“Through the first ten months of fiscal 2020 our business delivered results above our stated long-term growth objectives. Then the world changed for all of us as a result of COVID-19,” said Steve Rendle, Chairman, President and Chief Executive Officer. “From the early days of the outbreak VF has taken a people-first approach in our COVID-19 response, prioritizing the health and safety of our people, while also protecting their financial well-being. As we’ve implemented measures to care for and protect our people, we’ve also taken several key actions to advance our Enterprise Protection Strategy,” Rendle continued. “These prudent actions, most of which have been precautionary, have helped us preserve liquidity and given us more flexibility to manage our global business operations through the prolonged crisis. Moving forward we’re committed to using this moment to set VF and our brands up for the next successful chapter in our 121-year history.”
COVID-19 Outbreak Update and Response Summary
As the global spread of COVID-19 continues, VF remains first and foremost focused on a people-first approach that prioritizes the health and well-being of its employees, customers, trade partners and consumers around the world. To help mitigate the spread of COVID-19 and in response to health advisories and governmental actions and regulations, VF has modified its business practices, including the temporary closing of offices and retail stores, instituting travel bans and restrictions, implementing health and safety measures including social distancing and quarantines.
VF has taken several proactive actions to advance its Enterprise Protection Strategy in response to the COVID-19 outbreak. These actions have included: temporarily reducing the CEO’s base salary by 50 percent and the VF Executive Leadership Team’s base salaries by 25 percent; temporarily forgoing the cash retainer paid to VF’s Board of Directors; completing a $3 billion bond offering to establish a significant cash buffer to ensure near-term liquidity; temporarily suspending its share repurchase plan; and proceeding with the previously announced divestiture of VF’s Occupational Workwear business as an additional source of cash. As of the date of this release, VF has approximately $3 billion of cash on hand in addition to approximately $2.2 billion available under its revolving credit facility.
Currently, all of VF’s retail stores in the APAC region, including Mainland China, have re-opened. While retail store traffic has improved recently, it remains down significantly compared with the prior year. VF has started a phased reopening of its retail stores in the EMEA region, in accordance with guidance from government entities and healthcare authorities. In North America, VF is prepared to begin a phased reopening of its retail stores also subject to guidance from government entities and healthcare authorities to allow proper training and preparation of the retail environment. VF currently expects most of its retail stores to be open by mid-calendar year 2020. While most of VF’s wholesale customers in North America and EMEA remain closed, many have announced reopening plans in the coming weeks.
Consistent with VF’s long-term strategy, the company’s digital platform remains a high priority through which its brands stay connected with consumer communities while providing experiential content. VF continues to operate its global network of distribution centers with enhanced health and safety protocols to serve the company’s consumers and customers.
COVID-19 has also impacted some of VF’s suppliers, including third-party manufacturers, logistics providers and other vendors. At this time, many of VF’s facilities continue to manufacture and distribute products globally in a reduced capacity. VF is actively monitoring its supply chain and implementing mitigation plans.
VF believes it has sufficient liquidity and flexibility to operate during the disruptions caused by COVID-19 and related governmental actions and regulations and health authority advisories. However, due to the uncertainty of the duration and severity of COVID-19, governmental actions in response to the pandemic and the speed with which this pandemic is developing and impacting VF, its consumers, customers and suppliers, it is not possible to reasonably estimate the extent of the impact on VF’s financial condition or results of operations at this time.
Full Year Fiscal 2021 Outlook
Due to the uncertainty of the duration and severity of COVID-19, governmental actions and regulations in response to the pandemic and the speed with which the pandemic is developing and impacting VF, its consumers, customers and suppliers, it is not possible to provide a financial outlook for full-year fiscal 2021 at this time. First quarter fiscal 2021 revenues are expected to be down slightly more than 50%.