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A decline in consumer spending could have a material adverse effect on VF.
−Removed: The success of VF’s business depends on consumer spending on apparel and footwear, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions, disposable consumer income, interest rates, consumer credit availability, inflationary pressures (such as current inflation related to global supply chain disruptions), unemployment, stock market performance, weather conditions and natural disasters, energy prices, public health issues (including the COVID-19 pandemic), geopolitical instability (such as the current conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others), consumer discretionary spending patterns and tax rates in the international, national, regional and local markets where VF’s products are sold.
+Added: The success of VF’s business depends on consumer spending on apparel and footwear, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions, disposable consumer income, interest rates, consumer credit availability, inflationary pressures, recessions or economic slowdowns, unemployment, stock market performance, weather conditions and natural disasters (including potential effects from climate change), energy prices, public health issues (including the coronavirus (COVID-19) pandemic), geopolitical instability (such as the current conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others, and the current tensions between the U.S.
+Added: and China), consumer discretionary spending patterns and tax rates in the international, national, regional and local markets where VF’s products are sold.
Decreased consumer spending could result in reduced demand for our products, reduced orders from customers for our products, order cancellations, lower revenues, higher discounts, increased inventories and lower gross margins.
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If global economic and financial market conditions do not improve, adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on VF.
−Removed: The coronavirus (COVID-19) pandemic has and could continue to materially and adversely affect our business, financial condition and results of operations.
−Removed: Our business has been, and could continue to be, impacted by the effects of the COVID-19 pandemic in countries and territories where we operate and our employees, suppliers, third-party service providers, consumers or customers are located.
−Removed: As a result of the COVID-19 pandemic, and in response to government recommendations or mandates, as well as decisions we made to protect the health and safety of our employees, consumers and communities, our operations where our products are made, manufactured, distributed or sold were temporarily closed, or operated with limited operating hours and limited occupancy levels.
−Removed: Most of our operations have reopened, but there continues to be uncertainty around the extent to which operations may be closed again or experience operational restrictions if and where there is a resurgence in COVID-19 or new variants of the virus emerge, and the duration and severity of any related restrictions.
−Removed: Some of the impacts of the COVID-19 pandemic on our business have included, and could continue to include, the following:
−Removed: • significant reductions in demand and significant volatility in demand for our products by consumers and customers resulting in reduced orders, order cancellations, lower revenues, higher discounts, increased inventories, decreased value of inventories and lower gross margins, which continue to be caused by, among other things:
−Removed: inability of consumers to purchase our products due to illness, quarantine or other restrictions or out of fear of exposure to COVID-19, phased reopenings and reclosures of our owned stores as well as stores of our customers or reduced store hours across the Americas, Europe and Asia-Pacific regions due to a resurgence of COVID-19, significant declines in consumer retail store traffic to stores that have reopened, or financial hardship and unemployment, shifts in demand away from consumer discretionary products and reduced options for marketing and promotion of products or other restrictions in connection with the COVID-19 pandemic;
−Removed: • significant uncertainty and turmoil in global economic and financial market conditions causing, among other things:
−Removed: decreased consumer confidence and decreased consumer spending, now and in the mid- and long-term, inability to access financing in the credit and capital markets (including the commercial paper market) at reasonable rates (or at all) in the event we, our customers or suppliers find it desirable to do so, increased exposure to fluctuations in foreign currency exchange rates relative to the U.S.
−Removed: Dollar, and volatility in the availability and prices for commodities and raw materials we use for our products and in our supply chain;
−Removed: • inability to meet our consumers’ and customers’ needs for inventory production and fulfillment due to disruptions in our supply chain and increased costs associated with mitigating the effects of the pandemic caused by, among other things:
−Removed: reduction or loss of workforce due to illness, quarantine or other restrictions or facility closures, including vaccine mandates or return to work policies, scarcity of and/or increased prices for raw materials, scrutiny or embargoing of goods produced in infected areas, capacity constraints, vessel, container and other transportation shortages, and port congestion and increased freight and logistics costs, expenses and times;
−Removed: failure of third parties on which we rely, including our suppliers, customers, distributors, service providers and commercial banks, to meet their obligations to us or to timely meet those obligations, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, including business failure or insolvency and collectability of existing receivables;
−Removed: • significant changes in the conditions in markets in which we do business, including quarantines, governmental or regulatory actions, closures or other restrictions, including voluntarily adopted practices, that limit or close operating and manufacturing facilities and restrict our employees’ ability to perform necessary business functions, including operations necessary for the design, development, production, distribution, sale, marketing and support of our products and increase the likelihood of litigation;
−Removed: • increased costs, including increased employee costs, such as for expanded benefits and essential employee
−Removed: 10 VF Corporation Fiscal 2022 Form 10-K
−Removed: incentives, and increased operating costs, including those associated with provision of personal protective equipment and compliance with governmental or public health organization mandates or guidance, allowances or extended payment terms for customers, and inventory write-offs, all of which have negatively impacted our profitability;
−Removed: • increased risk to the health, safety and wellness, including mental and emotional health, of our employees due to the virus or the impact of related restrictions;
−Removed: • increased tax risk related to employees working remotely in a tax location other than their normal work location;
−Removed: • amplified data security risks as a result of more employees working remotely, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks, and an increase in the number of points of potential attack, such as laptops and mobile devices.
−Removed: These impacts have placed, and could continue to place limitations on our ability to execute our business plan and materially and adversely affect our business, financial condition and results of operations.
−Removed: We continue to monitor the situation and may adjust our current policies and procedures as more information and guidance become available.
−Removed: The impact of COVID-19 may also exacerbate other risks discussed in this “Risk Factors” section, any of which could have a material effect on us.
−Removed: The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration, severity and any resurgences of COVID-19, which are uncertain and cannot be predicted.
The apparel and footwear industries are highly competitive, and VF’s success depends on its ability to gauge consumer preferences and product trends, and to respond to constantly changing markets.
VF competes with numerous apparel and footwear brands and manufacturers.
−Removed: Competition is generally based upon brand name recognition, price, design, product quality, selection, service and purchasing convenience.
+Added: Competition is generally based upon brand name recognition, the price, design, quality and selection of product, service and purchasing convenience.
Some of our competitors are larger and have more resources than VF in some product categories and regions.
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• adapt to a more digitally driven consumer landscape.
+Added: In addition, our ability to compete is also dependent on our ability to reach consumers effectively and efficiently in an evolving media landscape, including digital, which is subject to evolving and increasingly restrictive privacy requirements.
Failure to compete effectively or to keep pace with rapidly changing consumer preferences, markets, technology, business model and product trends could have a material adverse effect on VF’s business, financial condition and results of operations.
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Recently there have been consolidations, reorganizations, restructurings, bankruptcies and ownership changes in the retail industry.
−Removed: In addition, the COVID-19 pandemic has resulted, and could continue to result, in closed stores, and reduced consumer traffic and purchasing.
−Removed: These events individually, and together, could have (and, in the case of the COVID-19 pandemic, have had) a material, adverse effect on VF's business.
+Added: These events individually, and together, could have a material, adverse effect on VF's business.
These changes could impact VF’s opportunities in the market and increase VF’s reliance on a smaller number of large customers.
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Further, the global economy periodically experiences recessionary conditions with rising unemployment, reduced availability of credit, increased savings rates and declines in real estate and securities values.
−Removed: These recessionary conditions, including as a result of the COVID-19 pandemic, could have a negative impact on retail sales of apparel, footwear and other consumer products.
+Added: These recessionary conditions could have a negative impact on retail sales of apparel, footwear and other consumer products.
The lower sales volumes, along with the possibility of restrictions on access to the credit markets, could result in our customers experiencing financial difficulties including store closures, bankruptcies or liquidations.
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If these developments occur, our inability to shift sales to other customers or to collect on VF’s trade accounts receivable could have a material adverse effect on VF’s financial condition and results of operations.
+Added: 10 VF Corporation Fiscal 2023 Form 10-K
+Added: Table of Conten ts
VF’s profitability may decline as a result of increasing pressure on margins.
−Removed: The apparel industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, inflation, rising freight costs, rising labor costs, pressure from retailers to reduce the costs of products, changes in consumer demand and shifts to online shopping and purchasing.
+Added: The apparel industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, inflation, rising freight costs, rising labor costs, pressure from retailers to reduce the costs of products, changes in consumer demand and shifts to online shopping and
Customers may increasingly seek markdown allowances, incentives and other forms of economic support.
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This could have a material adverse effect on VF’s results of operations, liquidity and financial condition.
−Removed: VF Corporation Fiscal 2022 Form 10-K 11
BUSINESS AND OPERATIONAL RISKS
VF’s business and the success of its products could be harmed if VF is unable to maintain the images of its brands.
−Removed: VF’s success to date has been due in large part to the growth of its brands’ images and VF’s customers’ connection to its brands.
+Added: VF’s success to date has been due in large part to the growth of its brands’ images and VF’s consumers’ connection to its brands.
If we are unable to timely and appropriately respond to changing consumer demand, the names and images of our brands may be impaired.
Even if we react appropriately to changes in consumer preferences, consumers may consider our brands’ images to be outdated or associate our brands with styles that are no longer popular.
−Removed: In addition, brand value is based in part on consumer perceptions on a variety of qualities, including merchandise quality and corporate integrity.
+Added: In addition, brand value is based in part on consumer perceptions on a variety of qualities, including merchandise quality, corporate integrity, and environmental, social and governance ("ESG") practices, including with respect to human rights, diversity, equity and inclusion, and our impact on the environment.
Negative claims or publicity regarding VF, its brands or its products, including licensed products, or its culture and values, or its employees, endorsers, sponsors or suppliers could adversely affect our reputation and sales regardless of whether such claims are accurate.
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In addition, actions taken by those individuals associated with our products could harm their reputations, which could adversely affect the images of our brands.
−Removed: Our reputation and brand image also could be damaged as a result of our support of, association with or lack of support or disapproval of certain social causes, as well as any decisions we make to continue to conduct, or change, certain of our activities in response to such considerations.
+Added: Our reputation and brand image also could be damaged as a result of our support of, association with or lack of support or disapproval of certain political or social issues or catastrophic events, as well as any decisions we make to continue to conduct, or change, certain of our activities in response to such considerations.
VF’s revenues and cash requirements are affected by the seasonal nature of its business.
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In addition, fluctuations in sales and operating income in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting retail sales.
−Removed: We may be adversely affected by weather conditions.
−Removed: Our business is adversely affected by unseasonable weather conditions.
+Added: We may be adversely affected by weather conditions, including any potential effects from climate change.
+Added: Our business is adversely affected by unseasonable weather conditions, including those resulting from climate change.
A significant portion of the sales of our products is dependent in part on the weather and is likely to decline in years in which weather conditions do not favor the use of these products.
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In addition, abnormally harsh or inclement weather can also negatively impact retail traffic and consumer spending.
+Added: As the effects of climate change increase, we expect the frequency and impact of weather and climate related events and conditions to increase as well.
Any and all of these risks may have a material adverse effect on our financial condition, results of operations or cash flows.
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One of VF’s key strategic objectives is growth.
−Removed: We seek to grow organically and through acquisitions.
+Added: Currently, we are prioritizing growth through organic means and, to a lesser extent, through acquisitions.
We seek to grow by building our lifestyle brands, expanding our share with winning customers, stretching VF’s brands to new regions, leveraging our supply chain and information technology capabilities across VF and expanding our direct-to-consumer business, including opening new stores, remodeling and expanding our existing stores and growing our e-commerce business.
However, we may not be able to grow our business.
−Removed: • We may have difficulty completing acquisitions or dispositions to reshape our portfolio, and we may not be able to successfully integrate a newly acquired business or achieve the expected growth, cost savings or synergies from such integration, or it may disrupt our current business.
−Removed: • We may not be able to transform our model to be more consumer- and retail-centric.
+Added: • We may not be able to find and amplify consumer tailwinds by innovating within our existing brand portfolio while also strategically expanding into adjacencies that complement our current brands and tap into consumer growth spaces.
• We may not be able to transform our model to be more digitally focused.
• We may not be able to expand our market share with winning customers, or our wholesale customers may encounter financial difficulties and thus reduce their purchases of VF products.
−Removed: • We may not be able to successfully distort investments to Asia or meet evolving consumer needs to unlock growth opportunities for our brands or expand in other geographies.
+Added: • We may not be able to successfully meet evolving consumer needs to unlock growth opportunities for our brands or expand in other geographies, including in Asia.
• We may not be able to effectively deploy resources and allocate capital towards investments in new and organic businesses and capabilities in order to drive strategic objectives.
−Removed: • We may not be able to achieve the expected results from our supply chain initiatives and establish and maintain effective supply chain systems, data, and capabilities, infrastructure, and the sourcing strategy necessary to optimally meet current and future business needs.
+Added: VF Corporation Fiscal 2023 Form 10-K 11
+Added: Table of Conten ts
+Added: • We may not be able to achieve the expected results from our supply chain initiatives and establish and maintain effective supply chain systems, data, and capabilities, infrastructure, and the sourcing strategy necessary to optimally meet current and future business needs, including direct-to-consumer needs.
• We may have difficulty recruiting, developing or retaining qualified employees.
1 unchanged sentence
• We may not be able to offset rising commodity or conversion costs in our product costs with pricing actions or efficiency improvements.
+Added: • We may have difficulty completing acquisitions or dispositions to reshape our portfolio, and we may not be able to successfully integrate a newly acquired business or achieve the expected growth, cost savings or synergies from such integration, or it may disrupt our current business.
Failure to implement our strategic objectives may have a material adverse effect on VF’s business.
−Removed: Moreover, VF is engaged in a business model transformation to become more consumer-minded, retail-centric and hyper-digital.
−Removed: Failure to successfully execute VF’s transformation agenda at a fast enough pace with clear objectives, assignments, accountability, project management, governance and
−Removed: 12 VF Corporation Fiscal 2022 Form 10-K
−Removed: appropriate consideration for change management could result in a diminished ability to remain competitive.
Further, organizational effectiveness, agility and execution are important to VF’s success.
Failure to create an agile and efficient operating model and organizational structure or to effectively define, prioritize, and align on clear achievable and appropriately resourced strategic priorities could result in an inability to remain competitive in a rapidly changing marketplace and lead to increase in costs, inefficient resource allocation, reduced productivity, organizational confusion, and reduced employee morale.
+Added: Our supply chain may be disrupted due to factors such as political instability, inflationary pressures, macroeconomic conditions, and other factors including reduced freight availability and increased costs, port disruption, distribution center closures, severe weather, natural disasters, military conflicts, or labor supply shortages or stoppages.
+Added: Any significant disruption in our supply chain could impair our ability to procure or distribute our products, which would adversely affect our business and results of operations.
VF relies significantly on information technology.
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We are also dependent on information technology, including the Internet, for our direct-to-consumer sales, including our e-commerce operations and retail business credit card transaction authorization.
−Removed: Despite our preventative efforts, our systems and those of our third-party service providers may be vulnerable to damage, failure or interruption due to viruses, data security incidents, technical malfunctions, natural disasters or other causes, or in connection with upgrades to our system or the implementation of new systems.
+Added: Despite our preventative efforts, our systems and those of our third-party service providers may be vulnerable to damage, failure or interruption due to viruses, data security incidents, technical malfunctions, natural disasters or other causes, or in connection
+Added: with upgrades to our system or the implementation of new systems.
The failure of these systems to operate effectively or remain innovative, problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach in security of these systems could adversely impact the operations of VF’s business, including our reputation, management of inventory, ordering and replenishment of products, sourcing and distribution of products, e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media.
−Removed: Moreover, failure to provide effective digital (including omnichannel) capabilities and information technology infrastructure could result in an inability to meet current and future business needs and a resulting loss of brand competitiveness, leading to loss of revenue and market share and decreased business agility.
+Added: Moreover, failure to provide effective digital (including omni-channel) capabilities and information technology infrastructure could result in an inability to meet current and future business needs and a resulting loss of brand competitiveness, leading to loss of revenue and market share and decreased business agility.
VF is subject to data and information security and privacy risks that could negatively affect its business operations, results of operations or reputation.
−Removed: In the normal course of business, we often collect, retain and transmit certain sensitive and confidential customer information, including credit card information and employee information, over public networks.
+Added: In the normal course of business, we often collect, retain and transmit certain sensitive and confidential consumer information, including credit card information and employee information, over public networks.
There is a significant concern by consumers and employees over the security of personal information collected, retained or transmitted over the Internet, identity theft and user privacy.
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Accordingly, if unauthorized parties gain access to our networks or databases, or those of our third-party service providers, they may be able to steal, publish, delete, hold ransom or modify our private and sensitive information, including credit card information, personal information, and confidential or other proprietary business information.
−Removed: We have implemented systems and processes
−Removed: designed to protect against unauthorized access to or use of personal information and other confidential information, and rely on encryption and authentication technology to effectively secure transmission of such information, including credit card information.
+Added: We have implemented systems and processes designed to protect against unauthorized access to or use of personal information and other confidential information, and rely on encryption and authentication technology to effectively secure transmission of such information, including credit card information.
Despite these security measures, there is no guarantee that they will prevent all unauthorized access to our systems and information, and our facilities and systems and those of our third-party service providers may be vulnerable and unable to anticipate or detect security breaches and data loss.
−Removed: In addition, employees may intentionally or inadvertently cause data security breaches that result in the unauthorized release of personal or confidential information.
−Removed: VF and its customers could suffer harm if valuable business data, or employee, customer and other confidential and proprietary information were corrupted, lost or accessed or misappropriated by third parties due to a security failure in VF’s systems or due to one of our third-party service providers or our employees.
−Removed: It could require significant expenditures to remediate any such failure or breach, severely damage our reputation, confidence in our e-commerce platforms and our relationships with customers and employees, result in business disruption, unwanted and negative media attention and lost sales, and expose us to risks of litigation, liability and increased scrutiny from regulatory entities.
−Removed: In addition, as a result of recent security breaches at a number of prominent retailers, the media and public scrutiny of information security and privacy has become more intense and the regulatory environment has become increasingly uncertain, rigorous and complex.
+Added: In addition, we face amplified data security risks as a result of more employees working remotely, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks, and an increase in the number of points of potential attack, such as laptops and mobile devices.
+Added: Employees may intentionally or inadvertently cause data security breaches that result in the unauthorized release of personal or confidential information.
+Added: VF and its consumers could suffer harm if valuable business data, or employee, consumer and other confidential and proprietary information were corrupted, lost or accessed or misappropriated by third parties due to a security failure in VF’s systems or due to one of our third-party service providers or our employees.
+Added: It could require significant expenditures to remediate any such failure or breach, severely damage our reputation, confidence in our e-commerce platforms and our relationships with consumers and employees, result in business disruption, unwanted and negative media attention and lost sales, and expose us to risks of litigation, liability and increased scrutiny from regulatory entities.
+Added: 12 VF Corporation Fiscal 2023 Form 10-K
+Added: Table of Conten ts
+Added: addition, as a result of recent security breaches at a number of prominent retailers, the media and public scrutiny of information security and privacy has become more intense and the regulatory environment has become increasingly uncertain, rigorous and complex.
As a result, we may incur significant costs to comply with laws regarding the privacy and security of personal information and we may not be able to comply with new data protection laws and regulations being adopted around the world.
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Any acquisitions or mergers by VF will be accompanied by the risks commonly encountered in acquisitions of companies.
−Removed: These risks include, among other things, higher than anticipated acquisition costs and expenses, the difficulty and expense of integrating the operations, systems and personnel of the companies and the loss of key employees and customers as a result of changes in management.
+Added: These risks include, among other things, higher than anticipated acquisition costs and expenses, the difficulty and expense of integrating the operations, systems and personnel of the companies, the loss of key employees and consumers as a result of changes in management, and slower progress toward ESG goals given challenges with data acquisition and integration, and integration of ESG initiatives overall.
In addition, geographic distances may make integration of acquired businesses more difficult.
1 unchanged sentence
Moreover, failure to effectively manage VF’s portfolio of brands in line with growth targets and shareholder expectations, including acquisition choices, integration approach and divestiture timing could result in unfavorable impacts to growth and value creation.
−Removed: VF Corporation Fiscal 2022 Form 10-K 13
−Removed: Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future.
+Added: Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges, such as the recent impairment charges related to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.
We also make certain estimates and assumptions in order to determine purchase price allocation and estimate the fair value of assets acquired and liabilities assumed.
If our estimates or assumptions used to value these assets and liabilities are not accurate, we may be exposed to losses that may be material.
+Added: The Supreme ® brand employs a different business model than the rest of our brands and is subject to unique risks because of its focus on frequent, weekly and limited product drops through the direct-to-consumer channel.
+Added: The Supreme business model has different characteristics from the business models which VF and its brands have historically employed.
+Added: These different characteristics may include product volume requirements, product seasonality, product design and production rates, and consumer concentrations and demand.
+Added: VF's failure to make the necessary adaptations to its operations to address these
+Added: different characteristics, complexities and market dynamics could adversely affect VF's revenue, business condition and results of operations.
VF uses third-party suppliers and manufacturing facilities worldwide for its raw materials and finished products, which poses risks to VF’s business operations.
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• political or labor instability in countries where VF’s contractors and suppliers are located;
−Removed: • changes in local economic conditions in countries where VF’s contractors and suppliers are located;
+Added: • inflationary pressures or changes in local economic conditions in countries where VF’s contractors and suppliers are located;
• public health issues, such as the COVID-19 pandemic, have resulted in (or could continue to result in) closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;
2 unchanged sentences
• heightened terrorism security concerns could subject imported or exported goods to additional, more frequent or lengthier inspections, leading to delays in deliveries or impoundment of goods for extended periods;
+Added: • increased risk of detention by customs officials of raw materials or goods used by our suppliers in the manufacture of certain of our products, and increased risk of detention of our products;
• decreased scrutiny by customs officials for counterfeit goods, leading to more counterfeit goods and reduced sales of VF products, increased costs for VF’s anti-counterfeiting measures and damage to the reputation of its brands;
4 unchanged sentences
Although no single supplier and no one country is critical to VF’s production needs, if we were to lose a supplier it could result in interruption of finished goods shipments to VF, cancellation of orders by customers and termination of relationships.
−Removed: This, along with the damage to our reputation, could have a material adverse effect on VF’s revenues and, consequently, our results of operations.
+Added: This, along with the damage to our reputation, could have a material
+Added: VF Corporation Fiscal 2023 Form 10-K 13
+Added: Table of Conten ts
+Added: adverse effect on VF’s revenues and, consequently, our results of operations.
In addition, although we audit our third-party material suppliers and contracted manufacturing facilities and set strict compliance standards, actions by a third-party supplier or manufacturer that fail to comply could result in such third-party supplier failing to manufacture products that consistently meet our quality standards or engaging in unfavorable labor practices or providing unfavorable working conditions that negatively impact worker health, safety and wellness.
6 unchanged sentences
A decision by any of VF’s major customers to significantly decrease the volume of products purchased from VF could substantially reduce revenues and have a material adverse effect on VF’s financial condition and results of operations.
−Removed: Talent management, employee retention and experience are important factors in VF’s success.
−Removed: Our future success also depends on our ability to attract, develop, and retain talent with the necessary knowledge, skills and experience and maintain a culture of wellbeing, empowerment and diversity and inclusion to ensure VF is innovative and remains competitive in a rapidly-changing global marketplace.
−Removed: Competition for experienced and well-qualified personnel is intense and we may not be successful in attracting, developing, and retaining such personnel, which could impact VF’s ability to remain competitive.
+Added: Talent acquisition, management, engagement and retention are important factors in VF’s success.
+Added: Turnover in VF’s leadership or other key positions may have a material adverse effect on VF.
+Added: Our future success also depends on our ability to acquire, develop, and retain talent needed to mobilize VF against our current and future needs, and sustain our culture as a performance-driven company that is committed to its purpose.
+Added: Competition for experienced, well-qualified and diverse personnel is intense and we may not be successful in attracting, developing, and retaining such personnel, which could impact VF’s ability to remain competitive.
+Added: Our ability to acquire, develop and retain personnel has been, and may continue to be impacted by, challenges and structural shifts in the labor market, which has experienced and may continue to experience wage inflation, labor shortages, increased employee turnover, changes in availability of the workforce and a shift toward remote work.
Additionally, changes to our office environments, the adoption of new work models, and our requirements and/or expectations about when or how often certain employees work on-site or remotely may not meet the expectations of our employees.
As businesses increasingly operate remotely, traditional geographic competition for talent may change in ways that we cannot presently predict.
−Removed: If our employment proposition is not perceived as favorable compared to other companies, it could negatively impact our ability to attract and retain our employees.
−Removed: If we are unable to retain, attract, and motivate talented employees with the appropriate skill sets, or if changes to our organizational structure, operating results, or business model adversely affect morale or retention, we may not achieve our objectives and our results of operations could be adversely impacted.
+Added: If our employment proposition is not perceived as favorable compared to other companies, it could negatively impact our ability to acquire and retain our employees.
+Added: If we are unable to retain, acquire, and engage talented employees with the appropriate skill sets, or if changes to our organizational structure, operating results, or business model adversely affect morale or retention, we may not achieve our objectives, our relationships with our customers, consumers or other third parties may be disrupted, and our results of operations could be adversely impacted.
VF depends on the services and management experience of its executive officers and business leaders who have substantial experience and expertise in VF’s business, and in developing and retaining employees.
+Added: This loss of experience and expertise can be mitigated through successful hiring and transition, but there can be no assurance that we will be successful in such efforts.
+Added: Acquiring and retaining qualified senior leadership may be more challenging under adverse business conditions.
The unexpected loss of services of one or more of these individuals or the inability to effectively identify a suitable successor to a key role could have a material adverse effect on VF.
−Removed: 14 VF Corporation Fiscal 2022 Form 10-K
+Added: On December 2, 2022, VF’s Board of Directors appointed Benno Dorer, a member of the Board, as Interim President and Chief Executive Officer, effective immediately following the retirement of Steve Rendle, VF’s then President and Chief Executive Officer.
+Added: VF’s Board has retained a search firm to assist in identifying a permanent President and Chief Executive Officer.
+Added: This recent change in our executive leadership team, along with other changes in the roles and responsibilities among our executive officers, and any future changes resulting from the hiring or departure of executive officers, could disrupt our business and negatively affect our ability to recruit and retain talent.
+Added: Such leadership transitions can be inherently difficult to manage, and an inadequate transition may cause disruption to our business, including to our relationships with our associates and other third parties.
+Added: Further, this change also increases our dependency on other members of our executive leadership team who remain with us, and the departure of any remaining executive officer could be particularly disruptive in light of the recent leadership transitions.
VF’s direct-to-consumer business includes risks that could have an adverse effect on its results of operations.
7 unchanged sentences
We have entered into substantial operating lease commitments for retail space.
−Removed: Due to the high fixed-cost structure associated with our direct-to-consumer operations, a decline in sales or the closure of or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and employee-related costs.
+Added: Due to the high fixed-cost structure associated with our direct-to-consumer operations, a decline in sales or the closure of or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of
+Added: 14 VF Corporation Fiscal 2023 Form 10-K
+Added: Table of Conten ts
+Added: equipment and leasehold improvements and employee-related costs.
VF’s net sales depend on the volume of traffic to its stores and the availability of suitable lease space.
A significant portion of our revenues are direct-to-consumer sales through VF-operated stores.
−Removed: In order to generate customer traffic, we locate many of our stores in prominent locations within successful retail shopping centers or in fashionable shopping districts.
+Added: In order to generate consumer traffic, we locate many of our stores in prominent locations within successful retail shopping centers or in fashionable shopping districts.
Our stores benefit from the ability of the retail center and other attractions in an area to generate consumer traffic in the vicinity of our stores.
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VF’s trademarks and other intellectual property rights are important to its success and its competitive position.
−Removed: susceptible to others copying its products and infringing its intellectual property rights, especially with the shift in product mix to higher priced brands and innovative new products in recent years.
+Added: VF is susceptible to others copying its products and infringing its intellectual property rights, especially with the shift in product mix to higher priced brands and innovative new products in recent years.
Some of VF’s brands, such as Vans ® , The North Face ® , Timberland ® , Dickies ® and Supreme ® enjoy significant worldwide consumer recognition, and the higher pricing of certain of the brands' products creates additional risk of counterfeiting and infringement.
3 unchanged sentences
In addition, unilateral actions in the U.S.
−Removed: or other countries, including changes to or the repeal of laws recognizing trademark or other intellectual property rights, such as the Russian government's recent announcements that it would not protect intellectual property rights, including patent rights and rights that could block parallel imports of gray market goods, as a result of the sanctions imposed on Russia in connection with the Russia-Ukraine conflict, could have an impact on VF’s ability to enforce those rights.
+Added: or other countries, including changes to or the repeal of laws recognizing trademark or other intellectual property rights, such as the Russian government's announcements that it would not protect intellectual property rights, including patent rights and rights that could block parallel imports of gray market goods, as a result of the sanctions imposed on Russia in connection with the Russia-Ukraine conflict, could have an impact on VF’s ability to enforce those rights.
The value of VF’s intellectual property could diminish if others assert rights in or ownership of trademarks and other intellectual property rights of VF, or trademarks that are similar to VF’s trademarks, or trademarks that VF licenses from others.
8 unchanged sentences
VF relies on owned or leased VF-operated and third party-operated distribution facilities to warehouse and ship product to VF customers.
−Removed: VF’s distribution system includes computer-controlled and automated equipment, which may be subject to a
−Removed: VF Corporation Fiscal 2022 Form 10-K 15
−Removed: number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures.
+Added: VF’s distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures.
Because substantially all of VF’s products are distributed from a relatively small number of locations, VF’s operations could also be interrupted by earthquakes, floods, fires or other natural disasters or other events outside VF's control affecting its distribution centers, including political or labor instability.
2 unchanged sentences
If we encounter problems with our distribution system, our ability to meet customer expectations, manage inventory, complete sales and achieve operating efficiencies could be materially adversely affected.
−Removed: VF’s business and operations could be materially and adversely affected if it fails to create systems of monitoring, prevention, response, crisis management, continuity and recovery to mitigate natural or man-made economic, political or environmental disruptions.
−Removed: Business resiliency is important to VF’s success because there are a variety of risks generally associated with doing business on a global basis that may involve natural or man-made economic, political or environmental disruptions.
−Removed: Disruptions, and government responses to any disruption, could cause, among other things, a decrease in consumer spending that would negatively impact our sales, delays in the fulfillment or cancellation of customer orders or disruptions in the manufacture and shipment of products, increased costs and a negative impact on our reputation and long-term growth plans.
+Added: VF’s business and operations could be materially and adversely affected if it fails to create systems of monitoring, prevention, response, crisis management, continuity and recovery to mitigate natural or man-made economic, public health, political or environmental disruptions.
+Added: Business resiliency is important to VF’s success because there are a variety of risks generally associated with doing business on a global basis that may involve natural or man-made economic, public health (including the COVID-19 pandemic), political or environmental disruptions.
+Added: Disruptions, and government responses to any disruption, could cause, among other things, a decrease in consumer spending that would negatively impact our sales, delays in the fulfillment or cancellation of customer
+Added: VF Corporation Fiscal 2023 Form 10-K 15
+Added: Table of Conten ts
+Added: orders or disruptions in the manufacture and shipment of products, increased costs and a negative impact on our reputation and long-term growth plans.
The impact of disruptions may vary based on the length and severity of the disruption.
−Removed: VF’s failure to create and implement systems of monitoring, prevention, response, crisis management, continuity and recovery to anticipate, prepare, prevent, mitigate, and respond to potential threats impacting its business, people, processes and facilities could result in extended disruptions and unpredictability.
+Added: VF’s failure to create and implement systems of
+Added: monitoring, prevention, response, crisis management, continuity and recovery to anticipate, prepare, prevent, mitigate, and respond to potential threats impacting its business, people, processes and facilities could result in extended disruptions and unpredictability.
LEGAL, REGULATORY AND COMPLIANCE RISKS
2 unchanged sentences
These include the burdens of complying with U.S.
−Removed: and international laws and regulations, and unexpected changes in regulatory requirements.
+Added: and international laws and regulations, and changes in regulatory requirements.
Changes in regulatory, geopolitical policies and other factors may adversely affect VF’s business or may require us to modify our current business practices.
6 unchanged sentences
and other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia, including certain Russian citizens and enterprises, and the continuation of the conflict may trigger additional economic and other sanctions.
−Removed: To date, we have experienced revenue impacts due to cessation of business in Russia, currency devaluation, and costs associated with compliance with sanctions and other regulations.
−Removed: In addition, as of April 2, 2022, there was approximately $31.0 million of cash in Russia that, although it can be used without limits within Russia, is currently limited on
−Removed: movement out of Russia.
+Added: To date, we have experienced revenue impacts due to business model changes in Russia, currency devaluation, and costs associated with compliance with sanctions and other regulations.
+Added: For example, we have closed all VF-operated retail stores, terminated all leases and ceased all direct-to-consumer e-commerce operations in Russia.
+Added: In addition, as of April 1, 2023, there was approximately $36.5 million of cash in Russia that, although it can be used without limits within Russia, is currently limited on movement out of Russia.
Further impacts of the conflict could include macro financial impacts resulting from the exclusion of Russian financial institutions from the global banking system, volatility in foreign exchange rates and interest rates, inflationary pressures on raw materials and energy, heightened cybersecurity threats, harm to employee health and safety, reputational harm, increase in counterfeiting and intellectual property activity, nationalization of our assets, and additional costs associated with compliance with sanctions and other regulations and risks associated with failure to comply with the same.
Although our operations in Russia are not significant, the conflict could escalate and result in broader economic and security concerns, including in other geographies, which could in turn adversely affect our business, financial condition or results of operations.
+Added: As a result of our global operations, we are subject to a number of risks impacting our employees working outside the U.S., including regulations that may differ from or be more stringent than analogous U.S.
+Added: regulations, political or economic instability, cross-border political tensions and challenges in effectively managing employees in foreign jurisdictions.
+Added: VF is subject to increased tax and regulatory risks related to employees working remotely or otherwise in a tax location other than their normal work location or residential state or country.
+Added: These changes have created, and continue to create, challenges in managing our tax and regulatory compliance as well as acquiring and retaining cross-border talent, which could adversely affect our business, results of operations and financial condition.
Changes to U.S.
10 unchanged sentences
Such changes have the potential to adversely impact the U.S.
−Removed: economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a
−Removed: 16 VF Corporation Fiscal 2022 Form 10-K
−Removed: material adverse effect on our business, financial condition and results of operations.
+Added: economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a material adverse effect on our business, financial condition and results of operations.
+Added: In addition, the Uyghur Forced Labor Prevention Act and other similar laws may lead to greater supply chain compliance costs and delays to us and to our suppliers and customers.
Changes in tax laws could increase our worldwide tax rate and tax liabilities and materially affect our financial position and results of operations.
2 unchanged sentences
On December 22, 2017, the U.S.
−Removed: government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“U.S.
−Removed: Tax Act”), which included a broad range of tax reform proposals affecting businesses, including a reduction in the U.S.
−Removed: federal corporate tax rate from 35% to 21%, a one-time mandatory deemed repatriation tax on earnings of certain foreign subsidiaries that were previously tax-deferred, and a new minimum tax on certain foreign earnings.
+Added: government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act, which included a broad range of tax reform proposals affecting businesses, including a reduction in the U.S.
+Added: federal corporate tax rate from 35% to 21%, a one-time mandatory deemed repatriation tax on earnings of certain foreign subsidiaries that were previously tax-deferred, and a
+Added: 16 VF Corporation Fiscal 2023 Form 10-K
+Added: Table of Conten ts
+Added: new minimum tax on certain foreign earnings.
Taxes related to the one-time mandatory deemed repatriation of foreign earnings due over a period of time could be accelerated upon certain triggering events, including failure to pay such taxes when due.
−Removed: In addition, regulatory, administrative and legislative guidance related to the U.S.
−Removed: Tax Act continues to be released.
−Removed: To the extent any future guidance differs from our interpretation of the law, or the current U.S.
−Removed: Presidential Administration takes further action, including through its proposal of a higher U.S.
−Removed: federal corporate tax rate and increased taxation of offshore income, such guidance or action could have a material effect on our financial position and results of operations.
+Added: In addition, the current U.S.
+Added: Presidential Administration could take further action, including through its proposal of a higher U.S.
+Added: federal corporate tax rate and increased taxation of offshore income.
+Added: Such action could have a material effect on our financial position and results of operations.
In addition, many countries in the European Union ("EU") and around the globe have adopted and/or proposed changes to current tax laws.
Further, organizations such as the Organisation for Economic Co-operation and Development ("OECD") have published action plans that, if adopted by countries where we do business, could increase our tax obligations and compliance costs in these countries.
−Removed: More specifically, the OECD has released rules to address tax challenges arising from the digitalization of the economy.
+Added: More specifically, the OECD has released rules to address tax challenges arising from the digitalization of the economy (i.e., Global Anti Base Erosion ("GloBE") model rules or "Pillar Two").
+Added: Member countries are expected to implement these rules into local law in the coming year.
+Added: The new rules could be effective for companies as early as tax years beginning on or after January 1, 2024.
The ultimate outcome of these rules that are enacted into law in each country may result in a material financial impact to VF.
10 unchanged sentences
For example, VF was granted a ruling which lowered the effective income tax rate on taxable earnings for years 2010 through 2014 under Belgium’s excess profit tax regime.
−Removed: 2015, the EU investigated and announced its decision that the ruling was illegal and ordered that tax benefits granted under the ruling should be collected from the affected companies, including VF Europe, BVBA, a subsidiary of VF.
+Added: During 2015, the EU investigated and announced its decision that the ruling was illegal and ordered that tax benefits granted under the ruling should be collected from the affected companies, including VF Europe, BVBA, a subsidiary of VF.
Requests for annulment were filed by Belgium and VF Europe BVBA, individually.
1 unchanged sentence
During 2019, the General Court annulled the EU decision and the EU subsequently appealed the General Court’s annulment.
−Removed: In September 2021, the General Court’s judgment was set aside by the Court of Justice of the EU and the case was sent back to the General Court to determine whether the excess profit tax regime amounted to illegal State aid.
+Added: In September 2021, the General Court’s judgment was set aside by the Court of Justice of the EU and the case was sent back to the General Court to determine whether the excess profit tax regime
+Added: amounted to illegal State aid.
The case remains open and unresolved.
3 unchanged sentences
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.
−Removed: Both parties moved for summary judgment on the issue, and on January 31, 2022, the Court issued its opinion in favor of the IRS.
−Removed: VF believes the opinion of the Court was in error based on the technical merits and intends to appeal;
−Removed: however, VF will be required to pay the 2011 taxes and interest being disputed or post a surety bond.
−Removed: It is anticipated that during Fiscal 2023, the IRS will assess, and VF will pay, the 2011 taxes and interest, which would be recorded as a tax receivable based on the technical merits of our position with regards to the case.
−Removed: The gross amount of taxes and interest as of April 2, 2022 was estimated at approximately $845.0 million and will continue to accrue interest until paid.
+Added: Both parties moved for summary judgment on the issue, and on January 31, 2022, the Court issued its opinion in favor of the IRS and on July 14, 2022 issued its final decision.
+Added: 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.
+Added: On October 19, 2022, VF paid $875.7 million related to the 2011 taxes and interest being disputed, which was recorded as a 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.
−Removed: However, should the Court opinion ultimately be upheld on appeal, this tax receivable may not be collected by VF.
+Added: 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.
1 unchanged sentence
Deferred tax liabilities, representing VF’s future tax on annual inclusions, would also be released.
−Removed: The net impact to tax expense estimated as of April 2, 2022 could be up to $700.0 million .
+Added: 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, which was approximately $12.0 million at March 2023 .
Although we accrue for uncertain tax positions, our accrual may be insufficient to satisfy unfavorable findings.
2 unchanged sentences
The costs of compliance with, or the violation of, such laws and regulations by VF or by independent suppliers who manufacture products for VF could have an adverse effect on our operations and cash flows, as well as on our reputation.
−Removed: Our business is subject to comprehensive national, state and local laws and regulations on a wide range of environmental,
−Removed: VF Corporation Fiscal 2022 Form 10-K 17
−Removed: climate change, consumer protection, employment, privacy, safety and other matters.
+Added: Our business is subject to comprehensive national, state and local laws and regulations on a wide range of environmental, climate change, consumer protection, social, employment, privacy, safety and other matters.
VF could be adversely affected by costs of compliance with or violations of those laws and regulations.
1 unchanged sentence
The costs of products purchased by VF from independent contractors could increase due to the costs of compliance by those contractors.
−Removed: Failure by VF or its third-party suppliers to comply with such laws and regulations, as well as with ethical, social, product, safety, labor and environmental standards, or related political considerations, could result in interruption of finished goods shipments to VF, extensive remediation efforts, cancellation of orders by customers and termination of relationships.
−Removed: If VF or one of our independent contractors violates labor or other laws, implements labor or other business practices or takes other actions that are generally regarded as unethical, it could result in unwanted or negative media attention, jeopardize our reputation and potentially lead to various adverse consumer actions, including boycotts that may reduce demand for VF’s merchandise.
+Added: Failure by VF or its third-party suppliers to comply with such laws and regulations, as well as with ethical, social, product, safety, labor and environmental standards, or related political
+Added: VF Corporation Fiscal 2023 Form 10-K 17
+Added: Table of Conten ts
+Added: considerations, could result in a material adverse effect on our financial condition, results of operations or cash flows, including resulting in interruption of finished goods shipments to VF, extensive remediation efforts, cancellation of orders by customers and termination of relationships.
+Added: If VF or one of our independent contractors violates labor or other laws, implements improper labor or other business practices or takes other actions that are generally regarded as unethical, it could result in unwanted or negative media attention, jeopardize our reputation and potentially lead to various adverse consumer actions, including boycotts that may reduce demand for VF’s merchandise.
Damage to VF’s reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on VF’s results of operations, financial condition and cash flows, as well as require additional resources to rebuild VF’s reputation.
−Removed: Our international operations are also subject to compliance with the U.S.
+Added: Our operations are also subject to compliance with the U.S.
Foreign Corrupt Practices Act (the “FCPA”) and other anti-bribery laws applicable to our operations.
3 unchanged sentences
Climate change is occurring around the world and may impact our business in numerous ways.
−Removed: Failure to monitor, adapt, build
−Removed: resilience, and develop solutions against the physical and transitional impacts from climate change may lead to revenue loss, market share loss, business interruptions, and rising costs.
+Added: Failure to monitor, adapt, build resilience, and develop solutions against the physical and transitional impacts from climate change may lead to revenue loss, market share loss, business interruptions, physical damage to our facilities, and rising costs.
Climate change could lead to increased volatility due to physical impacts of climate change on the supply chain, including the availability, quality and cost of raw materials.
−Removed: Increased frequency and severity of extreme weather events (storms and floods) could cause increased incidence of disruption to the production and distribution of our products and an adverse impact on consumer demand and spending.
−Removed: Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, and other stakeholders, including non-governmental organizations, employees, and consumers, have focused increasingly on the environmental, social and governance ("ESG") and related sustainability practices of companies.
−Removed: These parties have placed increased importance on the implications of the social cost of their investments and/or have higher expectations of corporate conduct.
−Removed: If our ESG practices do not meet investor or other stakeholder expectations and standards, including related to climate change, sustainability, and human rights, and do not meet related regulations and expectations for increased transparency, which continue to evolve, our brands, reputation and employee retention may be negatively impacted.
−Removed: It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.
+Added: Increased frequency and severity of extreme weather events (such as storms and floods) could cause increased incidence of disruption to the production and distribution of our products, increased costs for our business, including maintenance, repair, utilities and insurance costs, and an adverse impact on consumer demand and spending.
+Added: Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, and other stakeholders, including non-governmental organizations, employees, and consumers, have focused increasingly on ESG and related sustainability practices of companies.
+Added: These parties have placed increased importance on the implications of the social cost of their investments and/or have higher expectations
+Added: of corporate conduct.
+Added: If our ESG practices do not meet investor or other stakeholder expectations and standards, including related to climate change, sustainability, social impact, and human rights, and do not meet related regulations and expectations for increased transparency, which continue to evolve, our brands, reputation and employee retention may be negatively impacted.
+Added: In addition, governmental and self-regulatory organizations, including the SEC and NYSE, promulgate rapidly changing rules and regulations addressing ESG topics.
+Added: These rules and regulations continue to evolve in scope and complexity and have resulted in, and are likely to continue to result in, increased expenses and increased management time and attention spent complying with or meeting such rules and regulations.
+Added: For example, collection of ESG data, developing and acting on initiatives within the scope of ESG, and collecting, measuring and reporting ESG related information and targets can be costly, difficult and time consuming and is subject to evolving reporting standards, including the SEC’s recently proposed climate-related disclosure requirements, and similar proposals and laws by other international regulatory bodies.
+Added: If our ESG related data, information, processes or reporting are incomplete or inaccurate, our reputation, business, financial performance and growth could be adversely affected.
+Added: For example, customer expectations with respect to our ability to meet rapidly evolving ESG reporting standards in the EU member states and other countries may impact our ability to do business with customers, or otherwise present barriers to entry, which could result in an adverse impact on our business, financial performance and growth.
+Added: It is possible that stakeholders may oppose our ESG practices or disagree with them.
+Added: It is also possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.
While we may announce voluntary ESG targets, we may not be able to meet such targets in the manner or on such a timeline as initially contemplated, including, but not limited to as a result of unforeseen costs or technical difficulties associated with achieving such results.
+Added: Achieving ESG targets will require significant efforts from us and other stakeholders, such as our suppliers and other third parties, and also require capital investment, additional costs, and the development of technology that may not currently exist.
+Added: In addition, we could be criticized for the scope or nature of such targets, or for any revision to those targets.
We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices and regulations.
−Removed: Also, our failure, or perceived failure, to manage reputational threats and meet stakeholder expectations or shifting consumer preferences with respect to socially responsible activities and products and packaging and sustainability commitments and regulations could negatively impact our brand, image, reputation, credibility, employee retention, and the willingness of our customers and suppliers to do business with us.
+Added: Also, our failure, or perceived failure, to manage reputational threats and meet stakeholder expectations or shifting consumer preferences with respect to environmentally or socially responsible activities and products and packaging and sustainability commitments and regulations could negatively impact our brand, image, reputation, credibility, employee retention, and the willingness of our customers and suppliers to do business with us.
+Added: 18 VF Corporation Fiscal 2023 Form 10-K
+Added: Table of Conten ts
FINANCIAL RISKS
VF’s balance sheet includes a significant amount of intangible assets and goodwill.
−Removed: A decline in the fair value of an intangible asset or of a business unit could result in an asset impairment charge, which would be recorded as an operating expense in VF’s Consolidated Statement of Operations and could be material.
+Added: A decline in the fair value of an intangible asset or of a business unit could result in an asset impairment charge, such as the recent impairment charges related to the Supreme ® reporting unit goodwill and indefinite-lived trademark intangible asset .
VF’s policy is to evaluate indefinite-lived intangible assets and goodwill for possible impairment as of the beginning of the fourth quarter of each year, or whenever events or changes in circumstances indicate that the fair value of such assets may be below their carrying amount.
1 unchanged sentence
For these impairment tests, we use various valuation methods to estimate the fair value of our business units and intangible assets.
−Removed: If the fair value of an asset is less
−Removed: than its carrying value, we would recognize an impairment charge for the difference.
−Removed: It is possible that we could have an impairment charge for goodwill or trademark and trade name intangible assets in future periods if (i) overall economic conditions in Fiscal 2023 or future years vary from our current assumptions, (ii) business conditions or our strategies for a specific business unit change from our current assumptions (including changes in discount rates), (iii) investors require higher rates of return on equity investments in the marketplace, or (iv) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible
−Removed: 18 VF Corporation Fiscal 2022 Form 10-K
−Removed: A future impairment charge for goodwill or intangible assets could have a material effect on our consolidated financial position or results of operations.
+Added: If the fair value of an asset is less than its carrying value, we would recognize an impairment charge for the difference.
+Added: During the second quarter of Fiscal 2023, due to continued increases in the federal funds rate and strengthening of the U.S.
+Added: dollar relative to other currencies, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.
+Added: As a result of the impairment testing performed, VF recorded impairment charges of $229.0 million and $192.9 million to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset, respectively.
+Added: The impairment primarily 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.
+Added: During the fourth quarter of Fiscal 2023, in connection with its annual impairment testing, VF performed a quantitative analysis of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.
+Added: As a result of the impairment testing performed, VF recorded impairment charges of $165.1 million and $148.0 million to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset, respectively.
+Added: The impairment related to lower financial projections and increased risk of achieving management's forecasts.
+Added: It is possible that we could have another impairment charge for goodwill or trademark and trade name intangible assets in future periods if (i) the businesses do not perform as projected, (ii) overall economic conditions in Fiscal 2024 or future years vary from our current assumptions (including changes in discount rates and foreign currency exchange rates), (iii) business conditions or our strategies for a specific business unit change from our current assumptions, (iv) investors require higher rates of return on equity investments in the marketplace, or (v) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible assets.
+Added: Any future impairment charge for goodwill or intangible assets could have a material effect on our consolidated financial position or results of operations .
Fluctuations in wage rates and the price, availability and quality of raw materials and finished goods could increase costs.
2 unchanged sentences
Inflation, including as a result of inflationary pressures related to global supply chain disruptions, can also have a long-term impact on us because increasing costs of materials and labor may impact our ability to maintain satisfactory margins.
−Removed: For example, the cost and availability of the materials that are used in our products, such as oil-related commodity prices and other raw materials, such as cotton, dyes and chemical and other costs, such as fuel, energy and utility costs, can fluctuate significantly as a result of inflation in addition to many other factors, including general economic conditions and demand, crop yields, energy prices, weather patterns, public health issues (such as the COVID-19 pandemic) and speculation in the commodities markets.
+Added: For example, the cost and availability of the materials that are used in our products, such as oil-related commodity prices and other raw materials, such as cotton, dyes and chemical and other costs, such as fuel, energy and utility costs, can fluctuate significantly as a result of inflation in addition to many other factors, including general economic conditions and demand, crop yields, energy prices, weather patterns, water supply quality and availability, public health issues (such as the COVID-19 pandemic) and speculation in the commodities markets.
A significant portion of our products also are manufactured in other countries and declines in the values of the U.S.
15 unchanged sentences
Further, our use of derivative financial instruments may expose VF to counterparty risks.
−Removed: Although VF only enters into hedging contracts with counterparties having investment grade credit
−Removed: ratings, it is possible that the credit quality of a counterparty could be downgraded or a counterparty could default on its obligations, which could have a material adverse impact on VF’s financial condition, results of operations and cash flows.
−Removed: Our ability to obtain financing on favorable terms, if needed, could be adversely affected by geopolitical risk and volatility in the capital markets.
+Added: Although VF only enters into hedging contracts with counterparties having investment grade credit ratings, it is possible that the credit quality of a counterparty could be downgraded or a counterparty could default on its
+Added: VF Corporation Fiscal 2023 Form 10-K 19
+Added: Table of Conten ts
+Added: obligations, which could have a material adverse impact on VF’s financial condition, results of operations and cash flows.
+Added: Our ability to obtain financing on favorable terms, if needed, could be adversely affected by geopolitical risk and volatility in the capital markets, including interest rate risks.
Any disruption in the capital markets could limit the availability of funds or the ability or willingness of financial institutions to extend capital in the future.
−Removed: Future volatility in the financial and credit markets, including the recent volatility due, in part, to the COVID-19 pandemic and/or the conflict in Ukraine, could make it more difficult for us to obtain financing or refinance existing debt when the need arises, including upon maturity, or on terms that would be acceptable to us.
+Added: Future volatility in the financial and credit markets, including adverse interest rates, could make it more difficult for us to obtain financing or refinance existing debt when the need arises, including upon maturity, or on terms that would be acceptable to us.
This disruption or volatility could adversely affect our liquidity and funding resources or significantly increase our cost of capital.
An inability to access capital and credit markets may have an adverse effect on our business, results of operations, financial condition and cash flows.
−Removed: Effective January 1, 2022, the publication of LIBOR on a representative basis ceased for the one-week and two-month U.S.
−Removed: dollar LIBOR settings and all sterling, yen, euros, and Swiss franc LIBOR settings.
−Removed: All other remaining U.S.
−Removed: dollar LIBOR settings will cease July 1, 2023.
−Removed: In connection with the sunset of certain LIBOR reference rates occurring at the end of 2021, we amended the credit agreement for our senior unsecured revolving credit facility to include provisions for the replacement of LIBOR upon the cessation thereof that are customary for credit facilities of this nature.
−Removed: We continue to monitor developments related to the upcoming transition from U.S.
−Removed: dollar LIBOR settings to an alternative benchmark reference rate.
−Removed: The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to U.S.
−Removed: dollar LIBOR, and the Federal Reserve Bank of New York began publishing SOFR rates in April 2018.
−Removed: At this time, the effects of the phase out of U.S.
−Removed: dollar LIBOR and the adoption of alternative benchmark rates have not been fully determined, but uncertainty regarding rates may make borrowing or refinancing our indebtedness more expensive or difficult to achieve on terms we consider favorable.
+Added: In addition, if the U.S.
+Added: government were to default on its debt obligations, the U.S.
+Added: and global capital markets would be adversely affected and our liquidity and cost of capital would be adversely impacted.
VF’s indebtedness could have a material adverse effect on its business, financial condition and results of operations and prevent VF from fulfilling its financial obligations, and VF may not be able to maintain its current credit ratings, may not continue to pay dividends or repurchase its common stock and may not remain in compliance with existing debt covenants.
4 unchanged sentences
• limit VF’s flexibility in planning for or reacting to general adverse economic conditions or changes in its business and the industries in which it operates;
−Removed: VF Corporation Fiscal 2022 Form 10-K 19
• place VF at a competitive disadvantage compared to its competitors that have less indebtedness outstanding;
• negatively affect VF's credit ratings and limit, along with the financial and other restrictive covenants in VF’s debt documents and its ability to borrow additional funds.
+Added: VF's credit ratings may impact the cost and availability of future borrowings.
+Added: As a result of recent downgrades by S&P Global Inc.
+Added: and Moody's Investor Services, Inc., certain of VF's outstanding senior notes and VF's global credit facility were subject to interest rate adjustments.
In addition, VF may incur substantial additional indebtedness in the future to fund acquisitions, repurchase common stock or fund other activities for general business purposes.
If VF incurs additional indebtedness, it may limit VF’s ability to access the debt capital markets or other forms of financing in the future and may result in increased borrowing costs.
−Removed: Although VF has historically declared and paid quarterly cash dividends on its common stock and has been authorized to repurchase its stock subject to certain limitations under its share repurchase programs, any determinations by the board of directors to continue to declare and pay cash dividends on VF’s common stock or to repurchase VF’s common stock will be based primarily upon VF’s financial condition, results of operations and business requirements, its access to debt capital markets or other forms of financing, the price of its common stock in the case of the repurchase program and the board of directors’ continuing determination that the repurchase programs and the declaration and payment of dividends are in the best interests of VF’s shareholders and are in compliance with all laws and agreements applicable to the repurchase and dividend programs.
−Removed: In the event VF does not declare and pay a quarterly dividend or discontinues its share repurchases, VF’s stock price could be adversely affected.
+Added: Although VF has historically declared and paid quarterly cash dividends on its common stock and has been authorized to repurchase its stock subject to certain limitations under its
+Added: share repurchase programs, any determinations by the Board of Directors to continue to declare and pay cash dividends on VF’s common stock or to repurchase VF’s common stock will be based primarily upon VF’s financial condition, results of operations and business requirements, its access to debt capital markets or other forms of financing, the price of its common stock in the case of the repurchase program and the Board of Directors’ continuing determination that the repurchase programs and the declaration and payment of dividends are in the best interests of VF’s shareholders and are in compliance with all laws and agreements applicable to the repurchase and dividend programs.
+Added: Our cash dividend payments may change from time to time, and we cannot provide assurance that we will increase our cash dividend payment or declare cash dividends in any particular amount or at all.
+Added: A reduction in the amount or suspension of our cash dividend payments or a reduction in the level or discontinuation of our share repurchases could have a negative effect on VF’s stock price.
+Added: Beginning in the fourth quarter of Fiscal 2023, we reduced the cash dividend, which is expected to support the return to VF's target leverage ratio and provide additional financial flexibility.
VF is required to comply with certain financial and other restrictive debt covenants in its debt documents.
12 unchanged sentences
In addition, VF relies on its licensees to help preserve the value of its brands.
−Removed: Although we attempt to protect VF’s brands through approval rights over design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of our licensed products, we cannot completely
−Removed: control the use of licensed VF brands by our licensees.
+Added: Although we attempt to protect VF’s brands through approval rights over design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of our licensed products, we cannot completely control the use of licensed VF brands by our licensees.
The misuse of a brand by a licensee, including through the marketing of products under one of our brand names that do not meet our quality standards, could have a material adverse effect on that brand and on VF.
+Added: 20 VF Corporation Fiscal 2023 Form 10-K
+Added: Table of Conten ts
Volatility in securities markets, interest rates and other economic factors could substantially increase VF’s defined benefit pension costs.
18 unchanged sentences
In addition, these potential tax liabilities may discourage, delay or prevent a change of control of us.
−Removed: 20 VF Corporation Fiscal 2022 Form 10-K
+Added: GENERAL RISKS
+Added: Regional epidemics or global pandemics may materially and adversely affect our business, financial condition and results of operations.
+Added: The occurrence of regional epidemics or a global pandemic may adversely affect our business, financial condition and results of operations.
+Added: For example, the COVID-19 pandemic has and could continue to materially and adversely affect our business, financial condition and results of operation.
+Added: Our business has been, and could continue to be, impacted by the effects of the COVID-19 pandemic in countries and territories where we operate and where our employees, suppliers, third-party service providers, consumers or customers are located.
+Added: Our operations may be closed again or experience operational restrictions if and where there is a resurgence in COVID-19 or new variants of the virus emerge.
+Added: We may continue to experience significant reductions in demand and significant volatility in demand for our products by consumers and customers, resulting in reduced orders, order cancellations, lower revenues, higher discounts, increased inventories, decreased value of inventories and lower gross margins.
+Added: We may be negatively impacted by significant uncertainty and turmoil in global economic and financial market conditions causing, among other things:
+Added: decreased consumer
+Added: confidence and decreased consumer spending, inability to access financing in the credit and capital markets (including the commercial paper market) at reasonable rates (or at all), increased exposure to fluctuations in foreign currency exchange rates relative to the U.S.
+Added: Dollar, and volatility in the availability and prices for commodities and raw materials we use for our products and in our supply chain.
+Added: We may continue to fail to meet our consumers’ and customers’ needs for inventory production and fulfillment due to disruptions in our supply chain and increased costs associated with mitigating the effects of the pandemic.
+Added: These impacts have placed, and could continue to place limitations on our ability to execute our business plan and materially and adversely affect our business, financial condition and results of operations.
+Added: Measures to contain a global pandemic, including COVID-19, may exacerbate other risks discussed in this “Risk Factors” section, any of which could have a material effect on us.
+Added: The extent of the impact of the COVID-19 pandemic will depend on future developments, including the duration, severity and any resurgences of COVID-19, which are uncertain and cannot be predicted.
UNRESOLVED STAFF COMMENTS.
+Added: VF Corporation Fiscal 2023 Form 10-K 21
+Added: Table of Conten ts
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.