What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-02-07 · 236 added, 350 removed, 184 unchanged (76% of the section changed)

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VF Corporation (together with its subsidiaries, collectively known as “VF” or the “Company”) uses a 52/53 week fiscal year ending on the Saturday closest to March 31 of each year.

The Company's current fiscal year runs from April 2, 2023 through March 30, 2024 ("Fiscal 2024").

Accordingly, this Form 10-Q presents our third quarter of Fiscal 2024.

For presentation purposes herein, all references to periods ended December 2023 and December 2022 relate to the fiscal periods ended on December 30, 2023 and December 31, 2022, respectively.

References to March 2023 relate to information as of April 1, 2023.

The Company's current fiscal year runs from March 31, 2024 through March 29, 2025 ("Fiscal 2025").

Accordingly, this Form 10-Q presents our first quarter of Fiscal 2025.

For presentation purposes herein, all references to periods ended June 2024 and June 2023 relate to the fiscal periods ended on June 29, 2024 and July 1, 2023, respectively.

References to March 2024 relate to information as of March 30, 2024.

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 nine months ended December 2023 foreign currency amounts and impacts below reflect the changes in foreign exchange rates from the three and nine months ended December 2022 when translating foreign currencies into U.S.

References to the three months ended June 2024 foreign currency amounts and impacts below reflect the changes in foreign exchange rates from the three months ended June 2023 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

Cybersecurity Incident

On December 13, 2023, VF detected unauthorized occurrences on a portion of its information technology ("IT") systems.

Upon detecting the unauthorized occurrences, VF began taking steps to contain, assess and remediate the incident, including beginning an investigation with leading external cybersecurity experts, activating its incident response plan, and shutting down some systems.

As a result of these and other measures, and while VF’s investigation and remediation efforts remain ongoing, VF believes the threat actor was ejected from VF’s IT systems on December 15, 2023.

The threat actor disrupted VF’s business operations by encrypting some IT systems, and stole data from VF, including personal data.

After VF shut down some of its systems, VF experienced disruption to certain of its operations, including interrupted replenishment of retail store inventory and delayed order fulfillment which had impacts such as the cancellation by customers and consumers of some product orders, reduced demand on certain of its brands’ e-commerce sites, and delay of some wholesale shipments.

While VF is still experiencing minor residual impacts from the cyber incident, VF has resumed retail store inventory replenishment and product order fulfillment, and is caught up on fulfilling orders that were delayed as a result of the cyber incident.

VF has substantially restored the IT systems and data that were impacted by the cyber incident, but continues to work through minor operational impacts.

While the investigation remains ongoing, VF believes that the material impact or reasonably likely material impact on VF is limited to the material impacts on VF’s business operations discussed above, which are no longer ongoing at this time.

VF also believes the impacts of the cyber incident are not material and are not reasonably likely to be material to its financial condition and results of operations.

VF will be seeking reimbursement of costs, expenses and losses stemming from the cyber incident by submitting claims to VF’s cybersecurity insurers.

The timing and amount of any such reimbursements are not known at this time.

Supreme Divestiture

On July 16, 2024, VF entered into a definitive Stock and Asset Purchase Agreement (the "Purchase Agreement") to sell the Supreme ® brand business to EssilorLuxottica S.A.

for an aggregate base purchase price of $1.5 billion in cash, subject to customary adjustments for cash, indebtedness, working capital and transaction expenses as more fully set forth in the Purchase Agreement.

The divestiture of the Supreme ® brand business is expected to meet the "held-for-sale" criteria in the second quarter of Fiscal 2025, and VF has determined that the sale represents a strategic shift that will have a significant effect on VF's operations.

As such, the results of operations, including any expected loss recognized, and related cash flows will be reclassified to discontinued operations on the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively, for all periods presented beginning in the second quarter of Fiscal 2025.

In addition, the assets and liabilities will be presented separately on the Consolidated Balance Sheets for both current and prior periods beginning in the second quarter of Fiscal 2025.

On October 30, 2023, VF introduced Reinvent, a transformation program to enhance focus on brand-building and to improve operating performance and allow VF to achieve its full potential.

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• Establish global commercial organization, inclusive of an Americas region:

Change the operating model with the establishment of a global commercial structure.

This includes the creation of an Americas regional platform, modeled on the Company's successful operations in the Europe and Asia-Pacific regions.

With this change, VF has created the role of Chief Commercial Officer, with responsibility for go-to-market execution globally.

VF changed the operating model with the

establishment of a global commercial structure.

This included the creation of an Americas regional platform, modeled on the Company's successful operations in the Europe and Asia-Pacific regions.

With this change, VF created the role of Chief Commercial Officer, with responsibility for go-to-market execution globally.

• Sharpen brand presidents' focus on sustainable growth:

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• Appoint new Vans ® president :

The Global Brand President of Vans ® has stepped down from the position and has transitioned to lead Reinvent and the project teams driving the work.

A search for a new brand president is ongoing with VF's CEO serving in the role on an interim basis.

Sun Choe was appointed the new Global Brand President of Vans ® effective late July 2024.

• Optimize cost structure to improve operating efficiency and profitability:

Implement a large-scale cost reduction program, which is expected to deliver $300 million in fixed cost savings, by removing spend in non-strategic areas of the business, and simplifying and right-sizing VF's structure.

Actions have been implemented in a large-scale cost reduction program, which remains in process, and is expected to deliver $300 million in fixed cost savings, by removing spend in non-strategic areas of the business, and simplifying and right-sizing VF's structure.

• Reduce debt and leverage:

In addition to improving operating performance, VF is committed to deleveraging the balance sheet.

Reinvent charges and project-related costs in the third quarter of Fiscal 2024 were $50.9 million, which primarily included costs associated with severance and employee-related benefits and certain non-cash asset write-downs .

Dividend Update

On October 24, 2023, the Board of Directors declared a quarterly dividend of $0.09 per share that was paid during the third quarter of Fiscal 2024, which represented a 70% reduction when

VF will use the proceeds from the sale of the Supreme ® brand business to pay down upcoming debt maturities.

Reinvent restructuring charges in the first quarter of Fiscal 2025 were $13.6 million and cumulative charges were $122.3 million since the inception of the program, w hich primarily included costs associated with severance and employee-related benefits and the impact of asset impairments and write-downs.

SUMMARY OF THE FIRST QUARTER OF FISCAL 2025

• Revenues were down 9% to $1.9 billion compared to the three months ended June 2023, including a 1% unfavorable i mpact from foreign currency.

• Outdoor segment revenues decreased 5% to $790.2 million compared to the three months ended June 2023, including a 1% unfavorable impact from foreign currency.

• Active segment revenues decreased 12% to $942.1 million compared to the three months ended June 2023, including a 1% unfavorable impact from foreign currency.

• Work segment revenues decreased 8% to $175.0 million compared to the three months ended June 2023.

23 VF Corporation Q1 FY25 Form 10-Q

compared to the dividend of $0.30 per share paid in the second quarter of Fiscal 2024.

The decrease in the dividend was an action taken to strengthen the Company's financial position by reducing debt.

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

On January 23, 2024, the Board of Directors declared a quarterly dividend of $0.09 per share to be paid during the fourth quarter of Fiscal 2024.

Impact of Global Events and Uncertainties

Though not expected to have a significant impact in the current year, the coronavirus ("COVID-19") pandemic resulted in

temporary closures of VF-operated retail stores in Fiscal 2023, most notably in the Asia-Pacific region, which impacted revenues in the region for the nine months ended December 2022.

The ongoing conflict between Russia and Ukraine and the conflict in the Middle East continue to cause disruption in the regions and unknown impacts to the global economy;

however, we currently do not expect significant disruption to our business.

For additional information, see the risk factors discussed in Part I, "Item 1A.

Risk Factors" in the Fiscal 2023 Form 10-K.

SUMMARY OF THE THIRD QUARTER OF FISCAL 2024

• Revenues were down 16% to $3.0 billion compared to the three months ended December 2022, including a 1% favorable impact from foreign currency.

• Outdoor segment revenues decreased 13% to $1.7 billion compared to the three months ended December 2022, including a 2% favorable impact from foreign currency.

• Active segment revenues decreased 21% to $1.0 billion compared to the three months ended December 2022, including a 1% favorable impact from foreign currency.

• Work segment revenues decreased 17% to $222.3 million compared to the three months ended December 2022, including a 1% favorable impact from foreign currency.

• Wholesale revenues were down 26% compared to the three months ended December 2022, including a 2% favorable impact from foreign currency.

• Direct-to-consumer revenues were down 8% over the 2022 period, including a 1% favorable impact from foreign currency.

E-commerce revenues decreased 13% in the current period, including a 1% favorable impact from foreign currency.

Direct-to-consumer revenues accounted for 60% of VF's net revenues for the three months ended December 2023.

• International revenues decreased 5% compared to the three months ended December 2022, including a 3% favorable impact from foreign currency.

Revenues in Europe decreased 7%, including a 5% favorable impact from foreign currency.

Revenues in the Asia-Pacific region increased 2%, including a 1% unfavorable impact from foreign currency.

International revenues represented 52% of VF's net revenues for the three months ended December 2023.

• Revenues in the Americas region decreased 24% compared to the three months ended December 2022, including a 1% favorable impact from foreign currency.

• Gross margin increased 20 basis points to 55.1% compared to the three months ended December 2022, primarily driven by favorable mix, partially offset by unfavorable foreign currency impacts.

• Earnings (loss) per share was $(0.11) compared to $1.31 in the 2022 period.

The decrease was primarily driven by lower profitability across all segments, goodwill impairment charges related to the Timberland and Dickies reporting units and Reinvent charges during the three months ended December 2023, partially offset by legal settlement gains in the quarter .

The three months ended December 2022 included a $0.24 discrete tax benefit in the quarter.

• Wholesale revenues were down 8% co mpared to the three months ended June 2023, includ ing a 1% unfavorable impact from foreign currency.

• Direct-to-consumer revenues were down 10% co mpared to the three months ended June 2023 , including a 1% unfavorable impact from foreign currency.

• International revenues decreased 5% compared to the three months ended June 2023, including a 2% unfavorable impa ct from foreign currency.

• Revenues in the Americas region decreased 12% compared to the three months ended June 2023.

• G ross margin decreased 80 basis points to 52.0% compared to the three months ended June 2023, primarily driven by higher promotional activity.

• Net loss per share w as $(0.67) compared to $(0.15) i n the 2023 period .

The increase in net loss per share was primarily driven by the Supreme reporting unit goodwill and intangible asset impairment charges, which totaled $145.0 million on a pre-tax basis increasing diluted net loss per share by $0.30, and lower profitability across all segments during the three months ended June 2024.

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 nine months ended December 2023 from the comparable periods in 2022:

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

The following table presents a summary of the changes in net revenues for the three months ended June 2024 from the comparable period in 2023:

(In millions) Three Months Ended June

Net revenues — 2023 $ 2,086.3

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Net revenues — 2024 $ 1,907.3

VF reported a 16% and 9% decrease in revenues for the three and nine months ended December 2023, respectively, compared to the 2022 periods, including a 1% favorable impact from foreign currency in both periods.

The revenue decrease in the three months ended December 2023 was driven by declines across all segments.

The revenue decrease in the nine months ended December 2023 was primarily due to declines in the Active and Work segments.

The revenue decrease in both periods was

partially offset by overall growth in the Asia-Pacific region in both the three and nine months ended December 2023.

The Asia-Pacific region was negatively impacted by COVID-19 resurgence in Mainland China in the nine months ended December 2022.

VF reported a 9% decrease in revenues for the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable i mpact from foreign currency.

The revenue decrease in the three months ended June 2024 was driven by declines across all segments.

The revenue decrease in the three months ended June 2024 was also due to declines across all

regions, with the most significant declines in the Americas region.

Additional details on revenues are provided in the section titled “Information by Reportable Segment.”

27 VF Corporation Q3 FY24 Form 10-Q

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

Three Months Ended December Nine Months Ended December

2023 2022 2023 2022

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

Three Months Ended June

Gross margin (net revenues less cost of goods sold) 52.0 % 52.8 %

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Operating margin (12.6) % (0.4) %

Gross margin increased 20 basis points and decreased 30 basis points in the three and nine months ended December 2023, respectively, compared to the 2022 periods.

The increase in the three months ended December 2023 was primarily driven by favorable mix, partially offset by unfavorable foreign currency impacts.

The decrease in the nine months ended December 2023 was primarily driven by unfavorable foreign currency impacts , partially offset by favorable mix.

Selling, general and administrative expenses as a percentage of total revenues increased 720 and 280 basis points during the three and nine months ended December 2023, respectively, compared to the 2022 periods.

Selling, general and administrative expenses decreased $14.0 million and $118.3 million in the three and nine months ended December 2023, respectively, compared to the 2022 periods.

The decrease in the three months ended December 2023 was primarily due to lower distribution and advertising expenses, partially offset by Reinvent charges.

The decrease in the nine months ended December 2023 was due to lower compensation and administrative costs, direct-to-consumer expenses and distribution costs, partially offset by higher information technology costs.

VF recorded goodwill impairment charges of $195.3 million and $61.8 million related to the Timberland and Dickies reporting units, respectively, in the three and nine months ended December 2023.

During the third quarter of Fiscal 2024, due to continued weakness and downturn in the financial results, combined with expectations of a slower recovery, the Company determined that a triggering event had occurred requiring impairment testing of the Timberland and Dickies reporting unit goodwill and indefinite-lived trademark intangible assets.

The goodwill impairment related to the reduction in financial projections for both reporting units.

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 valuation and the negative impact of foreign currency exchange rate changes on financial projections.

Net interest expense increased $13.1 million and $53.3 million during the three and nine months ended December 2023, respectively, compared to the 2022 periods.

The increase in net

interest expense in both the three and nine months ended December 2023 was primarily due to additional borrowings on long-term debt at higher rates, partially offset by lower short-term commercial paper borrowings and higher investment rates.

Total outstanding debt averaged $6.8 billion in the nine months ended December 2023 and $6.5 billion in the same period in 2022, with weighted average interest rates of 3.4% and 2.3% in the nine months ended December 2023 and 2022, respectively.

Other income (expense), net decreased $39.9 million and $136.8 million during the three and nine months ended December 2023, respectively, compared to the 2022 periods.

The decrease in the three months ended December 2023 was primarily due to legal settlement gains of $29.1 million and lower foreign currency losses compared to the 2022 period.

The decrease in the nine months ended December 2023 was primarily due to the above-mentioned benefits during the fiscal third quarter and a $91.8 million pension settlement charge recorded in the 2022 period, 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 2023 was 412.9% compared to (28.6)% in the 2022 period.

The nine months ended December 2023 included a net discrete tax expense of $693.6 million, primarily related to the tax effects of decisions in the Timberland tax case and Belgium excess profits ruling.

Refer to Note 13 to VF's consolidated financial statements for additional information.

Gross margi n decreased 80 basis po ints in the three months ended June 2024 compared to the 2023 period.

The decrease was primarily drive n by higher promotional activity.

Selling, general and administrative expe nses as a percentage of total revenues increased 380 ba sis points during the three months ended June 2024 compared to the 2023 period, reflecting lower leverage of operating expenses due to decreased revenues .

Selling, general and administrative expenses decreased $23.5 million in th e three months ended June 2024 compared to the 2023 period.

The decrease was primarily due to cost savings from Reinvent, lower distribution expenses and a gain recognized from a sale leaseback transaction , partially offset by Reinvent charges and higher compensation costs, including performance-based compensation.

VF recorded goodwill and intangible asset impairment charges of $94.0 million and $51.0 million, respectively, in the three months ended June 2024 related to the Supreme reporting unit.

During the three months ended June 2024, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset .

VF's assessment gave consideration to the ongoing negotiations to sell the Supreme reporting unit.

The goodwill impairment charge related to the estimates of fair value subsequently confirmed by the transaction price in the Purchase Agreement signed July 16, 2024, and the indefinite-lived trademark intangible asset impairment charge related to an increase in the market-based discount rate applied.

Net interest expense increased $6.0 million during the three months ended June 2024 compared to the 2023 period.

The increase in net interest expense in the three months ended June 2024 was primarily due to increased levels of short-term commercial paper borrowings at higher rates and a decrease in interest income due to lower international investment rates, partially offset by lower interest on long-term debt due to the r epayment of €850.0 million ($907.1 million) of long-term notes

VF Corporation Q1 FY25 Form 10-Q 24

in September 2023 .

Total outstanding debt average d $6.1 billion in the three months ended June 2024 and $6.8 billion in the same period in 2023, with weighted average interest ra tes of 3.7% and 3.1% in the three months ended June 2024 and 2023, respectively.

Other income (expense), n et decreased $1.6 million during the three months ended June 2024 compared to the 2023 period.

The decrease in th e three months ended June 2024 w as primarily due to a $3.3 million pension settlement charge in the three months ended June 2023 , which resulted from lump-sum payments of re tirement benefits in the supplemental defined benefit pension plan .

The effective income tax rate for the three months ended June 2024 wa s 13.0% co mpared to 7.8% in the 2023 period.

The three months ended June 2024 included a net discrete ta x expense of $7.1 million, w hich was comprised prima rily of a $3.6 million net tax expense related to unrecognized tax benefits and interest and a $4.3 million tax expense related to stock compensation.

Excluding th e $7.1 million net discrete ta x expense in the 2024

period, the effective income tax rate would have bee n 15.4%.

The three months ended June 2023 included a net discrete tax expense of $0.2 million, which was comprised primarily of a $4.7 million net tax expense related to unrecognized tax benefits and interest, a $3.1 million tax expense related to stock compensation and a $7.5 million net tax benefit for interest on income tax receivables.

Excluding the $0.2 million net discrete tax expense in the 2023 period, the effective income tax rate would have been 8.2%.

The nine months ended December 2022 included a net discrete tax benefit of $98.8 million, which primarily related to the Internal Revenue Service ("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%.

Without discrete items, the effective income tax rate for the nine months ended December 2023 increased by 9.2% compared with the 2022 period primarily due to the jurisdictional mix of earnings and losses.

As a result of the above, net income (loss) in the three months ended December 2023 was $(42.5) million ($(0.11) per diluted share) compared to $507.9 million ($1.31 per diluted share) in the 2022 period, and net income (loss) in the nine months ended December 2023 was $(550.6) million ($(1.42) per diluted share) compared to $333.5 million ($0.86 per diluted share) in the 2022 period.

Without discrete items, the effective income tax rate for the three months ended June 2024 increased by 7.2% comp ared with t he 2023 period primarily due to the jurisdictional mix of earnings and year-to-date losses generated in the current year , including non-deductible goodwill impairment .

As a result of the above, net loss in the three months ended June 2024 wa s $(258.9) million ($(0.67) per diluted sh are) compared to net loss of $(57.4) million ($(0.15) per diluted share) in the 2023 period.

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

VF Corporation Q3 FY24 Form 10-Q 28

Information by Reportable Segment

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Outdoor, Active and Work.

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

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 (loss) 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 2023 from the comparable periods in 2022 and revenues by region for our top 4 brands for the three and nine months ended December 2023 and 2022:

Segment Revenues:

Three Months Ended December

(In millions) Outdoor Active Work Other Total

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

Organic (293.0) (274.4) (47.7) — (615.1)

Impact of foreign currency 28.6 15.1 1.1 — 44.7

The primary financial measures used by management to evaluate the financial results of VF's reportable segments are segment revenues and segment profit.

Segment profit comprises the operating income (loss) and other income (expense), net line items of each segment.

Refer to Note 13 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to loss before income taxes.

The following tables present a summary of the changes in segment revenues and profit (loss) in the three months ended June 2024 from the comparable period in 2023 and revenues by region for our Top 4 brands for the three months ended June 2024 and 2023:

Segment Revenues:

Nine Months Ended December

(In millions) Outdoor Active Work Other Total

Three Months Ended June

(In millions) Outdoor Active Work Total

Segment revenues — 2023 $ 829.7 $ 1,066.0 $ 190.6 $ 2,086.3

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Segment Profit (Loss):

Three Months Ended December

(In millions) Outdoor Active Work Other Total

Three Months Ended June

(In millions) Outdoor Active Work Total

Segment profit (loss) — 2023 $ (43.7) $ 123.8 $ 6.8 $ 87.0

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Segment profit (loss) — 2024 $ (83.4) $ 98.5 $ 5.3 $ 20.5

Nine Months Ended December

(In millions) Outdoor Active Work Other Total

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

Organic (125.8) (197.0) (80.3) 0.5 (402.6)

Impact of foreign currency 13.0 7.6 0.8 — 21.4

Segment profit — 2023 $ 557.8 $ 351.8 $ 13.5 $ — $ 923.1

Amounts may not sum due to rounding.

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Top Brand Revenues:

Three Months Ended December 2023

(In millions) Vans ®

The North Face ®

Timberland ® (a)

Americas $ 434.1 $ 557.7 $ 231.4 $ 111.5 $ 1,334.7

Europe 149.4 418.1 172.6 22.8 762.9

Asia-Pacific 84.7 216.3 69.1 13.6 383.7

Global $ 668.2 $ 1,192.1 $ 473.0 $ 147.9 $ 2,481.2

Three Months Ended December 2022

(In millions) Vans ®

The North Face ®

Timberland ® (a)

Americas $ 625.6 $ 731.8 $ 330.7 $ 125.4 $ 1,813.5

Europe 185.1 417.8 195.0 26.8 824.7

Asia-Pacific 116.2 171.6 69.8 24.8 382.4

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

Nine Months Ended December 2023

(In millions) Vans ®

The North Face ®

Three Months Ended June 2024

(In millions) The North Face ®

Timberland ® (a)

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Global $ 524.2 $ 581.8 $ 229.4 $ 116.8 $ 1,452.2

Nine Months Ended December 2022

(In millions) Vans ®

The North Face ®

Three Months Ended June 2023

(In millions) The North Face ®

Timberland ® (a)

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Amounts may not sum due to rounding.

VF Corporation Q3 FY24 Form 10-Q 30

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 December Nine Months Ended December

Three Months Ended June

(Dollars in millions) 2024 2023 Percent

Change 2023 2022 Percent

Segment revenues $ 790.2 $ 829.7 (4.8) %

Segment profit 304.7 457.0 (33.3) % 557.8 670.6 (16.8) %

Segment profit (loss) (83.4) (43.7) (91.1) %

Operating margin (10.6) % (5.3) %

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

Global revenues for Outdoor decreased 13% in the three months ended December 2023 compared to 2022, including a 2% favorable impact from foreign currency.

Global revenues for Outdoor decreased 5% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 8%.

Revenues in the Europe region decreased 3%, including a 5% favorable impact from foreign currency.

Revenues in the Europe region decreased 8%.

Revenues in the Asia-Pacific region increased 11%, including a 4% unfavorable impact from foreign currency and a 24% increase in Greater China (which includes Mainland China, Hong Kong and Taiwan), including a 4% unfavorable impact from foreign currency.

Global revenues for Outdoor decreased 1% in the nine months ended December 2023 compared to 2022, including a 1% favorable impact from foreign currency.

Revenues in the Americas region decreased 13%.

Revenues in the Asia-Pacific region increased 25%, including a 4% unfavorable impact from foreign currency and a 29% increase in Greater China, including an 5% unfavorable impact from foreign currency.

Revenues in the Europe region increased 8%, including a 5% favorable impact from foreign currency.

Global revenues for The North Face ® brand decreased 10% and increased 4% in the three and nine months ended December 2023, respectively, compared to the 2022 periods.

This includes a 1% favorable impact from foreign currency in both periods.

The decrease in the three months ended December 2023 was driven by a decline in the Americas region, which decreased 24% compared to the 2022 period.

Revenues in the Asia-Pacific region increased 26% in the three months ended December 2023, including a 2% unfavorable impact from foreign currency.

Revenues in the Europe region were flat in the three months ended December 2023, including a 5% favorable impact from foreign currency.

The increase in the nine months ended December 2023 was driven by growth in the Asia-Pacific and Europe regions.

Revenues in the Asia-Pacific region increased 34% in the nine months ended December 2023, including a 4% unfavorable impact from foreign currency.

Revenues in the Europe region increased 13% in the nine months ended December 2023, including a 5% favorable impact from foreign currency.

Revenues in the Americas region decreased 9% in the nine months ended December 2023.

Global revenues for the Timberland ® brand decreased 21% and 11% in the three and nine months ended December 2023, respectively, compared to the 2022 periods.

This includes a 2% favorable impact from foreign currency in both periods.

The overall declines were most significantly impacted by a 34% and 29% decrease in the Americas region for the three and nine months ended December 2023, respectively, including a 1% favorable impact from foreign currency in both periods.

Revenues in the Europe region decreased 11% and increased 1% in the three and nine months ended December 2023, respectively, including a 5% and 6% favorable impact from foreign currency in the respective periods.

Revenues in the Asia-Pacific region decreased 1% and increased 6% in the three and nine months ended December 2023, respectively, compared to the 2022 periods, including a 2% and 4% unfavorable impact from foreign currency in the respective periods.

Global direct-to-consumer revenues for Outdoor decreased 2% and increased 3% in the three and nine months ended December 2023, respectively, compared to the 2022 periods, including a 2% and 1% favorable impact from foreign currency in the respective periods.

The decrease in the three months ended December 2023 was primarily due to declines in the Americas region.

The increase in the nine months ended December 2023 was primarily due to The North Face ® brand in the Europe and Asia-Pacific regions.

Global wholesale revenues decreased 25% and 4% in the three and nine months ended December 2023, respectively, compared to the 2022 periods.

The decrease includes a 1% and 2% favorable impact from foreign currency in the three and nine months ended December 2023, respectively.

The decrease in both periods was primarily driven by declines in the Americas region.

Operating margin decreased in both the three and nine months ended December 2023 compared to the 2022 periods, reflecting increased direct-to-consumer expenses and higher information technology costs.

The decreases in both periods were partially offset by higher gross margin, primarily driven by favorable mix and unfavorable foreign currency impacts.

The decrease in the three months ended December 2023 also reflects lower leverage of operating expenses due to decreased revenues.

Global revenues for The North Face ® brand decreased 3% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency.

The decrease in the three months ended June 2024 was driven by a decline in the Americas region, which decreased 10% compared to the 2023 period.

Revenues in the Europe region decreased 6% in the three months ended June 2024.

Revenues in the Asia-Pacific region increased 30% in the three months ended June 2024, including a 5% unfavorable impact from foreign currency.

Global revenues for the Timberland ® brand decreased 14% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency.

Revenues in the Europe region decreased 16% in the three

months ended June 2024, including a 1% unfavorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 25% in the three months ended June 2024 compared to the 2023 period, including a 4% unfavorable imp act from foreign currency.

Revenue in the Americas regio n decreased 4% in the three months ended June 2024.

Global direct-to-consumer revenues for Outdoor increased 3% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency.

The increase was primarily due to The North Face ® brand in the Europe and Asia-Pacific regions.

Global wholesale revenues decreased 10% in the three months ended June 2024 compared to the 2023 period.

The decrease includes a 1% unfavorable impact from foreign currency.

The decrease was primarily driven by declines in the Americas and Europe regions across The North Face ® and Timberland ® brands.

Operating margin d ecreased in the three months ended June 2024 compared to the 2023 period, reflecting increased direct-to-consumer expenses and lower gross margin, primarily driven by highe r promotional activity , p artially offset by favorable pricing and mix.

VF Corporation Q1 FY25 Form 10-Q 26

Three Months Ended December Nine Months Ended December

Three Months Ended June

(Dollars in millions) 2024 2023 Percent

Change 2023 2022 Percent

Segment revenues $ 942.1 $ 1,066.0 (11.6) %

3 unchanged sentences

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

Global revenues for Active decreased 21% in the three months ended December 2023 compared to the 2022 period, including a 1% favorable impact from foreign currency.

Revenues in the Americas region decreased 24%, including a 1% favorable impact from foreign currency.

Revenues in the Europe region decreased 15%, including a 4% favorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 15%, including a 2% unfavorable impact from foreign currency, and a 24% decrease in Greater China, including a 1% unfavorable impact from foreign currency.

Global revenues for Active decreased 17% in the nine months ended December 2023 compared to the 2022 period, including a 1% favorable impact from foreign currency.

Global revenues for Active decreased 12% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency.

Revenues in the Americas region decreased 16%.

Revenues in the Europe region decreased 8%, including a 4% favorable impact from foreign currency.

Revenues in the Asia-Pacific region decreased 11%, including a 5% unfavorable impact from foreign currency, and a 27% decrease in Greater China, including a 2% unfavorable impact from foreign currency.

Vans ® brand global revenues decreased 28% and 24% in the three and nine months ended December 2023, respectively, compared to the 2022 periods.

This includes a 1% favorable impact from foreign currency in both periods.

The overall declines were most significantly impacted by a 31% and 27% decrease in the Americas region for the three and nine months ended December 2023, respectively, including a 1% favorable impact from foreign currency in the nine months ended December 2023.

Revenues in the Europe region decreased 19% and 13% in the three and nine months ended December 2023, respectively, including a 4% favorable impact from foreign currency in both periods.

Revenues in the Asia-Pacific region decreased 27% and 22% in the three and nine months ended

December 2023, respectively, including a 2% unfavorable impact from foreign currency in the nine months ended December 2023.

Global direct-to-consumer revenues for Active decreased 14% and 12% in the three and nine months ended December 2023, respectively, compared to the 2022 periods, including a 1% favorable impact from foreign currency in the three months ended December 2023.

The decreases were primarily driven by declines in the Americas region, which decreased 18% and 17% in the three and nine months ended December 2023, respectively.

Global wholesale revenues decreased 34% and 23% in the three and nine months ended December 2023, respectively, including a 2% favorable impact from foreign currency in both periods.

The decreases were primarily due to a 44% and 31% decrease in the Americas region in the three and nine months ended December 2023, respectively, including a 1% favorable impact from foreign currency in both periods.

Wholesale revenues in the Europe region decreased 25% and 14% in the three and nine months ended December 2023, respectively, including a 4% favorable impact from foreign currency in both periods.

Wholesale revenues in the Asia-Pacific region decreased 19% and 23% in the three and nine months ended December 2023, respectively, and included a 1% unfavorable impact from foreign currency in the nine months ended December 2023.

Operating margin decreased in the three and nine months ended December 2023 compared to the 2022 periods, reflecting lower leverage of operating expenses due to decreased revenues.

The decrease in the three and nine months ended December 2023 was partially offset by legal settlement gains of $29.1 million.

The decrease in the three months ended December 2023 was partially offset by higher gross margin, primarily driven by favorable mix and unfavorable foreign currency impacts.

VF Corporation Q3 FY24 Form 10-Q 32

Three Months Ended December Nine Months Ended December

Revenues in the Europe region decreased 3% including a 1% unfavorable impact from foreign currency.

Vans ® brand global reve nues decreased 21% in the three months ended June 2024 compared to the 2023 period.

The overall decline was most significantly impacted by a 25% decrease in the Americas region for the three months ended June 2024.

Revenues in the Asia-Pacific region decreased 29% in the three m onths ended June 2024, including a 2% unfavorable impact from foreign currency.

Revenues in the Europe region decreased 3% in the three months ended June 2024.

Global direct-to-consumer revenues for Active decreased 16% in the three months ended June 2024 compared to the 2023 period,

including a 1% unfavorable impact from foreign currency.

The decrease was primarily driven by a decline in the Americas region, which decreased 21% in t he three months ended June 2024.

Global wholesale rev enues decreased 6% in the three months ended June 2024, including a 1% unfavorable impact from foreign currency.

T he decrease was primarily due to a 7% decrease in the Americas region in the three months ended June 2024.

Wholesale revenues in the Asia-Pacific region decreased 18% in the three months ended June 2024, and included a 2% unfavorable imp act from foreign currency.

Wholesale revenues in the Europe regi on increased 1% in the three months ended June 2024, including a 1% unfavorable impact from foreign currency.

O perating margin decreased in the three months ended June 2024 compared to the 2023 period, primarily reflecting lower leverage of operating expenses due to decreased revenues.

Three Months Ended June

(Dollars in millions) 2024 2023 Percent

Change 2023 2022 Percent

Segment revenues $ 175.0 $ 190.6 (8.2) %

Segment profit (loss) (1.9) 18.5 (110.1) % 13.5 93.0 (85.5) %

Segment profit 5.3 6.8 (22.0) %

Operating margin 3.0 % 3.6 %

1 unchanged sentence

Dickies ® and Timberland PRO ® .

Global Work revenues decreased 17% in the three months ended December 2023 compared to the 2022 period, including a 1% favorable impact from foreign currency.

Revenues in the Americas region decreased 14%.

Revenues in the Asia-Pacific region decreased 45%.

Revenues in the Europe region decreased 15%, including a 4% favorable impact from foreign currency.

Global Work revenues decreased 16% in the nine months ended December 2023 compared to the 2022 period.

Global Work revenues decreased 8% in the three months ended June 2024 compared to the 2023 period.

Revenues in the Americas region decreased 6%.

Revenues in the Asia-Pacific region decreased 35%, including a 3% unfavorable impact from foreign currency.

Revenues in the Europe region increased 11%, including a 6% favorable impact from foreign currency.

Dickies ® brand global revenues decreased 16% and 15% in the three and nine months ended December 2023, respectively, compared to the 2022 periods, including a 1% favorable impact from foreign currency in the three months ended December 2023.

The decline in both the three and nine months ended December 2023 was primarily driven by a decrease in the

Americas region of 11% and 14% in the respective periods, reflecting lower inventory replenishment and weakness with certain key U.S.

Revenues in the Europe region decreased 3%, including a 1% unfavorable impact from foreign currency.

Dickies ® brand global revenues decreased 15% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency.

The decline in the three months ended June 2024 was primarily driven by a decrease in the Americas reg ion of 13%, reflecting lower

inventory replenishment and weakness with certain key U.S.

wholesale customer accounts.

The decline in both periods was also attributed to decreases in the Asia-Pacific region of 45% and 38% in the three and nine months ended December 2023, respectively, including a 2% unfavorable impact from foreign currency in the nine months ended December 2023, primarily due to broad-based weakness in Greater China.

Revenues in the Europe region decreased 15% and increased 11% in the three and nine months ended December 2023, respectively, including a 4% and 6% favorable impact from foreign currency in the respective periods.

Operating margin decreased in the three and nine months ended December 2023 compared to the 2022 periods, reflecting lower gross margin resulting from increased inventory reserves and higher material costs, and lower leverage of operating expenses due to decreased revenues.

The decreases were partially offset by price increases and favorable 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) 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 December Nine Months Ended December

The decline was also attributed to a decrease in the Asia- Pacific region of 35% in the three months ended June 2024, including a 3% unfavorable im pact from foreign currency, primari ly due to broad-based weakness in Greater China.

R evenues in the Europe regi on decreased 3% in the three months ended June 2024, including a 1% unfavorable impact from foreign currency.

Operating margin decreased in the three months ended June 2024 compare d to the 2023 period, primarily reflecting lower leverage of operating expenses due to decreased revenues.

27 VF Corporation Q1 FY25 Form 10-Q

Reconciliation of Segment Profit to Loss Before Income Taxes

There are three types of costs necessary to reconcile total segment profit to consolidated loss before income taxes.

These costs are (i) impairment of goodwill and indefinite-lived intangible assets, which was discussed in the “Consolidated Statements of Operations” section and is excluded from segment profit because these costs are not part of the ongoing operations of the respective 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 June

(Dollars in millions) 2024 2023 Percent

Change 2023 2022 Percent

Impairment of goodwill and intangible assets $ 145.0 $ — 100.0 %

1 unchanged sentence

Interest expense, net 55.7 49.7 12.0 %

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

The increase in corporate and other expenses for the three months ended December 2023 was

primarily due to Reinvent charges and project-related costs of $50.9 million.

The decrease in the nine months ended December 2023 was due to a $91.8 million pension settlement charge recorded in the first quarter of Fiscal 2023 and lower compensation and administrative costs in Fiscal 2024.

33 VF Corporation Q3 FY24 Form 10-Q

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 primarily due to Reinvent c harges and higher compensation costs, including performance-based compensation, partially offset by cost savings from Reinvent in the three months ended June 2024.

International

International revenues decreased 5% and increased 2% in the three and nine months ended December 2023, respectively, compared to the 2022 periods.

Foreign currency had a favorable impact of 3% and 2% on international revenues in the three and nine months ended December 2023, respectively.

Revenues in the Europe region decreased 7% and increased 2% in the three and nine months ended December 2023, respectively, including a 5% favorable impact from foreign currency in both periods.

In the Asia-Pacific region, revenues increased 2% and 5% in the three and nine months ended December 2023, respectively.

Foreign currency had an

unfavorable impact of 1% and 3% on Asia-Pacific revenues in the three and nine months ended December 2023, respectively.

Revenues in Greater China increased 5% and 10% in the three and nine months ended December 2023, respectively, including a 2% and 4% unfavorable impact from foreign currency in the respective periods.

The nine months ended December 2022 was negatively impacted by COVID-19 resurgence in Mainland China.

International revenues were 52% and 46% of total revenues in the three-month periods ended December 2023 and 2022, respectively, and 52% and 47% of total revenues in the nine-month periods ended December 2023 and 2022, respectively.

International revenues decreased 5% in the three months ended June 2024 compared to the 2023 period.

Foreign currency had an unfavorable impact of 2% on international revenues in the three months ended June 2024.

Revenues in the Europe r egion decreased 5% in the three months ended June 2024.

In the Asia-Pacific region, revenues decreased 3% in the three months e nded June 2024.

Foreign currency had an unfavorable impact of 5% on Asia-Pacific revenues in the three months ended June 2024.

Greater C hina remained flat in t he three months ended June 2024, inclu ding a 4% unfavorable impact from foreign currency.

Revenues in the Americas (non-U.S.) region decreased 6% in t he three months ended June 2024, including a 1% favorable impact from foreign currency.

International revenues were 51% and 49% of total revenues in the three-month periods ended June 2024 and 2023, respectively.

Direct-to-Consumer

Direct-to-consumer revenues decreased 8% and 5% in the three and nine months ended December 2023, respectively, compared to the 2022 periods, including a 1% favorable impact from foreign currency in both periods.

VF's e-commerce business decreased 13% and 9% during the three and nine months ended December 2023, respectively, including a 1% favorable impact from foreign currency in the three months ended December 2023.

These results were primarily driven by declines in the e-commerce business in the Americas region.

Revenues from VF-operated retail stores decreased 4% during the three and nine months ended December 2023, including a

1% favorable impact from foreign currency in both periods.

There were 1,271 VF-operated retail stores at December 2023 compared to 1,282 at December 2022.

Direct-to-consumer revenues were 60% and 55% of total revenues in the three-month periods ended December 2023 and 2022, respectively, and 48% and 46% of total revenues in the nine-month periods ended December 2023 and 2022, respectively.

Wholesale revenues decreased 26% and 12% in the three and nine months ended December 2023, respectively, compared to the 2022 periods, including a 2% favorable impact from foreign currency in both periods.

These results were primarily driven by declines in the wholesale business in the Americas region.

Wholesale revenues were 40% and 45% of total revenues in the three-month periods ended December 2023 and 2022, respectively, and 52% and 54% of total revenues in the nine-month periods ended December 2023 and 2022, respectively.

D irect-to-consumer revenues decreased 10% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency.

VF's e-commerce business decreased 5% during the three months ended June 2024, including a 1% unfavorable impact from foreign currency.

The decrease was primarily driven by declines in the e-commerce business in the Americas region, which decreased 8% in the three months ended June 2024.

Revenues from VF-operated r etail stores decreased 14% during the three months ended June 2024, including a 1% unfavorable impact from foreign currency.

There wer e 1,175 VF -operated retail stores at June 2024 compared to 1,250 at June 2023.

Direct-to-consumer revenues were 46% and 47% o f total revenues in the three-month periods ended June 2024 and 2023, respectively.

Wholesale revenues decreased 8% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency .

The decrease was primarily driven by declines in the wholesale business in the Americas region.

Wholesale revenues were 54% and 53% of total revenues in the t hree-month periods ended June 2024 and 2023, respectively.

VF Corporation Q1 FY25 Form 10-Q 28

1 unchanged sentence

Consolidated Balance Sheets

The following discussion refers to significant changes in balances at December 2023 compared to March 2023:

• Decrease in accounts receivable — primarily due to lower wholesale shipments.

• Decrease in inventories — driven by VF reducing elevated inventory levels, primarily in core and replenishment products.

• Decrease in goodwill — primarily due to $257.1 million in impairment charges related to the Timberland and Dickies reporting units recorded in the third quarter of Fiscal 2024.

• Decrease in other assets — primarily due to the write-off of the $875.7 million income tax receivable in the second quarter of Fiscal 2024 due to the unfavorable decision in the Timberland tax case related to 2011 taxes and interest disputed with the IRS.

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

• Decrease in long-term debt — due to the reclassification of $1.0 billion of long-term debt due in December 2024 related to our delayed draw Term Loan Agreement (the "DDTL Agreement").

The following discussion refers to significant changes in balances at December 2023 compared to December 2022:

The following discussion refers to significant changes in balances at June 2024 compared to March 2024:

• Decrease in accounts receivable — primarily due to the seasonality of the business and the timing of collections.

• Increase in inventories — primarily due to the seasonality of the business.

• Increase in the current portion of long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025.

• Increase in accounts payable — primarily due to the timing of payments to vendors and seasonality of inventory purchases.

• Decrease in accrued liabilities — primarily due to a decrease in returns allowances and lower accrued income taxes.

• Decrease in long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025.

The following discussion refers to significant changes in balances at June 2024 compared to June 2023:

• Decrease in accounts receivable — primarily due to lower wholesale shipments.

• Decrease in inventories — driven by VF reducing elevated inventory levels, primarily in core and replenishment products.

• Decrease in intangible assets — primarily due to a $148.0 million impairment charge related to the Supreme ® indefinite-lived trademark intangible asset recorded in the fourth quarter of Fiscal 2023.

• Decrease in goodwill — primarily due to $257.1 million in impairment charges related to the Timberland and Dickies reporting units recorded in the third quarter of Fiscal 2024 and a $165.1 million impairment charge related to the Supreme reporting unit recorded in the fourth quarter of Fiscal 2023.

• Decrease in short-term borrowings — primarily due to a decrease in commercial paper borrowings.

• Decrease in accrued liabilities — primarily due to a decrease in income taxes payable related to the Timberland tax case decision and lower accrued compensation.

• Decrease in other liabilities — primarily due to a decrease in deferred income tax liabilities, including the impacts from the Timberland tax case decision.

• Increase in other currents assets — primarily due to higher prepaid income taxes.

• Decrease in property, plant and equipment, net — primarily due to asset disposals and write-downs.

• Decrease in goodwill — primarily due to $507.6 million in impairment charges related to the Timberland, Dickies and Icebreaker reporting units recorded in the third and fourth quarters of Fiscal 2024 and a $94.0 million impairment charge related to the Supreme reporting unit recorded in the first quarter of Fiscal 2025.

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

• Increase in the current portion of long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025 and the reclassification of $1.0 billion of long-term debt due in December 2024 related to our delayed draw Term Loan ("DDTL"), partially offset by the repayment of €850.0 million ($907.1 million) of long-term notes in September 2023.

• Decrease in accounts payable — primarily due to the timing of payments to vendors and lower inventory purchases.

• Decrease in accrued liabilities — primarily due to lower accrued income taxes.

• Decrease in long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025 and the reclassification of $1.0 billion of long-term debt due in December 2024 related to our DDTL.

Liquidity and Capital Resources

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

December March December

June March June

(Dollars in millions) 2024 2024 2023

2 unchanged sentences

Net debt to total capital 83.0% 80.3% 73.1%

The decrease in working capital and the current ratio at December 2023 compared to March 2023 was primarily due to a net increase in current liabilities driven by higher short-term borrowings, and a net decrease in current assets driven by lower accounts receivable and inventories for the periods compared, as discussed in the "Consolidated Balance Sheets" section above, partially offset by higher cash balances.

The increase in working capital at December 2023 compared to December 2022 was primarily due to a net decrease in current liabilities driven by decreased short-term borrowings and accrued liabilities, partially offset by a net decrease in current assets driven by lower accounts receivable and inventories, as discussed in the "Consolidated Balance Sheets" section above.

The decrease in working capital and the current ratio at June 2024 compared to March 2024 was primarily due to a net increase in current liabilities driven by a higher current portion of long-term debt and higher accounts payable, as discussed in the "Consolidated Balance Sheets" section above.

The decrease in working capital at June 2024 compared to June 2023 was primarily due to a net decrease in current assets driven by lower accounts receivable and inventories, and a net increase in current liabilities due to a higher current portion of long-term debt, 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 December 2023 compared to both March 2023 and December 2022 was driven by a decrease in

stockholders' equity, partially offset by a decrease in net debt for the periods compared.

The decrease in stockholders' equity for both comparisons was driven by net loss in the respective periods and payments of dividends.

The decrease in net debt at December 2023 compared to March 2023 was driven by the repayment of €850.0 million in aggregate principal amount of Senior Notes due in September 2023, partially offset by higher short-term borrowings.

The decrease in net debt at December 2023 compared to December 2022 was driven by lower short-term borrowings, as discussed in the "Consolidated Balance Sheets" section above, and higher cash and cash equivalents at December 2023.

Total capital is defined

as net debt plus stockholders’ equity.

The increase in the net debt to total capital ratio at June 2024 compared to March 2024 was driven by a decrease in stockholders' equity for the periods compared.

The decrease in stockholders' equity was primarily driven by the net loss for the period and payments of dividends.

The increase in the net debt to total capital ratio at June 2024 compared to June 2023 was driven by a decrease in stockholders' equity, partially offset by a decrease in net debt for the periods compared.

The decrease in stockholders' equity was primarily driven by the net loss in the period and payments of dividends.

The decrease in net debt at June 2024 compared to June 2023 was driven by the repayment of €850.0 million in aggregate principal amount of Senior Notes due in September 2023, partially offset by higher short-term borrowings, as discussed in the "Consolidated Balance Sheet" section above.

29 VF Corporation Q1 FY25 Form 10-Q

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 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-

35 VF Corporation Q3 FY24 Form 10-Q

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, available cash balances and international lines of credit.

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, available cash balances and international lines of credit.

In summary, our cash flows were as follows:

Nine Months Ended December

Three Months Ended June

(In thousands) 2024 2023

Cash provided (used) by operating activities $ 1,105,747 $ (833,472)

Cash provided by operating activities $ 19,830 $ 163,575

Cash used by investing activities (11,061) (90,562)

Cash provided (used) by financing activities (735,766) 418,719

Cash Provided (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 provided by operating activities in the nine months ended December 2023 compared to December 2022 was primarily due to a decrease in net cash used by working capital driven by lower accounts receivable and inventory balances in the 2023 period and the $875.7 million payment related to the Timberland tax case in the prior year period.

The increase in cash provided by operating activities was partially offset by lower earnings for the periods compared.

Cash used by financing activities (37,444) (71,885)

Cash Provided by Operating Activities

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

The decrease in cash provided by operating activities in the three months ended June 2024 compared to June 2023 was primarily due to lower earnings for the periods compared and an increase in net cash used by working capital.

Cash Used by Investing Activities

The decrease in cash used by investing activities in the nine months ended December 2023 was primarily due to decreased software purchases of $22.6 million and decreased capital expenditures of $10.6 million, partially offset by lower proceeds from the sale of assets of $14.2 million compared to the 2022 period.

Cash Provided (Used) by Financing Activities

The increase in cash used by financing activities during the nine months ended December 2023 was primarily due to borrowings of $1.0 billion under the DDTL Agreement during the 2022 period and a $907.1 million payment of long-term debt in the nine months ended December 2023 compared to a $500.0 million payment of long-term debt in the nine months ended December 2022.

The increase was also due to a $122.7 million net decrease in short-term borrowings for the periods compared.

The increase was partially offset by a $57.0 million payment of Supreme contingent consideration in the prior year period and a $318.2 million decrease in dividends paid for the periods compared.

The decrease in cash used by investing activities in the three months ended June 2024 was primarily due to proceeds from the sale of assets of $45.6 million in the period, primarily related to a sale leaseback transaction of a distribution center and sale of a corporate-owned aircraft.

The decrease was also due to a decrease in capital expenditures of $36.6 million and a decrease in software purchases of $6.7 million in the three months ended June 2024 compared to the 2023 period.

Cash Used by Financing Activities

The decrease in cash used by financing activities during the three months ended June 2024 was primarily due to a $81.6 million decrease in dividends paid for the periods compared.

The decrease was partially offset by a $47.3 million net decrease in short-term borrowings for the periods compared.

Share Repurchases

VF did not purchase shares of its Common Stock in the open market during the nine months ended December 2023 or the nine months ended December 2022 under the share repurchase program authorized by VF's Board of Directors.

As of the end of December 2023, VF had $2.5 billion remaining 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 and reducing leverage.

Revolving Credit Facility and Short-term Borrowings

VF did not purchase shares of its Common Stock in the open market during the three months ended June 2024 or the three months ended June 2023 under the share repurchase program authorized by VF's Board of Directors.

As of the end of June 2024, VF had $2.5 billion remaining for future repurchases under its share repurchase authorization.

VF's capital deployment priorities in the near-to-medium term will be focused on reducing leverage and optimizing the performance of the current portfolio.

Revolving Credit Facility, DDTL Agreement and Short-term Borrowings

VF relies on its ability to generate cash flows to finance its ongoing operations.

In addition, VF has significant liquidity from

its available cash balances and credit facilities.

In addition, VF has significant liquidity from its available cash balances and credit facilities.

VF maintains a $2.25 billion senior unsecured revolving line of credit (the “Global Credit Facility”) that expires in November 2026.

VF may request an unlimited number of one-year extensions so long as each extension does not cause the remaining life of the Global Credit Facility to exceed five years, subject to stated terms and conditions;

request an unlimited number of one-year extensions so long as each extension does not cause the remaining life of the Global Credit Facility to exceed five years, subject to stated terms and conditions;

however, granting of any extension is at the discretion of the lenders.

4 unchanged sentences

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

VF has restrictive covenants on its Global Credit Facility, including a consolidated net indebtedness to consolidated net capitalization financial ratio covenant, as defined in the agreement as amended in February 2023, starting at 70% with future step downs.

The calculation of consolidated net indebtedness is net of unrestricted cash and the calculation of consolidated net capitalization permits certain addbacks, including non-cash impairment charges and material impacts resulting from adverse legal rulings, as defined in the amended agreement.

VF has restrictive covenants on its Global Credit Facility and DDTL Agreement, including a consolidated net indebtedness to consolidated net capitalization financial ratio covenant, as defined in the agreements as amended in August 2024 (effective for the three months ended June 2024), starting at 70% with future step downs.

The covenant calculation also excludes consolidated operating lease liabilities.

As of December 2023, VF was in compliance with all covenants.

Additionally, the amended agreements restrict the total amount of cash dividends and share repurchases to $500.0 million annually, on a calendar-year basis and require the repayment of the DDTL upon the completion of the sale of the Supreme ® brand business.

As of June 2024, VF was in compliance with all covenants.

VF has a global 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 were $250.0 million in U.S.

commercial paper borrowings as of December 2023 .

commercial paper borrowings as of June 2024 .

In addition to the U.S.

commercial paper program, VF commenced a euro commercial paper borrowing program during the second quarter of Fiscal 2024.

As of December 2023, there were no outstanding euro commercial paper borrowings under this program.

Standby letters of credit issued under the Global Credit Facility as of December 2023 were $0.6 million, leaving approximately $1.8 billion available for borrowing against the Global Credit Facility at December 2023, subject to applicable financial covenants.

VF has $85.1 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 $15.3 million at December 2023.

Additionally, VF had $988.0 million of unrestricted cash and equivalents at December 2023.

As of June 2024 , there were no outstanding euro commercial paper borrowings under this program.

Standby letters of credit issued under the Global Credit Facility as of June 2024 were $0.6 million, leaving approximately $2.0 billion available for borrowing against the Global Credit Facility at June 2024, subject to applicable financial covenants.

VF has $86.3 million o f international lines of credit with various banks, which are uncommitted and may be terminated at any

VF Corporation Q1 FY25 Form 10-Q 30

On September 18, 2023, VF repaid €850.0 million ( $907.1 million) in aggregate principal amount of its outstanding 0.625% Senior Notes due in September 2023, in accordance with the terms of the notes.

time by either VF or the banks.

Total outstanding balances under these arrangements were $13.7 million at June 2024.

Additionally, VF had $637.4 million of unrestricted cash and equivalents at June 2024.

Supply Chain Financing Program

VF facilitates a voluntary supply chain finance ("SCF") program that enables a significant portion of our suppliers of inventory to leverage VF's credit rating to receive payment from participating financial institutions prior to the payment date specified in the terms between VF and the supplier.

VF facilitates a voluntary supply chain finance ("SCF") program that enables a significant portion of our inventory suppliers to leverage VF's credit rating to receive payment from participating financial institutions prior to the payment date specified in the terms between VF and the supplier.

The SCF program is administered through third-party platforms that allow participating suppliers to track payments from VF and elect which receivables, if any, to sell to the financial institutions.

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All amounts due to suppliers that are eligible to 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.

At December 2023, March 2023 and December 2022, the accounts payable line item in VF’s Consolidated Balance Sheets included total outstanding obligations of $599.0 million, $510.9 million and $502.8 million, respectively, due to suppliers that are eligible to participate in the SCF program.

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

VF expects a positive impact in Fiscal 2024;

however, the change is not expected to have a material impact on VF's long-term overall liquidity or capital resources.

At June 2024, March 2024 and June 2023, the accounts payable line item in VF’s Consolidated Balance Sheets included total outstanding obligations of $843.0 million, $485.0 million and $931.0 million, respectively, due to suppliers that are eligible to participate in the SCF program.

Rating Agencies

At the end of December 2023, VF’s long-term debt ratings were ‘BBB’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa3 by Moody’s Investors Service ("Moody's"), and U.S.

At the end of June 2024, VF’s long-term debt ratings were ‘BBB-’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa3' by Moody’s Investors Service ("Moody's"), and U.S.

commercial paper ratings by those rating agencies were ‘A-3’ and ‘P-3’, respectively.

The Moody's rating for VF's euro commercial paper was also 'P-3' at the end of December 2023.

The Moody's rating for VF's euro commercial paper was also 'P-3' at the end of June 2024.

There is no active market for euro commercial paper based on VF's current rating.

VF's credit rating outlook by both S&P and Moody's at the end of December 2023 was 'negative'.

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

Further downgrades to VF's ratings could negatively impact borrowing costs.

credit rating outlook by both S&P and Moody's at the end of June 2024 was 'negative'.

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

Further downgrades to VF's ratings would negatively impact borrowing costs.

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.

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 notes due in 2033.

The Company paid cash dividends of $0.09 and $0.69 per share during the three and nine months ended December 2023, respectively, and the Company has declared a cash dividend of $0.09 per share that is payable in the fourth quarter of Fiscal 2024.

The Company paid cash dividends of $0.09 per share during the three months ended June 2024, and the Company declared a cash dividend of $0.09 per share that is payable in the second quarter of Fiscal 2025.

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

Other Matters

As previously reported, VF petitioned the U.S.

Tax Court (the “Tax Court”) to resolve an IRS dispute regarding the timing of income inclusion associated with VF’s acquisition of The Timberland Company in September 2011.

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

In Fiscal 2023, the Tax Court issued its final decision in favor of the IRS, which was appealed by VF.

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 began to accrue interest income.

On September 8, 2023, the U.S.

Court of Appeals for the First Circuit (“Appeals Court”) upheld the Tax Court’s decision in favor of the IRS.

As a result of the Appeals Court decision, VF wrote off the related income tax receivable and associated interest and recorded $690.0 million of income tax expense in the second quarter of Fiscal 2024.

This amount includes the reversal of $19.6 million of interest income, of which $7.5 million was recorded in the first quarter of Fiscal 2024.

This amount reflects the total estimated net impact to VF’s tax expense, which includes the expected reduction in taxes paid on the periodic inclusions that VF has reported, release of related deferred tax liabilities, and consideration of indirect tax effects resulting from the decision.

The estimated impact is subject to future adjustments based on finalization with tax authorities.

Contractual Obligations

Management’s Discussion and Analysis in the Fiscal 2024 Form 10-K provided a table summarizing VF’s material contractual obligations and commercial commitments at the end of Fiscal 2024 that would require the use of funds.

As of December 2023, there have been no material changes in the amounts of unrecorded commitments disclosed in the Fiscal 2023 Form 10-K, except as noted below:

• Inventory purchase obligations decreased by approximately $1.1 billion at the end of December 2023 primarily due to timing of inventory shipments and an overall planned reduction in inventory levels.

As of June 2024, there have been no material changes in the amounts of unrecorded commitments disclosed in the Fiscal 2024 Form 10-K, except as noted below:

• Inventory purchase obligations decreased by approximately $818.0 million at the end of June 2024 primarily due to timing of inventory shipments and increased inventory levels.

Management believes that VF has sufficient liquidity and flexibility to operate its business and meet its current and long-term obligations as they become due.

Recent Accounting Pronouncements

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

37 VF Corporation Q3 FY24 Form 10-Q

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

Critical Accounting Policies and Estimates

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Significant accounting policies are summarized in Note 1 to the consolidated financial statements included in the Fiscal 2024 Form 10-K.

Except as disclosed in Note 2 to VF's consolidated financial statements, there have been no material changes in VF's accounting policies

There have been no material changes in VF's accounting policies from those disclosed in our Fiscal 2024 Form 10-K.

The application of these accounting policies requires management to make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, revenues, expenses, contingent assets and liabilities, and related disclosures.

These estimates,

assumptions and judgments are based on historical experience, current trends and other factors believed to be reasonable under the circumstances.

These estimates, assumptions and judgments are based on historical experience,

current trends and other factors believed to be reasonable under the circumstances.

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

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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 2024 Form 10-K.

Refer to Note 16 to VF's consolidated financial statements for additional information regarding VF's critical accounting policies and estimates during Fiscal 2024.

Refer to Note 15 to VF's consolidated financial statements for additional information regarding VF's critical accounting policies and estimates during Fiscal 2025 related to fair value measurements.

31 VF Corporation Q1 FY25 Form 10-Q

Cautionary Statement on Forward-looking Statements

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disruption to VF’s distribution system;

changes in global economic conditions and the financial strength of VF’s customers, including as a result of current inflationary pressures;

changes in global economic conditions and the financial strength of VF’s consumers and customers, including as a result of current inflationary pressures;

fluctuations in the price, availability and quality of raw materials and finished products;

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VF’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior;

VF's ability to maintain the image, health and equity of its brands;

VF's ability to maintain the image, health and equity of its brands, including through investment in brand building and product innovation;

intense competition from online retailers and other direct-to-consumer business risks;

third-party manufacturing and product innovation;

increasing pressure on margins;

VF’s ability to grow its international, direct-to-consumer and digital businesses;

VF's ability to find and amplify consumer tailwinds, build brands on multiple growth horizons and leverage platforms for speed to scale and efficiency;

retail industry changes and challenges;

VF's ability to execute its transformation and other business strategies, such as the Reinvent transformation program,

including cost reduction and productivity initiatives and the update and maintenance of an agile and efficient operating model and organizational structure;

VF's ability to execute our Reinvent transformation program and other business priorities, including measures to streamline and right-size our cost base and strengthen the balance sheet while reducing leverage, including any sale of the Supreme ® brand business;

VF’s ability to successfully establish a global commercial organization, and identify and capture efficiencies in our business model;

any inability of VF or third parties on which we rely, to maintain the strength and security of information technology systems;

the fact that VF’s facilities and systems, and those of third parties on which we rely, are frequent targets of cyber-attacks of varying levels of severity, and may be vulnerable to such attacks, and any inability or failure by us or such third parties to anticipate or detect data or information security breaches or other cyber-attacks, including the cyber incident that was reported by VF in December 2023, could result in data or financial loss, reputational harm, business disruption, damage to our relationships with customers, consumers, employees and third parties on which we rely, litigation, regulatory investigations, enforcement actions or other negative impacts;

the fact that VF’s facilities and systems, and those of third parties on which we rely, are frequent targets of cyber-attacks of varying levels of severity, and may in the future be vulnerable to such attacks, and any inability or failure by us or such third parties to anticipate or detect data or information security breaches or other cyber-attacks, including the cyber incident that was reported by VF in December 2023, could result in data or financial loss, reputational harm, business disruption,

damage to our relationships with customers, consumers, employees and third parties on which we rely, litigation, regulatory investigations, enforcement actions or other negative impacts;

any inability by VF or third parties on which we rely to properly collect, use, manage and secure business, consumer and employee data and comply with privacy and security regulations;

VF’s ability to adopt new technologies, including artificial intelligence, in a competitive and responsible manner;

foreign currency fluctuations;

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VF’s ability to protect trademarks and other intellectual property rights;

possible goodwill and other asset impairment such as the impairment charges related to the Timberland ® and Dickies ® reporting unit goodwill and Supreme ® reporting unit goodwill and indefinite-lived trademark intangible asset;

possible goodwill and other asset impairment such as the impairment charges related to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset;

maintenance by VF’s licensees and distributors of the value of VF’s brands;

VF’s ability to execute acquisitions and dispositions, integrate acquisitions and manage its brand portfolio;

business resiliency in response to natural or man-made economic, public health, political or environmental disruptions;

changes in tax laws and additional tax liabilities, including the timing of income inclusion associated with our acquisition of the Timberland ® brand in 2011;

legal, regulatory, political, economic, and geopolitical risks, including those related to the current conflicts in Ukraine and the Middle East;

VF’s ability to execute acquisitions and dispositions, integrate acquisitions and manage its brand portfolio, including the proposed sale of the Supreme ® brand business;

whether and when the required regulatory approvals for the proposed sale of the Supreme ® brand business will be obtained, whether and when the closing conditions will be satisfied and whether and when the proposed sale of the Supreme ® brand business will close, if at all;

our ability to execute, and realize benefits, successfully, or at all, from the proposed sale of the Supreme ® brand business;

business resiliency in response to natural or man-made economic, public health, cyber, political or environmental disruptions;

changes in tax laws and additional tax liabilities;

legal, regulatory, political, economic, and geopolitical risks, including those related to the current conflicts in Ukraine and the Middle East and tensions between the U.S.

changes to laws and regulations;

adverse or unexpected weather conditions, including any potential effects from climate change;

VF's indebtedness and its ability to obtain

VF Corporation Q3 FY24 Form 10-Q 38

financing on favorable terms, if needed, could prevent VF from fulfilling its financial obligations;

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;

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VF's ability to execute on its sustainability strategy and achieve its sustainability-related goals and targets;

risks arising from the widespread outbreak of an illness or any other

communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic;

risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic;

and tax risks associated with the spin-off of our Jeanswear business completed in 2019.

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There have been no significant changes in VF’s market risk exposures from what was disclosed in Item 7A in the Fiscal 2024 Form 10-K.

VF Corporation Q1 FY25 Form 10-Q 32

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