount of VF's outstanding 2.050% Senior Notes due April 2022.

Other income (expense), net decreased $9.8 million and $130.4 million during the three and nine months ended December 2022, respectively, compared to the 2021 periods.

The decrease in the three months ended December 2022 was primarily driven by higher foreign currency losses.

The decrease in the nine months ended December 2022 was primarily driven by lower net periodic pension income and higher foreign currency losses compared to the 2021 periods.

The decrease in the nine months ended December 2022 included a $91.8 million pension settlement charge, which resulted from the purchase of a group annuity contract and transfer of a portion of the assets and liabilities associated with the U.S.

qualified defined benefit pension plan to an insurance company.

The effective income tax rate for the nine months ended December 2022 was (28.6)% compared to 16.0% in the 2021 period.

The nine months ended December 2022 included a net discrete tax benefit of $98.8 million, which primarily related to the IRS examinations for tax year 2017 and short-tax year 2018 resulting in a $94.9 million favorable adjustment to VF's transition tax liability under the Tax Cuts and Jobs Act.

Excluding the $98.8 million net discrete tax benefit in the 2022 period, the effective income tax rate would have been 9.5%.

The nine months ended December 2021 included a net discrete tax expense of $43.7 million, which included a $92.3 million net tax expense related to unrecognized tax benefits and interest, a $9.6 million net tax benefit related to return to accrual adjustments, a $35.2 million net tax benefit related to withholding taxes on prior foreign earnings, a $1.7 million tax benefit related to stock compensation, and a $2.4 million net tax benefit related to tax rate change on deferred tax items.

Excluding the $43.7 million net discrete tax expense in the 2021 period, the effective income tax rate would have been 12.8%.

The six months ended September 2021 included a net discrete tax benefit of $0.2 million, which included a $3.4 million net tax expense related to unrecognized tax benefits and interest, a $1.4 million tax benefit related to stock compensation and a $2.4 million net tax benefit related to tax rate change on deferred tax items.

The $0.2 million net discrete tax benefit in the 2021 period had an insignificant impact on the effective income tax rate.

Without discrete items, the effective income tax rate for the six months ended September 2022 increased by 0.8% compared with the 2021 period primarily due to year-to-date losses generated in the current year.

As a result of the above, income (loss) from continuing operations in the three months ended September 2022 was $(118.4) million ($(0.31) per diluted share) compared to $464.1 million ($1.18 per diluted share) in the 2021 period, and income (loss) from continuing operations in the six months ended September 2022 was $(174.4) million ($(0.45) per diluted share) compared to $618.0 million ($1.57 per diluted share) in the 2021 period.

Without discrete items, the effective income tax rate for the nine months ended December 2022 decreased by 3.3% compared with the 2021 period primarily due to the jurisdictional mix of earnings.

As a result of the above, income from continuing operations in the three months ended December 2022 was $507.9 million ($1.31 per diluted share) compared to $517.8 million ($1.32 per diluted share) in the 2021 period, and income from continuing operations in the nine months ended December 2022 was $333.5 million ($0.86 per diluted share) compared to $1.1 billion ($2.89 per diluted share) in the 2021 period.

Refer to additional discussion in the “Information by Reportable Segment” section below.

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Information by Reportable Segment

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We have included an Other category in the tables below for purposes of reconciliation of revenues and profit, but it is not considered a reportable segment.

Included in this Other category are results primarily related to sourcing activities related to transition services.

Refer to Note 14 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to income (loss) before income taxes.

The following tables present a summary of the changes in segment revenues and profit (loss) in the three and six months ended September 2022 from the comparable period in 2021 and revenues by region for our top 4 brands for the three and six months ended September 2022 and 2021:

Other primarily includes sourcing activities related to transition services.

Refer to Note 14 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to income before income taxes.

The following tables present a summary of the changes in segment revenues and profit (loss) in the three and nine months ended December 2022 from the comparable period in 2021 and revenues by region for our top 4 brands for the three and nine months ended December 2022 and 2021:

Segment Revenues:

Three Months Ended September

Three Months Ended December

(In millions) Outdoor Active Work Other Total

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Segment revenues — 2022 $ 2,003.0 $ 1,258.7 $ 268.9 $ — $ 3,530.7

Six Months Ended September

Nine Months Ended December

(In millions) Outdoor Active Work Other Total

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Segment Profit (Loss):

Three Months Ended September

Three Months Ended December

(In millions) Outdoor Active Work Other Total

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Segment profit (loss) — 2022 $ 457.0 $ 146.9 $ 18.5 $ (0.1) $ 622.3

Six Months Ended September

Nine Months Ended December

(In millions) Outdoor Active Work Other Total

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Segment profit (loss) — 2022 $ 670.6 $ 541.2 $ 93.0 $ (0.5) $ 1,304.3

Amounts may not sum due to rounding.

VF Corporation Q3 FY23 Form 10-Q 32

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Top Brand Revenues:

Three Months Ended September 2022

Three Months Ended December 2022

(In millions) Vans ®

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Global $ 926.9 $ 1,321.2 $ 595.5 $ 177.0 $ 3,020.6

Three Months Ended September 2021

Three Months Ended December 2021

(In millions) Vans ®

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Global $ 1,060.4 $ 1,240.3 $ 593.4 $ 211.5 $ 3,105.6

Six Months Ended September 2022

Nine Months Ended December 2022

(In millions) Vans ®

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Global $ 2,825.9 $ 2,753.2 $ 1,389.1 $ 533.7 $ 7,501.9

Six Months Ended September 2021

Nine Months Ended December 2021

(In millions) Vans ®

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33 VF Corporation Q3 FY23 Form 10-Q

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The following sections discuss the changes in revenues and profitability by segment.

For purposes of this analysis, royalty revenues have been included in the wholesale channel for all periods.

Three Months Ended September Six Months Ended September

Three Months Ended December Nine Months Ended December

(Dollars in millions) 2022 2021 Percent

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The North Face ® , Timberland ® , Smartwool ® , Icebreaker ® and Altra ® .

Global revenues for Outdoor increased 3% in the three months ended September 2022 compared to 2021, including a 7% unfavorable impact from foreign currency.

Revenues in the Americas region increased 4%, including a 1% unfavorable impact from foreign currency.

Global revenues for Outdoor increased 4% in the three months ended December 2022 compared to 2021, including a 6% unfavorable impact from foreign currency.

Revenues in the Americas region increased 7%.

Revenues in the Europe region decreased 1%, including a 12% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region increased 5%, including a 12% unfavorable impact from foreign currency.

Global revenues for Outdoor increased 9% in the six months ended September 2022 compared to 2021, including a 7% unfavorable impact from foreign currency.

Global revenues for Outdoor increased 7% in the nine months ended December 2022 compared to 2021, including a 6% unfavorable impact from foreign currency.

Revenues in the Americas region increased 9%.

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Revenues in the Asia-Pacific region increased 9%, including a 9% unfavorable impact from foreign currency.

Global revenues for The North Face ® brand increased 8% and 15% in the three and six months ended September 2022, respectively, compared to the 2021 periods.

This includes a 6% unfavorable impact from foreign currency in both the three and six months ended September 2022.

The increases reflect growth in all regions that was led by the Asia-Pacific region, which increased 31% and 25% in the three and six months ended September 2022, respectively, including a 6% and 5% unfavorable impact from foreign currency in the respective periods.

Global revenues for the Timberland ® brand decreased 6% and 1% in the three and six months ended September 2022, respectively, compared to the 2021 periods, driven by an 8% and

Global revenues for The North Face ® brand increased 7% and 11% in the three and nine months ended December 2022, respectively, compared to the 2021 periods.

This includes a 6% unfavorable impact from foreign currency in both the three and nine months ended December 2022.

The increases reflect growth in all regions that was led by the Asia-Pacific region, which increased 17% and 21% in the three and nine months ended December 2022, respectively, including a 12% and 9% unfavorable impact from foreign currency in the respective periods.

Global revenues for the Timberland ® brand decreased 3% and 2% in the three and nine months ended December 2022, respectively, compared to the 2021 periods, driven by a 6% and

8% unfavorable impact from foreign currency in the respective periods.

Revenues in the Europe region increased 2% and 9% in the three and six months ended September 2022, respectively, including a 17% unfavorable impact from foreign currency in both periods.

Revenues in the Americas region decreased 12% and 9% in the three and six months ended September 2022, respectively, driven by lower wholesale shipments for the periods compared primarily due to supply chain challenges, including an unfavorable impact of 1% from foreign currency in the six months ended September 2022.

Global direct-to-consumer revenues for Outdoor increased 6% in both the three and six months ended September 2022 compared to the 2021 periods, including an 8% and 6% unfavorable impact from foreign currency in the respective periods.

The increase was primarily due to strength in The North Face ® brand.

Global wholesale revenues increased 2% and 11% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 7% unfavorable impact from foreign currency in both periods.

Operating margin decreased in the three and six months ended September 2022 compared to the 2021 periods primarily due to increased discounts and other promotional activity and higher costs, including materials, freight, direct-to-consumer and distribution expenses, which were partially offset by price increases in both periods.

The decrease for the six months ended September 2022 was also impacted by unfavorable channel mix, partially offset by leverage of operating expenses on increased revenues.

Revenues in the Europe region decreased 5% and increased 3% in the three and nine months ended December 2022, respectively, including a 12% and 15% unfavorable impact from foreign currency in the respective periods.

Revenues in the Americas region increased 4% and decreased 3% in the three and nine months ended December 2022, respectively.

Revenues in the Asia-Pacific region decreased 17% and 9% in the three and nine months ended December 2022, respectively, compared to the 2021 periods, including a 10% and 8% unfavorable impact from foreign currency in the respective periods.

Global direct-to-consumer revenues for Outdoor increased 6% in both the three and nine months ended December 2022 compared to the 2021 periods, including a 6% unfavorable impact from foreign currency in both periods.

The increase was primarily due to strength in The North Face ® brand and e-commerce growth.

Global wholesale revenues increased 2% and 7% in the three and nine months ended December 2022, respectively, compared to the 2021 periods, including a 6% and 7% unfavorable impact from foreign currency in three and nine months ended December 2022, respectively.

Operating margin decreased in the three and nine months ended December 2022 compared to the 2021 periods primarily due to increased discounts and other promotional activity, higher material costs and increased advertising expenses, which were partially offset by price increases and lower freight costs.

VF Corporation Q3 FY23 Form 10-Q 34

Three Months Ended September Six Months Ended September

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Three Months Ended December Nine Months Ended December

(Dollars in millions) 2022 2021 Percent

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Vans ® , Supreme ® , Kipling ® , Napapijri ® , Eastpak ® and JanSport ® .

Global revenues for Active decreased 9% in the three months ended September 2022 compared to the 2021 period, including a 5% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 9%, including a 1% unfavorable impact from foreign currency.

Global revenues for Active decreased 11% in the three months ended December 2022 compared to the 2021 period, including a 5% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 11%.

Revenues in the Europe region decreased 6%, driven by a 12% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 17%, including an 8% unfavorable impact from foreign currency, and a 37% decrease in Greater China including a 4% unfavorable impact from foreign currency.

Global revenues for Active decreased 7% in the six months ended September 2022 compared to the 2021 period, including a 5% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 16%, including an 11% unfavorable impact from foreign currency, and a 29% decrease in Greater China including an 8% unfavorable impact from foreign currency.

Global revenues for Active decreased 8% in the nine months ended December 2022 compared to the 2021 period, including a 5% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 5%.

Revenues in the Europe region decreased 5%, driven by a 13% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 26%, including a 7% unfavorable impact from foreign currency, and a 46% decrease in Greater China including a 2% unfavorable impact from foreign currency.

Vans ® brand global revenues decreased 13% and 10% in the three and six months ended September 2022, respectively, compared to the 2021 periods.

This includes a 5% and 4% unfavorable impact from foreign currency in the three and six months ended September 2022, respectively.

The overall declines were driven by a 20% and 30% decrease in the Asia-Pacific region for the three and six months ended September 2022, respectively, including a 6% and 4% unfavorable impact from foreign currency in the respective periods.

Revenues in the Americas region decreased 11% and 4% in the three and six months ended September 2022, respectively.

Revenues in the Europe region decreased 12% and 11% in the three and six

months ended September 2022, respectively, driven by a 14% and 13% unfavorable impact from foreign currency in the respective periods.

Global direct-to-consumer revenues for Active decreased 9% and 10% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 4% unfavorable impact from foreign currency in both periods.

The decrease was primarily due to declines in the Americas region, which decreased 8% in both the three and six months ended September 2022.

Global wholesale revenues decreased 10% and 2% in the three and six months ended September 2022, respectively, and included an 8% and 6% unfavorable impact from foreign currency in the respective periods.

The decrease was primarily due to a 24% and 32% decrease in the Asia-Pacific region in the three and six months ended September 2022, respectively, including a 5% and 3% unfavorable impact from foreign currency in the respective periods.

Wholesale revenues in the Americas region decreased 10% and increased 10% in the three and six months ended September 2022, respectively.

Wholesale revenues in the Europe region decreased 5% and 3% in the three and six months ended September 2022, respectively, driven by a 15% unfavorable impact from foreign currency in both periods.

Operating margin decreased in the three and six months ended September 2022 compared to the 2021 periods, reflecting lower leverage of operating expenses due to decreased revenues in both periods.

The decreases were also impacted by increased discounts and other promotional activity, higher freight costs and unfavorable channel mix, which were partially offset by price increases.

Revenues in the Asia-Pacific region decreased 23%, including an 8% unfavorable impact from foreign currency, and a 41% decrease in Greater China including a 4% unfavorable impact from foreign currency.

Vans ® brand global revenues decreased 13% and 11% in the three and nine months ended December 2022, respectively, compared to the 2021 periods.

This includes a 4% unfavorable impact from foreign currency in both the three and nine months ended December 2022.

The overall declines were primarily attributed to a 13% and 7% decrease in the Americas region for the three and nine months ended December 2022, respectively, driven by the performance in the direct-to-consumer channel.

Revenues in the Asia-Pacific region decreased 22% and 27% in the three and nine months ended December 2022, respectively, including an 8% and 5% unfavorable impact from foreign currency in the respective periods.

Revenues in the Europe region decreased 5% and 9% in the three and nine months ended December 2022, respectively, driven by a 12% unfavorable impact from foreign currency in both periods.

Global direct-to-consumer revenues for Active decreased 11% in both the three and nine months ended December 2022, compared to the 2021 periods, including a 4% unfavorable impact from foreign currency in both periods.

The decrease was primarily due to declines in the Americas region, which decreased 12% and 10% in the three and nine months ended December 2022, respectively.

Global wholesale revenues decreased 10% and 4% in the three and nine months ended December 2022, respectively, and included a 5% and 6% unfavorable impact from foreign currency in the respective periods.

The decrease was primarily due to a 24% and 30% decrease in the Asia-Pacific region in the three and nine months ended December 2022, respectively, including a 6% and 4% unfavorable impact from foreign currency in the respective periods.

Wholesale revenues in the Americas region decreased 8% and increased 4% in the three and nine months ended December 2022, respectively, and included a 1% unfavorable impact from foreign currency in the nine months ended December 2022.

Wholesale revenues in the Europe region decreased 7% and 4% in the three and nine months ended December 2022, respectively, driven by a 12% and 14% unfavorable impact from foreign currency in the respective periods.

Operating margin decreased in the three and nine months ended December 2022 compared to the 2021 periods, reflecting lower leverage of operating expenses due to decreased revenues.

The decreases were also impacted by increased discounts and other promotional activity, which were partially offset by price increases.

35 VF Corporation Q3 FY23 Form 10-Q

Three Months Ended September Six Months Ended September

Table of Con tents

Three Months Ended December Nine Months Ended December

(Dollars in millions) 2022 2021 Percent

5 unchanged sentences

Dickies ® and Timberland PRO ® .

Global Work revenues decreased 11% in the three months ended September 2022 compared to the 2021 period, including a 2% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 8%, including a 1% unfavorable impact from foreign currency.

Revenues in the Europe region decreased 1% , driven by a 17% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 35%, including an 8% unfavorable impact from foreign currency.

Global Work revenues decreased 12% in the six months ended September 2022 compared to the 2021 period, including a 2% unfavorable impact from foreign currency.

Global Work revenues decreased 6% in the three months ended December 2022 compared to the 2021 period, including a 3% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 5%.

Revenues in the Europe region increased 5%, including a 16% unfavorable impact from foreign currency.

Revenues in the Europe region increased 44%, including a 19% unfavorable impact from foreign currency, due to lower revenues in the prior year resulting from strategic business model changes.

Revenues in the Asia-Pacific region decreased 34%, including a 9% unfavorable impact from foreign currency.

Dickies ® brand global revenues decreased 19% and 17% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 4% and 3% unfavorable impact from foreign currency in the respective

The decline was primarily driven by a decrease of 17% in the Americas region in both the three and six months ended September 2022, reflecting a more conservative inventory posture by the brand's largest U.S.

The decline in the three and six months ended September 2022 was also attributed to a decrease in the Asia-Pacific region of 35% and 27%, respectively, including an 8% and 7% unfavorable impact from foreign currency in the respective periods.

Revenues in the Europe region decreased 1% and increased 5% in the three and six months ended September 2022, respectively, including a 17% and 16% unfavorable impact from foreign currency in the respective periods.

Operating margin decreased in the three and six months ended September 2022 compared to the 2021 periods, reflecting lower leverage of operating expenses due to decreased revenues in both periods.

The decreases were also impacted by higher costs, including materials and freight, which were partially offset by price increases and favorable channel mix.

Reconciliation of Segment Profit to Income (Loss) Before Income Taxes

There are three types of costs necessary to reconcile total segment profit to consolidated income (loss) from continuing operations before income taxes.

These costs are (i) impairment of goodwill and intangible assets, which is excluded from segment profit because these costs are not part of the ongoing operations of the businesses, (ii) corporate and other expenses, discussed below, and (iii) interest expense, net, which was discussed in the “Consolidated Statements of Operations” section.

Three Months Ended September Six Months Ended September

Global Work revenues decreased 10% in the nine months ended December 2022 compared to the 2021 period, including a 2% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 9%.

Revenues in the Europe region increased 17%, including a 17% unfavorable impact from foreign currency, due to lower revenues in the prior year resulting from strategic business model changes.

Revenues in the Asia-Pacific region decreased 29%, including a 7% unfavorable impact from foreign currency.

Dickies ® brand global revenues decreased 16% and 17% in the three and nine months ended December 2022, respectively,

compared to the 2021 periods, including a 3% unfavorable impact from foreign currency in both periods.

The decline was primarily driven by a decrease of 19% and 18% in the Americas region in the three and nine months ended December 2022, respectively, reflecting a more conservative inventory posture by the brand's largest U.S.

The decline in the three and nine months ended December 2022 was also attributed to a decrease in the Asia-Pacific region of 34% and 29%, respectively, including a 9% and 7% unfavorable impact from foreign currency in the respective periods.

Revenues in the Europe region increased 44% and 17% in the three and nine months ended December 2022, respectively, including a 19% and 17% unfavorable impact from foreign currency in the respective periods.

Operating margin decreased in the three and nine months ended December 2022 compared to the 2021 periods, reflecting lower leverage of operating expenses due to decreased revenues in both periods.

The decreases were also impacted by higher material costs, which were partially offset by price increases and channel mix.

Reconciliation of Segment Profit to Income Before Income Taxes

There are four types of costs necessary to reconcile total segment profit to consolidated income from continuing operations before income taxes.

These costs are (i) impairment of goodwill and intangible assets, which is excluded from segment profit because these costs are not part of the ongoing operations of the businesses, (ii) corporate and other expenses, discussed below, (iii) interest expense, net, and (iv) loss on debt extinguishment, which were both discussed in the “Consolidated Statements of Operations” section.

Three Months Ended December Nine Months Ended December

(Dollars in millions) 2022 2021 Percent

3 unchanged sentences

Interest expense, net 50.2 33.4 50.4 % 115.4 100.5 14.8 %

Loss on debt extinguishment — 3.6 (100.0) % — 3.6 (100.0) %

Corporate and other expenses are those that have not been allocated to the segments for internal management reporting, including (i) information systems and shared service costs, (ii) corporate headquarters costs, and (iii) certain other income and expenses.

The increase in corporate and other expenses was driven by an increase in corporate restructuring charges of $41.9 million and $46.6 million in the three and six months ended September 2022, respectively, and increases in information technology costs of $19.1 million and $36.4 million in the three and six months ended September 2022, respectively.

The increase in the six months ended September 2022 also included a $91.8 million pension settlement charge.

Additionally, the increase in the three and six months ended September 2022 when compared to the 2021 periods was driven by a $35.0 million and $108.0 million decrease in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition in the three and six months ended September 2021, respectively.

The increase in corporate and other expenses was driven by an increase in corporate restructuring charges of $10.1 million and $56.8 million in the three and nine months ended December 2022, respectively.

The increase in the nine months ended December 2022 was also driven by an increase in information technology costs of $38.4 million and a $91.8 million

pension settlement charge recorded in the first quarter of Fiscal 2023.

Additionally, the increase in the three and nine months ended December 2022 when compared to the 2021 periods was driven by a $50.0 million and $158.0 million decrease in the estimated fair value of the contingent consideration liability associated with the Supreme acquisition in the three and nine months ended December 2021, respectively.

VF Corporation Q3 FY23 Form 10-Q 36

Table of Con tents

International Operations

International revenues decreased 5% and 3% in the three and six months ended September 2022, respectively, compared to the 2021 periods.

Foreign currency had an unfavorable impact of 13% and 11% on international revenues in the three and six months ended September 2022, respectively.

Revenues in the Europe region decreased 4% and increased 1% in the three and six months ended September 2022, respectively, including a 16% and 15% unfavorable impact from foreign currency in the respective periods.

In the Asia-Pacific region, revenues decreased 6% and 12% in the three and six months ended September 2022, respectively.

Foreign currency had an unfavorable impact of 8% and 6% on Asia-Pacific revenues in the

three and six months ended September 2022, respectively.

Revenues in Greater China decreased 15% and 23% in the three and six months ended September 2022, respectively, which was negatively impacted by COVID-19 resurgence in Mainland China.

Foreign currency had an unfavorable impact of 5% and 4% on Greater China revenues in the three and six months ended September 2022, respectively.

International revenues were 49% of total revenues in both the three-month periods ended September 2022 and 2021, and 47% and 48% of total revenues in the six-month periods ended September 2022 and 2021, respectively.

International revenues decreased 3% in both the three and nine months ended December 2022, compared to the 2021 periods.

Foreign currency had an unfavorable impact of 11% on international revenues in both the three and nine months ended December 2022.

Revenues in the Europe region decreased 2% and were flat in the three and nine months ended December 2022, respectively, driven by a 12% and 14% unfavorable impact from foreign currency in the respective periods.

In the Asia-Pacific region, revenues decreased 7% and 10% in the three and nine months ended December 2022, respectively.

Foreign currency had an unfavorable impact of 11% and 8% on Asia-Pacific revenues in

the three and nine months ended December 2022, respectively.

Revenues in Greater China decreased 11% and 18% in the three and nine months ended December 2022, respectively, which was negatively impacted by COVID-19 resurgence in Mainland China.

Foreign currency had an unfavorable impact of 10% and 6% on Greater China revenues in the three and nine months ended December 2022, respectively.

International revenues were 46% of total revenues in both the three-month periods ended December 2022 and 2021, and 47% of total revenues in both the nine-month periods ended December 2022 and 2021.

Direct-to-Consumer Operations

Direct-to-consumer revenues decreased 4% and 5% in the three and six months ended September 2022, respectively, compared to the 2021 periods, including a 5% and 4% unfavorable impact from foreign currency in the respective periods.

VF's e-commerce business decreased 7% and 13% during the three and six months ended September 2022, respectively, including a 6% and 5% unfavorable impact from foreign currency in the respective periods.

Revenues from VF-operated retail stores decreased 3% during the three months ended September 2022 driven by a 4%

unfavorable impact from foreign currency in the period, and revenues were flat for the six months ended September 2022, including a 3% unfavorable impact from foreign currency.

There were 1,283 VF-operated retail stores at September 2022 compared to 1,358 at September 2021.

Direct-to-consumer revenues were 37% of total revenues in both the three-month periods ended September 2022 and 2021, and 40% and 42% of total revenues in the six-month periods ended September 2022 and 2021, respectively.

Direct-to-consumer revenues decreased 2% and 4% in the three and nine months ended December 2022, respectively, compared to the 2021 periods, driven by a 5% unfavorable impact from foreign currency in both periods.

VF's e-commerce business was flat and decreased 6% during the three and nine months ended December 2022, respectively, including a 6% and 5% unfavorable impact from foreign currency in the respective periods.

Revenues from VF-operated retail stores decreased 5% and 2% during the three and nine months ended December 2022,

respectively, including a 3% unfavorable impact from foreign currency in both periods.

There were 1,282 VF-operated retail stores at December 2022 compared to 1,354 at December 2021.

Direct-to-consumer revenues were 55% of total revenues in both the three-month periods ended December 2022 and 2021, and 46% and 47% of total revenues in the nine-month periods ended December 2022 and 2021, respectively.

37 VF Corporation Q3 FY23 Form 10-Q

Table of Con tents

ANALYSIS OF FINANCIAL CONDITION

Consolidated Balance Sheets

The following discussion refers to significant changes in balances at September 2022 compared to March 2022:

• Increase in accounts receivable — primarily due to the seasonality of the business and timing of wholesale shipments.

• Increase in inventories — driven by increased in-transit inventory resulting from the modification of terms with the majority of our suppliers to take ownership of inventory near point of shipment rather than destination, the seasonality of the business and softening consumer demand.

• Increase in other current assets — primarily due to an increase in derivative assets resulting from unrealized gains on foreign currency exchange contracts.

• Decrease in intangible assets — primarily due to a $192.9 million impairment charge related to the Supreme ® indefinite-lived trademark intangible asset recorded in the three months ended September 2022.

• Decrease in goodwill — primarily due to a $229.0 million goodwill impairment charge related to the Supreme reporting unit recorded in the three months ended September 2022.

The following discussion refers to significant changes in balances at December 2022 compared to March 2022:

• Increase in inventories — driven by increased in-transit inventory of $441.6 million resulting from the modification of terms with the majority of our suppliers to take ownership of inventory near point of shipment rather than destination, with the remaining increase resulting primarily from higher cancellations and softening consumer demand along with the impact of COVID-19 related challenges in the supply chain where prolonged manufacturing and logistics lead times forced earlier buy commitments and led to higher excess inventory being generated.

• Increase in other current assets — primarily due to assets classified as held-for-sale at December 2022, the majority of which relates to a sale-leaseback transaction for an office location in the Europe region.

• Decrease in intangible assets — primarily due to a $192.9 million impairment charge related to the Supreme ® indefinite-lived trademark intangible asset recorded in the second quarter of Fiscal 2023.

• Decrease in goodwill — primarily due to a $229.0 million impairment charge related to the Supreme reporting unit recorded in the second quarter of Fiscal 2023.

• Increase in other assets — primarily due to an $875.7 million payment related to the 2011 taxes and interest being disputed in The Timberland Company court case, which was recorded as an income tax receivable based on the technical merits of our position with regards to the case.

• Increase in short-term borrowings — primarily due to an increase in commercial paper borrowings to support working capital requirements.

• Increase in the current portion of long-term debt — due to the reclassification of €850.0 million ($909.7 million) of long-term notes due in September 2023, partially offset by the repayment of $500.0 million of long-term notes in April 2022.

• Increase in accounts payable — primarily due to the increase of in-transit inventory.

• Decrease in long-term debt — due to the reclassification of €850.0 million ($831.2 million) of long-term notes due in September 2023.

The following discussion refers to significant changes in balances at September 2022 compared to September 2021:

• Increase in inventories — driven by increased in-transit inventory resulting from the modification of terms with the majority of our suppliers to take ownership of inventory near point of shipment rather than destination, a rebuild of inventory levels given supply chain disruption and softening consumer demand.

• Increase in other current assets — primarily due to an increase in derivative assets resulting from unrealized gains on foreign currency exchange contracts.

• Decrease in g oodwill — primarily due to a $229.0 million goodwill impairment charge related to the Supreme reporting unit recorded in the three months ended September 2022.

• Increase in accounts payable — primarily due to the modification of terms with the majority of our suppliers to take ownership of inventory near point of shipment rather than destination.

• Decrease in other liabilities — primarily due to a discrete tax benefit resulting in a $94.9 million favorable adjustment to VF's transition tax liability under the Tax Cuts and Jobs Act.

The following discussion refers to significant changes in balances at December 2022 compared to December 2021:

• Increase in inventories — driven by increased in-transit inventory of $415.1 million resulting from the modification of terms with the majority of our suppliers to take ownership of inventory near point of shipment rather than destination, with the remaining increase resulting primarily from higher cancellations and softening consumer demand along with the impact of COVID-19 related challenges in the supply chain where prolonged manufacturing and logistics lead times forced earlier buy commitments and led to higher excess inventory being generated.

• Decrease in g oodwill — primarily due to a $229.0 million impairment charge related to the Supreme reporting unit recorded in the second quarter of Fiscal 2023.

• Increase in other assets — primarily due to a $875.7 million payment related to the 2011 taxes and interest being disputed in The Timberland Company court case, which was recorded as an income tax receivable based on the technical merits of our position with regards to the case.

• Increase in short-term borrowings — primarily due to an increase in commercial paper borrowings to support working capital requirements.

• Decrease in the current portion of long-term debt — due to the early redemption of $500.0 million in December 2021 and repayment of the remaining $500.0 million of long-term notes in April 2022, which is partially offset by the reclassification of €850.0 million ($831.2 million) of long-term notes due in September 2023.

• Increase in accounts pa yable — primarily due to the increase of in-transit inventory.

• Decrease in long-term debt — due to the reclassification of €850.0 million ($831.2 million) of long-term notes due in September 2023.

• Decrease in other liabilities — primarily due to a decrease in the accrual for unrecognized tax benefits and other accrued income taxes resulting from the reclassification to accrued liabilities.

• Increase in accounts payable — primarily due to the modification of terms with the majority of our suppliers to take ownership of inventory near point of shipment rather than destination.

• Decrease in accrued liabilities — primarily due to lower accrued income taxes, the payout of the contingent consideration liability associated with the Supreme acquisition and lower accrued compensation.

• Decrease in other liabilities — primarily due to a discrete tax benefit resulting in a $94.9 million favorable adjustment to VF's transition tax liability under the Tax Cuts and Jobs Act.

VF Corporation Q3 FY23 Form 10-Q 38

Table of Con tents

Liquidity and Capital Resources

We consider the following to be measures of our liquidity and capital resources:

September March September

December March December

(Dollars in millions) 2022 2022 2021

2 unchanged sentences

Net debt to total capital 68.7% 61.0% 59.4%

The decrease in the current ratio at September 2022 compared to both March 2022 and September 2021 was primarily due to a net increase in current liabilities driven by higher short-term borrowings and accounts payable, partially offset by a net increase in current assets driven by higher inventories for the periods compared as discussed in the "Consolidated Balance Sheets" section above.

The decrease in working capital and the current ratio at December 2022 compared to both March 2022 and December 2021 was primarily due to a net increase in current liabilities driven by higher short-term borrowings, a higher current portion of long-term debt and higher accounts payable, partially offset by a net increase in current assets driven by higher inventories for the periods compared as discussed in the "Consolidated Balance Sheets" section above.

For the ratio of net debt to total capital, net debt is defined as short-term and long-term borrowings, in addition to operating lease liabilities, net of unrestricted cash.

Total capital is defined as net debt plus stockholders’ equity.

The increase in the net debt to total capital ratio at September 2022 compared to March 2022 and September 2021 was primarily driven by an increase in net debt to support working capital demands at September 2022 and a decrease in stockholders' equity for the periods compared.

VF Corporation Q2 FY23 Form 10-Q 38

The increase in the net debt to total capital ratio at December 2022 compared to both March 2022 and December 2021 was primaril y driven by an increase in net debt to support working capital demands at December 2022 and a decrease in stockholders' equity for the periods compared.

The increase in net debt was primarily attributed to the increase in short-term borrowings, as discussed in the "Consolidated Balance Sheet" section above.

The decrease in stockholders' equity as of September 2022 compared to March 2022 was primarily driven by payments of dividends and net losses in the period, and the decrease compared to September 2021 was primarily due to payments of dividends and share repurchases, partially offset by net income in the period.

The increase in net debt at December 2022 compared to both

March 2022 and December 2021 was also due to borrowings of $1.0 billion under the DDTL Agreement in the three months ended December 2022, partially offset by the repayment of $500.0 million of long-term notes in April 2022.

The decrease in stockholders' equity at December 2022 compared to both March 2022 and December 2021 was primarily driven by payments of dividends, partially offset by net income in the respective periods.

VF’s primary source of liquidity is its expected annual cash flow from operating activities.

Cash from operations is typically lower

in the first half of the calendar year as inventory builds to support peak sales periods in the second half of the calendar year.

Cash from operations is typically lower in the first half of the calendar year as inventory builds to support peak sales periods in the second half of the calendar year.

Cash provided by operating activities in the second half of the calendar year is substantially higher as inventories are sold and accounts receivable are collected.

Additionally, direct-to-consumer sales are highest in the fourth quarter of the calendar year.

VF's additional sources of liquidity include available borrowing capacity against its Global Credit Facility and term debt facility, available cash balances and international lines of credit.

VF's additional sources of liquidity include available borrowing capacity against its Global Credit Facility, available cash balances and international lines of credit.

In summary, our cash flows from continuing operations were as follows:

Six Months Ended September

Nine Months Ended December

(In thousands) 2022 2021

Cash used by operating activities $ (913,957) $ (177,227)

Cash provided (used) by operating activities $ (833,472) $ 791,290

Cash provided (used) by investing activities (206,833) 953,936

Cash provided (used) by financing activities 418,719 (1,257,664)

Cash Used by Operating Activities

Cash flows related to operating activities are dependent on net income (loss), adjustments to net income (loss) and changes in working capital .

The increase in cash used by operating activities in the six months ended September 2022 compared to September 2021 is primarily due to an increase in net cash used by working capital and lower earnings for the periods compared.

Cash Provided (Used ) by Operating Activities

Cash flows related to operating activities are dependent on net income, adjustments to net income and changes in working capital.

The decrease in cash provided by operating activities in the nine months ended December 2022 compared to December 2021 was primarily due to an increase in net cash used by working capital a nd lower ear nings for the periods compared.

The increase in cash used by working capital was primarily driven by higher inventory balances and the $875.7 million payment related to the 2011 taxes and interest being disputed in The Timberland Company court case.

Cash Provided (Used) by Investing Activities

The decrease in cash provided by investing activities in the six months ended September 2022 was primarily due to $616.5 million of net proceeds from the sale of the Occupational Workwear business and $598.8 million of proceeds from sale of short-term investments in the six months ended September 2021.

Capital expenditures decreased $54.6 million and software purchases increased $5.7 million in the six months ended September 2022 compared to the 2021 period.

The decrease in cash provided by investing activities in the nine months ended December 2022 was primarily due to $616.5 million of net proceeds from the sale of the Occupational Workwear business and $598.8 million of proceeds from sale of short-term investments in the nine months ended December 2021.

Capital expenditures decreased $84.0 million and software purchases increased $11.7 million in the nine months ended December 2022 compared to the 2021 period.

The decrease in

capital expenditures was primarily driven by higher spending in the prior year related to a new distribution center in the Americas region.

Cash Provided (Used) by Financing Activities

The increase in cash provided by financing activities during the six months ended September 2022 was primarily due to a net increase in short-term borrowings of $1.4 billion for the periods compared, which was partially offset by a $500.0 million payment of long-term debt, the $57.0 million payment of Supreme contingent consideration and a $27.9 million decrease in net proceeds from the issuance of Common Stock for the periods compared.

The increase in cash provided by financing activities during the nine months ended December 2022 was primarily due to borrowings of $1.0 billion under the DDTL Agreement, a net increase in short-term borrowings of $471.2 million and a $300.0 million decrease in share repurchases for the periods compared, which were partially offset by the $57.0 million payment of Supreme contingent consideration and a $35.5 million decrease in net proceeds from the issuance of Common Stock for the periods compared.

Share Repurchases

VF did not purchase shares of its Common Stock in the open market during the six months ended September 2022 or the six months ended September 2021 under the share repurchase program authorized by VF's Board of Directors.

As of the end of September 2022, VF h ad $2.5 billion re maining for future repurchases under its share repurchase authorization.

VF will continue to evaluate its use of capital, giving priority to investments in organic growth, business acquisitions and direct shareholder return in the form of dividends and share repurchases.

VF did not purchase shares of its Common Stock in the open market during the nine months ended December 2022.

During the nine months ended December 2021, VF purchased 4.0 million shares of its Common Stock in open market transactions at a total cost of $300.0 million (average price per share of $74.45)

39 VF Corporation Q3 FY23 Form 10-Q

Table of Con tents

under the share repurchase program authorized by VF's Board of Directors.

As of the end of December 2022, VF h a d $2.5 billion re maining for future repurchases under its share repurchase authorization.

VF's capital deployment priorities in the near to medium term will be focused on optimizing and driving the performance of the current portfolio, reducing leverage and returning capital to shareholders in the form of the dividend.

Revolving Credit Facility and Short-term Borrowings

7 unchanged sentences

In addition, the Global Credit Facility supports VF’s U.S.

commercial paper program for short-term, seasonal working capital requirements and general corporate purposes, including acquisitions and share repurchases.

commercial paper program for short-term, seasonal working capital requirements and general corporate purposes, including acquisitions, share repurchases and dividends.

Outstanding short-term balances may vary from period to period depending on the level of corporate requirements.

1 unchanged sentence

The calculation of consolidated net indebtedness is net of unrestricted cash.

As of September 2022, the covenant calculation excludes consolidated operating lease liabilities.

As of September 2022, VF was in compliance with all covenants.

The covenant calculation excludes consolidated operating lease liabilities.

As of December 2022, VF was in compliance with all covenants.

VF has a commercial paper program that allows for borrowings of up to $2.25 billion to the extent that it has borrowing capacity under the Global Credit Facility.

There wer e $1.7 billion in commercial paper borrowings as of September 2022 .

Standby letters of credit issued as of September 2022 were $24.9 million, leaving approximately $539.9 million available for borrowing against the Global Credit Facility at September 2022.

Additionally, VF had $552.8 million of cash and equivalents at September 2022.

There wer e $889.9 million in commercial paper borrowings as of December 2022 .

Standby letters of credit issued as of December 2022 were $24.7 million, leaving approximately $1.3 billion available for borrowing against the Global Credit Facility at December 2022.

Additionally, VF had $571.3 million of cash and equivalents at December 2022.

VF ha s $97.6 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either VF or the banks.

Total outstanding balances under these arrangements were $7.5 million at September 2022.

39 VF Corporation Q2 FY23 Form 10-Q

Total outstanding balances under these arrangements were $11.8 million at December 2022.

On April 25, 2022, VF repaid the remaining $500.0 million in aggregate principal amount of its outstanding 2.050% Senior Notes due April 2022, in accordance with the terms of the notes.

Term Debt Facility

On August 11, 2022, the Company entered into a delayed draw Term Loan Agreement (the “DDTL Agreement”).

Under the DDTL Agreement, the lenders have agreed to provide up to three separate delayed draw term loans (each, a “Delayed Draw”) to the Company in an aggregate principal amount of up to $1.0 billion (which may be increased to $1.1 billion subject to the terms and conditions of the DDTL Agreement).

The DDTL Agreement has a stated termination date of the earlier of December 30, 2024 or the two-year anniversary of the latest Delayed Draw under the DDTL Agreement.

Subject to the terms and conditions of the DDTL Agreement, the Company may request extensions of the stated termination date.

Any commitments of the lenders to provide Delayed Draws that remain undrawn will automatically terminate on December 30, 2022.

VF completed its first draw under the DDTL Agreement of $800.0 million on October 18, 2022, which will mature no later than December 30, 2024.

On August 11, 2022, the Company entered into a DDTL Agreement.

Under the DDTL Agreement, the lenders agreed to provide up to three separate delayed draw term loans (each, a “Delayed Draw”) to the Company in an aggregate principal amount of up to $1.0 billion (which may be increased to

$1.1 billion subject to the terms and conditions of the DDTL Agreement).

The DDTL Agreement has a stated termination date of December 14, 2024.

Subject to the terms and conditions of the DDTL Agreement, the Company may request extensions of the termination date.

During the three months ended December 2022 , VF completed two draws under the DDTL Agreement totaling $1.0 billion, all of which will mature on December 14, 2024.

Supply Chain Financing Program

5 unchanged sentences

Amounts due to suppliers who voluntarily participate in the SCF program are included in the accounts payable line item in VF's Consolidated Balance Sheets and VF payments made under the SCF program are reflected in cash flows from operating activities in VF's Consolidated Statements of Cash Flows.

VF has been informed by the participating financial institutions that amounts payable to them for suppliers who voluntarily participated in the SCF program and included in the accounts payable line item in VF's Consolidated Balance Sheet was $201.2 million at September 2022.

The amounts settled through the SCF program during the three and six months ended September 2022 were $417.2 million and $432.2 million, respectively.

During the three months ended September 2022, VF extended its payment terms with eligible suppliers under the SCF program.

The amounts settled through the SCF program during the three and nine months ended December 2022 were $333.8 million and $766.0 million, respectively.

In the second quarter of Fiscal 2023, VF extended its payment terms with eligible suppliers under the SCF program.

The extended payment terms are expected to have a positive impact on Fiscal 2023 cash flows from operating activities;

2 unchanged sentences

VF’s credit agency ratings allow for access to additional liquidity at competitive rates.

At the end of September 2022, VF’s long-term debt ratings were ‘A-’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa1’ by Moody’s Investors Service, and commercial paper ratings by those rating agencies were ‘A-2’ and ‘P-2’, respectively.

VF's credit rating outlook was revised to 'negative' from 'stable' by S&P in June 2022 and Moody's in October 2022.

On October 31, 2022, S&P downgraded VF's long-term debt rating to 'BBB+', while maintaining VF's commercial paper rating of 'A-2' and credit rating outlook of 'negative'.

At the end of December 2022, VF’s long-term debt ratings were ‘BBB+’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa1’ by Moody’s Investors Service, and commercial paper ratings by those rating agencies were ‘A-2’ and ‘P-2’, respectively.

VF's credit rating outlook by both S&P and Moody's at the end of December 2022 was 'negative'.

None of VF’s long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings.

However, if there were a change in control of VF, and as a result of the change in control the notes were rated below investment grade by recognized rating agencies, then VF would be obligated to repurchase the notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest, if required by the respective holders of the notes.

The change of control provision applies to all notes, except for the 2033 notes.

The Company paid cash dividends of $0.50 per share and $1.00 per share during the three and six months ended September 2022, respectively, and the Company has declared a cash dividend of $0.51 per share that is payable in the third quarter of Fiscal 2023.

Subject to approval by its Board of Directors, VF intends to continue to pay its regularly scheduled dividend.

The change of control provision applies to all notes, except for the notes due in 2033.

VF Corporation Q3 FY23 Form 10-Q 40

Table of Con tents

The Company paid cash dividends of $0.51 per share and $1.51 per share during the three and nine months ended December 2022, respectively, and the Company has declared a cash dividend of $0.30 per share that is payable in the fourth quarter of Fiscal 2023.

Subject to approval by its Board of Directors, VF intends to continue to pay quarterly dividends.

Contractual Obligations

Management’s Discussion and Analysis in the Fiscal 2022 Form 10-K provided a table summarizing VF’s material contractual obligations and commercial commitments at the end of Fiscal 2022 that would require the use of funds.

As of September 2022, there have been no material changes in the amounts of unrecorded commitments disclosed in the Fiscal 2022 Form 10-K, except as noted below:

• Inventory purchase obligations decreased by approximately $1.3 billion at the end of September 2022 primarily due to changes in terms with suppliers that increased in-transit inventory and the timing of fulfilled orders following periods of supply chain disruption.

As of December 2022, there have been no material changes in the amounts of unrecorded commitments disclosed in the Fiscal 2022 Form 10-K, except as noted below:

• Inventory purchase obligations decreased by approximately $800.0 million at the end of December 2022 primarily due to changes in terms with suppliers that increased in-transit inventory and the timing of fulfilled orders following periods of supply chain disruption.

As previously reported, VF petitioned the U.S.

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While the IRS argues that all such income should have been immediately included in 2011, VF has reported periodic income inclusions in subsequent tax years.

Both parties moved for summary judgment on the issue.

Both parties moved for

summary judgment on the issue.

On January 31, 2022, the Court issued its opinion in favor of the IRS and on July 14, 2022 issued its final decision.

VF believes the opinion of the Court was in error based on the technical merits and filed a notice of appeal on October 7, 2022.

On October 19, 2022, VF paid $875.7 million related to the 2011 taxes and interest being disputed, which will be recorded as a tax receivable based on the technical merits of our position with regards to the case.

On October 19, 2022, VF paid $875.7 million related to the 2011 taxes and interest being disputed, which was recorded as an income tax receivable based on the technical merits of our position with regards to the case and will accrue interest income.

VF continues to believe its timing and treatment of the income inclusion is appropriate and VF is vigorously defending its position.

However, should the Court opinion ultimately be upheld on appeal, this tax receivable will not be collected by VF.

However, should the Court opinion ultimately be upheld on appeal, this income tax receivable will not be collected by VF.

If the Court opinion is upheld, VF should be entitled to a refund of taxes paid on the periodic inclusions that VF has reported.

However, any such refund could

VF Corporation Q2 FY23 Form 10-Q 40

be substantially reduced by potential indirect tax effects resulting from application of the Court opinion.

However, any such refund could be substantially reduced by potential indirect tax effects resulting from application of the Court opinion.

Deferred tax liabilities, representing VF’s future tax on annual inclusions, would also be released.

The net impact to tax expense is estimated to be up to $730 million.

There continues to be uncertainty about the duration and extent of the impact of the challenging macroeconomic environment

and COVID-19 pandemic.

The net impact to tax expense is estimated to be up to $730.0 million, plus the reversal of any interest income accrued on the payment.

There continues to be uncertainty about the duration and extent of the impact of the challenging macroeconomic environment and COVID-19 pandemic.

However, management believes that VF has sufficient liquidity and flexibility to operate during and after the disruptions caused by the challenging macroeconomic environment and COVID-19 pandemic, and meet its current and long-term obligations as they become due.

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Refer to Note 2 to VF’s consolidated financial statements for information on recently issued accounting standards.

41 VF Corporation Q2 FY23 Form 10-Q

Critical Accounting Policies and Estimates

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Management evaluates these estimates and assumptions, and may retain outside consultants to assist in the evaluation.

If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known.

If actual results ultimately differ from previous

estimates, the revisions are included in results of operations in the period in which the actual amounts become known.

The accounting policies that involve the most significant estimates, assumptions and management judgments used in preparation of the consolidated financial statements, or are the most sensitive to change from outside factors, are discussed in Management’s Discussion and Analysis in the Fiscal 2022 Form 10-K.

Except as disclosed in Note 1 to VF's consolidated financial statements, there have been no material changes in VF's accounting policies from those disclosed in our Fiscal 2022 Form 10-K.

Refer to Note 16 for additional detail of critical accounting estimates during the three months ended September 2022, which were associated with impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.

Refer to Note 16 for additional detail of critical accounting estimates during the second quarter of Fiscal 2023, which were associated with impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.

Cautionary Statement on Forward-looking Statements

From time to time, VF may make oral or written statements, including statements in this quarterly report, that constitute “forward-looking statements” within the meaning of the federal securities laws.

These include statements concerning plans, objectives, projections and expectations relating to VF’s operations or economic performance and assumptions related thereto.

These include statements concerning plans, objectives, projections and expectations relating to VF’s

operations or economic performance and assumptions related thereto.

Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting VF and therefore involve a number of risks and uncertainties.

Forward-looking statements are not guarantees, and actual results could differ materially from those expressed or implied in the forward-looking statements.

Forward-looking statements are not guarantees,

41 VF Corporation Q3 FY23 Form 10-Q

Table of Con tents

and 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 include, but are not limited to:

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VF’s and its vendors’ ability to maintain the strength and security of information technology systems;

the risk that VF’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data or

information security breaches and data or financial loss;

VF’s ability to properly collect, use, manage and secure business, consumer and employee data and comply with privacy and security regulations;

the risk that VF’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data or information security breaches and data or financial loss;

VF’s ability to properly collect, use, manage and secure business,

consumer and employee data and comply with privacy and security regulations;

foreign currency fluctuations;

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VF's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent VF from fulfilling its financial obligations;

VF'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;

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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.

VF Corporation Q2 FY23 Form 10-Q 42

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis