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What changed in V F CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of V F CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+489 added−493 removedSource: 10-K (2022-05-26) vs 10-K (2021-05-27)

Top changes in V F CORP's 2023 10-K

489 paragraphs added · 493 removed · 369 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

96 edited+24 added−27 removed31 unchanged
Biggest changeThe recommerce model addresses one of the apparel industry’s biggest challenges, textile waste, and offers our products at a lower price point, which allows new consumers to experience our brands. 6 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts HUMAN CAPITAL As a purpose-led, performance-driven enterprise, VF leverages the strength of our business to drive profitable growth and create value for our shareholders and our stakeholders.
Biggest changeHUMAN CAPITAL MANAGEMENT As a purpose-led, performance-driven company, VF leverages the strength of our business and the capabilities of our people to drive profitable growth and create value for shareholders and stakeholders. Our purpose is to power movements of sustainable and active lifestyles for the betterment of people and our planet.
Eastpak ® backpacks, travel bags and luggage are sold primarily through department and specialty stores across Europe, on websites with strategic digital partners, throughout Asia by distributors and online at www.eastpak.com. JanSport ® backpacks and accessories are sold in North America, through department, office supply and chain stores, as well as sports specialty stores and independent distributors.
Eastpak ® backpacks, travel bags and luggage are sold primarily through department and specialty stores across Europe, on websites with strategic digital partners, throughout Asia by distributors and online at www.eastpak.com. JanSport ® backpacks and accessories are sold primarily in North America, through department, office supply and chain stores, as well as sports specialty stores and independent distributors.
The loss of any one supplier or contractor would not have a significant adverse effect on our business. Product is shipped from our independent suppliers to distribution centers around the world. In some instances, product is shipped directly to our customers. Most distribution centers are operated by VF, and some support more than one brand.
The loss of any one supplier or contractor would not have a significant adverse effect on our business. Product is shipped from our independent suppliers to distribution centers around the world. In some instances, product is shipped directly to our customers. Most distribution centers are operated by VF, and most support more than one brand.
Our dedication to inclusion and diversity is further reflected in programs sponsored by our ERGs. Our ERGs enhance our culture of belonging by creating a safe space for learning and dialogue about underrepresented groups, establishing a sense of community among associates and providing platforms to collect and share insights to support business imperatives.
Our dedication to inclusion and diversity is further reflected in programs sponsored by our ERGs. Our ERGs enhance our culture of belonging by creating a safe space for learning and dialogue for underrepresented groups, establishing a sense of community among associates and providing platforms to collect and share insights to support business imperatives.
Rendle served as President and Chief Operating Officer from June 2015 to December 2016, Senior Vice President — Americas from April 2014 until June 2015, Vice President and Group President — Outdoor & Action Sports Americas from May 2011 until April 2014, President of VF’s Outdoor Americas businesses from 2009 to 2011, President of The North Face ® brand from 2004 to 2009 and Vice President of Sales of The North Face ® brand from 1999 to 2004.
Rendle served as President and Chief Operating Officer from June 2015 until December 2016, Senior Vice President — Americas from April 2014 until June 2015, Vice President and Group President — Outdoor & Action Sports Americas from May 2011 until April 2014, President of VF’s Outdoor Americas businesses from 2009 until 2011, President of The North Face ® brand from 2004 until 2009 and Vice President of Sales of The North Face ® brand from 1999 until 2004.
He served as President — VF EMEA from April 2017 until December 2017, Coalition President — Jeanswear, Sportswear and Contemporary International from January 2013 to November 2017, President — Sportswear and Contemporary EMEA from February 2009 to December 2012 and President — Sportswear and Packs from August 2006 to January 2009. Mr. Guerrini joined VF in 2006. Bryan H.
He served as President — VF EMEA from April 2017 until December 2017, Coalition President — Jeanswear, Sportswear and Contemporary International from January 2013 until November 2017, President — Sportswear and Contemporary EMEA from February 2009 until December 2012 and President — Sportswear and Packs from August 2006 until January 2009. Mr. Guerrini joined VF in 2006. Bryan H.
The Timberland ® brand offers outdoor, adventure-inspired lifestyle footwear, apparel and accessories that combine performance benefits and versatile styling for men, women and children. We sell Timberland ® products globally through chain, department and specialty stores, independent distributors and licensees, independently-operated partnership stores, concession retail stores, over 200 VF-operated stores, on websites with strategic digital partners and online at www.timberland.com.
The Timberland ® brand offers outdoor, adventure-inspired lifestyle footwear, apparel and accessories that combine performance benefits and versatile styling for men, women and children. We sell Timberland ® products globally through chain, department and specialty stores, independent distributors and licensees, independently-operated partnership stores, concession retail stores, approximately 200 VF-operated stores, on websites with strategic digital partners and online at www.timberland.com.
Most of these partnership stores are located in Europe and Asia, and are concentrated in the Timberland ® , The North Face ® , Vans ® , Dickies ® , Kipling ® and Napapijri ® brands.
Most of these partnership stores are located in Europe and in Asia, and are concentrated amongst the Timberland ® , The North Face ® , Vans ® , Dickies ® , Kipling ® and Napapijri ® brands.
LICENSING ARRANGEMENTS As part of our strategy of expanding market penetration of VF-owned brands, we enter into licensing agreements with independent parties for specific apparel and complementary product categories when such arrangements provide more effective manufacturing, distribution and marketing than could be achieved internally.
LICENSING ARRANGEMENTS As part of our strategy of expanding market penetration of VF-owned brands, we enter into licensing agreements with independent parties for specific apparel and complementary product categories when such arrangements provide more effective sourcing, distribution and marketing than could be achieved internally.
The North Face ® products are marketed globally, primarily through specialty outdoor and premium sporting goods stores, department stores, independent distributors, independently-operated partnership stores, concession retail store s, over 200 VF-operated stores, on websites with strategic digital partners and online at www.thenorthface.com.
The North Face ® products are marketed globally, primarily through specialty outdoor and premium sporting goods stores, department stores, independent distributors, independently-operated partnership stores, concession retail stores, over 200 VF-operated stores, on websites with strategic digital partners and online at www.thenorthface.com.
The Smartwool ® brand offers active outdoor consumers a premium, technical layering system of merino wool socks, apparel and accessories that are designed to work together in fit, form and function. Smartwool ® products are sold globally through s pecialty outdoor and premium sporting goods stores, independent distributors, on websites with strategic digital partners and online at www.smartwool.com.
The Smartwool ® brand offers active outdoor consumers a premium, technical layering system of merino wool socks, apparel and accessories that are designed to work together in fit, form and function. Smartwool ® products are sold globally through specialty outdoor and premium sporting goods stores, independent distributors, on websites with strategic digital partners and online at www.smartwool.com.
Initiatives to promote overall alignment with our purpose, guiding principles and strategy are therefore important and include extensive internal communications and education about our programs, interactive townhalls across various parts of our business, and a listening strategy that engages associates in providing input and feedback on a variety of topics.
Initiatives to promote overall alignment with our performance, purpose, guiding principles, and strategy are therefore important and include internal communications and education about our programs, townhalls across various parts of our business, and a listening strategy that engages associates in providing input and feedback on a variety of topics.
Rendle , 61, has been Executive Chairman of the Board since October 2017, President and Chief Executive Officer of VF since January 2017 and a Director of VF since June 2015. Mr.
Rendle , 62, has been Executive Chairman of the Board since October 2017, President and Chief Executive Officer of VF since January 2017 and a Director of VF since June 2015. Mr.
Becoming consumer- and retail-centric to meet and exceed consumers' needs across all channels, and operate our business differently - from the design studio to the factory floor to the point of sale - by thinking and acting more like a vertical retailer. VF is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
Becoming consumer- and retail-centric to meet and exceed consumers' needs across all channels, and operate our business differently - from the design studio to the factory floor to the point of sale - by thinking and acting more like a vertically integrated manufacturer and retailer. VF is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
Timberland PRO ® products are available through specialty stores, chain stores, independent distributors, on websites with strategic digital partners and online at www.timberland.com. Timberland PRO ® products are also available in most domestic VF-operated Timberland ® stores.
Timberland PRO ® products are available through specialty stores, chain stores, independent distributors, on websites with strategic digital partners and online at www.timberland.com. Timberland PRO ® products are also available in most U.S. VF-operated Timberland ® stores.
In total, we operate 29 owned or leased distribution centers primarily in the U.S., but also in the United Kingdom, Belgium, the Netherlands, Canada, Mexico, Israel, Japan and France. SEASONALITY VF’s quarterly operating results vary due to the seasonality of our individual brands, and are historically stronger in the second half of the calendar year.
In total, we operate 25 owned or leased distribution centers primarily in the U.S., but also in the Czech Republic, United Kingdom, the Netherlands, China, Canada, Mexico, Belgium, Israel, Japan and France. SEASONALITY VF’s quarterly operating results vary due to the seasonality of our individual brands, and are historically stronger in the second half of the calendar year.
The Governance and Corporate Responsibility Committee is responsible for conducting Director succession planning and the selection of Director nominees, and reviews VF’s Code of Business Conduct and VF’s sustainability policies, goals and programs.
The Governance and Corporate Responsibility Committee is responsible for conducting Board succession planning and the selection of nominees to the Board, and reviews VF’s Code of Business Conduct and VF’s sustainability policies, goals and programs.
Culture, Talent Management and Engagement Our culture is built on our five Guiding Principles: Live with Integrity, Act with Empathy, Be Curious, Persevere, and Act Courageously. We have codified this culture through the lens of “what we do”, “what we see” and “how we feel”, and we measure our culture and Employee Net Promoter Score (eNPS) via semi-annual surveys.
Culture and Engagement Our culture is built on our five Guiding Principles: Live with Integrity, Act with Empathy, Be Curious, Persevere, and Act Courageously. We have codified this culture through the lens of “what we do”, “what we see” and “how we feel”, and we measure our culture and Employee Net Promoter Score ("eNPS") via semiannual surveys.
VF a ims to remove barriers to uplifting women and has added and expanded resources to support women in the workplace, including career advancement workshops, community building activities through our Employee Resource Groups (“ERGs”), and a suite of benefits designed to promote wellbeing and provide support for parents and families.
VF aims to remove barriers to uplifting women and has added and expanded resources to support women in the workplace, including career advancement workshops, community building activities through our Employee Resource Groups (“ERGs”), and a suite of benefits designed to promote wellbeing and provide support for parents and families, including paid parental leave.
DIRECT-TO-CONSUMER OPERATIONS Our direct-to-consumer business includes VF-operated retail stores, brand e-commerce sites, concession retail locations and other digital platforms. Direct-to-consumer revenues were 45% of total VF revenues in Fiscal 2021. Our full-price retail stores allow us to display a brand’s full line of products with fixtures and imagery that support the brand’s positioning and promise to consumers.
DIRECT-TO-CONSUMER OPERATIONS Our direct-to-consumer business includes VF-operated retail stores, brand e-commerce sites, concession retail locations and other digital platforms. Direct-to-consumer revenues were 46% of total VF revenues in Fiscal 2022. Our full-price ret ail stores allow us to display a brand’s full line of products with fixtures and imagery that support the brand’s positioning and promise to consumers.
Each licensee pays royalties to VF based on its sales of licensed products, with most agreements providing for a minimum royalty requirement. Royalties generally range f rom 4% to 10% of the licensing partners’ net licensed products sales.
Each licensee pays royalties to VF based on its sales of licensed products, with most agreements providing for a minimum royalty requirement. Royalties generally range from 4% to 10% of the licensing partners’ net licensed product sales.
He served as Executive Vice President and Group President, APAC and Vans from January 2017 until December 2017, President Action Sports & VF CASA from March 2016 to December 2016, President Action Sports & the Vans ® brand from April 2014 to February 2016, Global President of the Vans ® brand from June 2009 to March 2014 and Vice President Direct-to-Consumer for the Vans ® brand from June 2002 to November 2007.
He served as Executive Vice President and President, APAC and Emerging Brands from August 2020 until February 2022, Executive Vice President and Group President, APAC from January 2017 until August 2020, President Action Sports & VF CASA from March 2016 until December 2016, President Action Sports and the Vans ® brand from April 2014 until February 2016, Global President of the Vans ® brand from June 2009 until March 2014 and Vice President Direct-to-Consumer for the Vans ® brand from June 2002 until November 2007.
These Committees report and provide recommendations to the Board and are part of the broader framework that guides how VF attracts, develops, and retains a workforce that aligns with VF’s values and supports its strategies.
These Committees provide recommendations to the Board and are part of the broader framework that guides how VF attracts, develops, and retains a workforce that aligns with VF’s values and supports its business strategies and performance objectives.
These functions are performed by employees located in our global supply chain organization and our branded business units across the globe. VF’s centralized global supply chain organization is responsible for producing, procuring and delivering products to our customers. VF is highly skilled in managing the complexities associated with our global supply chain .
These functions are performed by employees located in our global supply chain organization and our branded business units across the globe. VF’s centralized global supply chain organization is responsible for procuring and delivering products to support our brands and businesses. VF is highly skilled in managing the complexities associated with our global supply chain .
Dickies ® products are available globally through mass merchants, specialty stores, independent distributors and licensees, independently-operated partnership stores, concession retail store s, 20 VF-operated stores, on websites with strategic digital p artners and online at www.dickies.com. The Timberland PRO ® brand offers work and work-inspired products that provide comfort, durability and performance.
Dickies ® products are available globally through mass merchants, specialty stores, independent distributors and licensees, independently-operated partnership stores, concession retail stores, approximately 20 VF-operated stores, on websites with strategic digital partners and online at www.dickies.com. The Timberland PRO ® brand offers work and work-inspired products that provide comfort, durability and performance.
Nothing is more fundamental than providing people with an environment where they feel safe, secure and supported. Our mission is simple: Foster a culture of safety that enables a workplace free of hazards and sends every employee home safely. Our goal is zero workplace injuries within our operations.
Associate safety rests at the heart of our decisions. Nothing is more fundamental than providing people with an environment where they feel safe, secure and supported. Our mission is simple: Foster a culture of safety that enables a workplace free of hazards and sends every employee home safely. Our goal is zero workplace injuries within our operations.
After VF’s 2021 Annual Meeting of Shareholders, VF intends to file with the New York Stock Exchange (“NYSE”) the certification regarding VF’s compliance with the NYSE’s corporate governance listing standards as required by NYSE Rule 303A.12. Last year, VF filed this certification with the NYSE on August 26, 2020. VF Corporation Fiscal 2021 Form 10-K 9 Table of Conte nts
After VF’s 2022 Annual Meeting of Shareholders, VF intends to file with the New York Stock Exchange (“NYSE”) the certification regarding VF’s compliance with the NYSE’s corporate governance listing standards as required by NYSE Rule 303A.12. Last year, VF filed this certification with the NYSE on August 16, 2021. VF Corporation Fiscal 2022 Form 10-K 9 Table of Contents
Murray , 60, has been Executive Vice President and Group Brand President, The North Face since October 2020. He served as Executive Vice President — Strategic Projects from April 2018 until October 2019 and as Group President, American from October 2019 until October 2020.
Murray , 61, has been Executive Vice President and Group Brand President, The North Face since October 2020. He served as Group President, Americas from October 2019 until October 2020 and as Executive Vice President — Strategic Projects from April 2018 until October 2019.
We also believe that having an engaged, diverse and committed workforce not only enhances our culture but also drives our business success.
We believe that having an engaged, diverse and committed workforce not only enhances our business performance but also our culture.
VF also conducts periodic pulse check surveys for interim feedback on specific topics such as ethics & compliance, safety, and remote/flexible work. Talent management includes the acquisition, development, skilling and upskilling, and deployment of our talent.
VF also conducts periodic pulse check surveys for interim feedback on specific topics such as ethics and compliance, safety, communications, and related topics. Talent Management Talent Management includes the acquisition, development, skilling and upskilling, and deployment of our talent.
Additional information is included under the caption “Election of Directors” in VF’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held July 27, 2021 (“2021 Proxy Statement”) that will be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year ended April 3, 2021, which information is incorporated herein by reference.
Additional information is included under the caption “Election of Directors” in VF’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held July 26, 2022 (“2022 Proxy Statement”) that will be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year ended April 2, 2022, which information is incorporated herein by reference.
These actions are consistent and aligned with VF’s IDEA Statement, committing to equal opportunity for all employees and candidates. At the end of Fiscal 2021, approximately 16% of our U.S. workforce within director and above roles voluntarily self-identified as BIPOC.
These actions are consistent and aligned with VF’s IDEA Statement, committing to equal opportunity for all employees and candidates. At the end of Fiscal 2022, approximately 18% of our U.S. director and above workforce voluntarily self-identified as BIPOC.
McNeill , 59, has been Vice President — Controller and Chief Accounting Officer since April 2015. He served as Controller and Supply Chain Chief Financial Officer of VF International from January 2012 until March 2015 and Controller of VF International from May 2010 until December 2011. Mr. McNeill joined VF in 1993. Laura C.
McNeill , 60, has been Vice President — Controller and Chief Accounting Officer since April 2015. He served as Controller and Supply Chain Chief Financial Officer of VF International from January 2012 until March 2015 and Controller of VF International from May 2010 until December 2011. Mr. McNeill joined VF in 1993. Stephen M.
Corporation and its consolidated subsidiaries. All references to "Fiscal 2021" relate to VF's current fiscal year which ran from March 29, 2020 through April 3, 2021. Unless otherwise noted, all discussion below, including amounts and percentages for all periods, reflect the results of operations and financial condition of VF’s continuing operations.
Corporation and its consolidated subsidiaries. All references to "Fiscal 2022" relate to VF's current fiscal year which ran from April 4, 2021 through April 2, 2022. Unless otherwise noted, all discussion below, including amounts and percentages for all periods, reflect the results of operations and financial condition of VF’s continuing operations.
Backlog The dollar amount of VF’s order backlog as of any date may not be indicative of actual future shipments and, accordingly, is not material to an understanding of the business taken as a whole. 8 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following are the executive officers of VF Corporation as of May 27, 2021.
Backlog The dollar amount of VF’s order backlog as of any date is not indicative of actual future shipments and, accordingly, is not material to an understanding of the business taken as a whole. 8 VF Corporation Fiscal 2022 Form 10-K Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following are the executive officers of VF Corporation as of May 26, 2022.
Royalty income was $51.7 million in Fiscal 2021 (less than 1% of total revenues), primarily from the Vans ® , Dickies ® and Timberland ® brands. MANUFACTURING, SOURCING AND DISTRIBUTION Product design and innovation, including fit, fabric, finish and quality, are important elements across our businesses.
Royalty income was $66.6 million in Fiscal 2022 (less than 1% of total revenues), primarily from the Dickies ® , Vans ® and Timberland ® brands. SOURCING AND DISTRIBUTION Product design and innovation, including fit, fabric, finish and quality, are important elements across our businesses.
A portion of our distribution needs are met by contract distribution centers. In response to COVID-19, VF's distribution centers have maintained operations in accordance with local government guidelines while maintaining enhanced health and safety protocols. Our largest fully operational distribution centers by region are located in Visalia, California, Prague, Czech Republic and Shanghai, China.
In response to COVID-19, VF's distribution centers have maintained operations in accordance with local government guidelines while maintaining enhanced health and safety protocols. Our largest distribution centers by region are located in Visalia, California, Prague, Czech Republic and Shanghai, China.
Sales to VF’s ten largest customers amounted to approximately 16% of total revenues in Fiscal 2021. Sales to the five largest customers amounted to approximately 10% of total revenues in Fiscal 2021. Sales to VF’s largest customer totaled approximately 2% of total revenues in Fiscal 2021.
Sales to the five largest customers amounted to approximately 10% of total revenues in Fiscal 2022. Sales to VF’s largest customer totaled approximately 2% of total revenues in Fiscal 2022.
ADVERTISING, CUSTOMER SUPPORT AND COMMUNITY OUTREACH During Fiscal 2021, our advertising and promotion expense was $608.1 million, representing 7% of total revenues. We advertise in consumer and trade publications, on radio and television and through digital initiatives including social media and mobile platforms on the Internet.
ADVERTISING, CUSTOMER SUPPORT AND COMMUNITY OUTREACH During Fiscal 2022, our advertising and promotion expense was $840.6 million, representing 7% of total revenues. We advertise in consumer and trade publications and through digital initiatives, including social media and mobile platforms on the Internet.
The Icebreaker ® brand specializes in performance apparel and accessories based on natural fibers, including merino wool and other plant-based fibers. Icebreaker ® products are sold globally through s pecialty outdoor and premium sporting goods stores , independent distributors, over 30 VF-operated stores, on websites with strategic digital p artners and online at www.icebreaker.com.
The Icebreaker ® brand specializes in performance apparel and accessories based on natural fibers, including merino wool and other plant-based fibers. Icebreaker ® products are sold globally through specialty outdoor and premium sporting goods stores, concession retail stores, independent distributors, approximately 30 VF-operated stores, on websites with strategic digital partners and online at www.icebreaker.com.
Our Board of Directors and its Committees provide governance and oversight on a broad range of VF’s human capital management efforts. The Board’s oversight includes review of CEO and executive officer performance, compensation and succession planning and inclusion, diversity and belonging programs and initiatives.
Our Board of Directors and its Committees provide governance and oversight on a broad range of VF’s human capital management efforts. The Board’s oversight includes review of CEO and executive officer performance, compensation and succession planning and inclusion, and diversity and belonging 6 VF Corporation Fiscal 2022 Form 10-K Table of Contents programs and initiatives.
The Talent and Compensation Committee works with management on executive compensation and compensation risks, and regularly reviews inclusion and diversity, benefits, wellbeing, culture, and talent development strategies. VF’s Audit Committee monitors current and emerging risks, including human capital management risks, and VF’s health and safety program.
The Talent and Compensation Committee works with management on executive compensation and compensation risks, and regularly reviews our progress on company-wide HCM priorities, including inclusion and diversity, benefits, wellbeing, culture, succession and talent development strategies. VF’s Audit Committee monitors current and emerging risks, including HCM risks, and VF’s health and safety program.
We limit VF’s sourcing exposure through, among other measures: (i) diversifying production among countries and contractors, (ii) sourcing production to merchandise categories where product is readily available, and (iii) sourcing from countries with tariff preference and free trade agreements.
Management continually monitors political risks and developments related to duties, tariffs and quotas. We limit VF’s sourcing exposure through, among other measures: (i) diversifying production among countries and contractors, (ii) sourcing production to merchandise categories where product is readily available, and (iii) sourcing from countries with tariff preference and free trade agreements.
Products are marketed to men, women and children primarily in Europe. Products are sold in department and specialty stores, independently-operated partnership stores, concession retail stores, independent distributors, more than 25 VF-operated stores, on websites with strategic digital partners and online at www.napapijri.com.
Products are sold in department and specialty stores, independently-operated partnership stores, concession retail stores, independent distributors, 25 VF-operated stores, on websites with strategic digital partners and online at www.napapijri.com.
The North Face ® brand features performance-based apparel, outerwear, sportswear and footwear for men, women and children. Its equipment line includes tents, sleeping bags, backpacks and accessories. Many of The North Face ® products are designed for extreme winter sport activities, such as high altitude mountaineering, skiing, snowboarding, and ice and rock climbing.
Its equipment line includes tents, sleeping bags, backpacks and accessories. Many of The North Face ® products are designed for extreme winter sport activities, such as high altitude mountaineering, skiing, snowboarding, and ice and rock climbing.
We believe there is a strategic opportunity for growth in our Work segment in both existing and future markets and all channels and geographies by introducing innovative products that address workers’ desires for increased comfort and performance, combined with our increased presence in the retail workwear market and work-inspired lifestyle product offerings.
We believe there is a strategic opportunity for growth in our Work segment in both existing and future markets, and in all channels and geographies. We expect growth will be driven by an increased presence in the retail workwear market, additional work-inspired lifestyle product offerings and by continuing to innovate products that address workers’ desires for increased comfort and performance.
VF is a member of the Paradigm for Parity coalition, which has pledged to prom ote organizational gender parity globally by 2030. At the end of Fiscal 2021, nearly 55% of the overall VF workforce and approximately 40% of director and above roles voluntarily self-identified as women.
VF is a member of the Paradigm for Parity coalition, which has pledged to promote organizational gender parity globally in leadership roles by 2030. At the end of Fiscal 2022, approximately 53% of the overall VF workforce and approximately 42% of director and above roles voluntarily self-identified as women.
The Timberland ® brand has a strong heritage of volunteerism, including the Path of Service™ program that offers full-time VF Corporation Fiscal 2021 Form 10-K 5 Table of Conte nts employees up to 40 hours of paid time off a year to serve their local communities through global service events such as Earth Day in the spring and Serv-a-palooza in the fall.
The Timberland ® brand has a strong heritage of volunteerism, including the Path of Service™ program that offers full-time employees paid time off to serve their local communities through global service events such as Earth Day in the spring and "Serv-a-palooza" in the fall.
As such, both the Occupational Workwear business that met the held-for-sale and discontinued operations criteria as of March 28, 2020 and the Jeans business subject to the spin-off completed May 22, 2019, have been excluded. VF’s diverse portfolio meets consumer needs across a broad spectrum of activities and lifestyles.
As such, both the Occupational Workwear business that was sold on June 28, 2021 and the Jeans business subject to the spin-off completed May 22, 2019, have been excluded. VF’s diverse portfolio meets consumer needs across a broad spectrum of activities and lifestyles.
VF Corporation Fiscal 2021 Form 10-K 3 Table of Conte nts Our global direct-to-consumer operations included 1,374 stores at the end of Fiscal 2021. We operate retail store locations for the following brands: Vans ® , Timberland ® , The North Face ® , Kipling ® , Dickies ® , Icebreaker ® , Napapijri ® and Supreme ® .
Our global direct-to-consumer operations included 1,322 stores at the end of Fiscal 2022. We operate retail store locations for the following brands: Vans ® , The North Face ® , Timberland ® , Kipling ® , Dickies ® , Icebreaker ® , Napapijri ® and Supreme ® .
These include health & welfare programs, retirement programs, paid parental leave, adoption assistance, paid time off, tuition reimbursement, product discounts, fitness facilities or programs, childcare and educational resources and various on-site services, employee assistance program, and regular wellbeing programming as culturally appropriate throughout the geographies in which we operate. Associate Safety rests at the heart of our decisions.
These include health and welfare programs, retirement programs, paid parental leave, reproductive and adoption assistance, paid time off, tuition reimbursement, product discounts, fitness facilities or programs, childcare and educational resources and various on-site services, employee assistance program, and regular wellbeing programming, as VF Corporation Fiscal 2022 Form 10-K 7 Table of Contents culturally appropriate throughout the geographies in which we operate.
We continue to expand our e-commerce initiatives by rolling out additional, country-specific brand sites in Europe and Asia, which enhances our ability to deliver a superior, localized consumer experience. We also continue to increase focus on digital innovation and growth across other third-party digital platforms. Changes in the retail landscape resulting from the COVID-19 pandemic have accelerated our e-commerce growth.
We continue to expand our e-commerce initiatives by rolling out additional, country-specific brand sites in Europe and Asia, which enhances our ability to deliver a superior, localized consumer experience. We also continue to increase focus on digital innovation and growth across other third-party digital platforms that are reported within our direct-to-consumer business.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Employees VF had approximately 40,000 employees at the end of Fiscal 2021. Of VF's total employees , approximately 68% were full-time and approximately 49% were located in the U.S. In international markets, certain employees are covered by trade-sponsored or governmental bargaining arrangements. Employee relations are considered to be good.
Associate Base VF had approximately 35,000 employees at the end of Fiscal 2022. Of VF’s total employees, approximately 58% were full-time and approximately 58% were located in the U.S. In international markets, certain employees are covered by trade-sponsored or governmental bargaining arrangements. Employee relations are considered to be good.
Our Council to Advance Racial Equity (“CARE”) has committed to assisting in actions that promote, among other things; 1) increasing Black, Indigenous and People of Color (“BIPOC”) associate representation within director and above roles in the U.S.; 2) diverse candidate slates; 3) pay equity; 4) leader compensation tied to successful implementation of our IDEA strategy; 5) mentorship and sponsorship of BIPOC employees and members of the community; and 6) elevating our commitment to education, listening and learning.
Our Council to Advance Racial Equity (“CARE”) oversees our commitments on actions that promote: increasing Black, Indigenous and People of Color (“BIPOC”) representation at the director and above population in the U.S.; diverse candidate slates; pay equity; leader compensation tied to successful implementation of our IDEA strategy; mentorship and sponsorship of BIPOC employees and members of the community; and elevating our commitment to education, listening and learning.
Our purpose is to power movements of sustainable and active lifestyles for the betterment of people and our planet. This purpose, combined with a focus on delivering on our commitments, allows us to offer a unique value proposition to our associates – a place where you can do good and do well at the same time.
This purpose, combined with a laser focus on performance and delivering on our commitments, allows us to offer a unique value proposition to our associates – a place where you can do well and do good at the same time.
Absent any material changes, VF believes it would be able to largel y offset any increases in product costs through (i) the continuing shift in the mix of its business to higher margin brands, geographies and channels of distribution, (ii) increases in the prices of its products, and (iii) cost reduction efforts.
VF has and will continue to work to offset any increases in product costs through (i) the continuing shift in the mix of its business to higher margin brands, geographies and channels of distribution, (ii) increases in the prices of its products, and (iii) cost reduction efforts.
VF Corporation Fiscal 2021 Form 10-K 1 Table of Conte nts The following table summarizes VF’s brands by reportable segment: REPORTABLE SEGMENT BRANDS PRIMARY PRODUCTS Outdoor The North Face ® High performance outdoor apparel, footwear, equipment, accessories Timberland ® Outdoor lifestyle footwear, apparel, accessories Smartwool ® Performance merino wool and other natural fibers-based apparel and accessories Icebreaker ® High performance apparel based on natural, plant-based and recycled fibers Altra ® Performance-based footwear Active Vans ® Youth culture/action sports-inspired footwear, apparel, accessories Supreme ®(1) Streetwear apparel, footwear, accessories Kipling ® Handbags, luggage, backpacks, totes, accessories Napapijri ® Premium outdoor apparel, footwear, accessories Eastpak ® Backpacks, luggage JanSport ® Backpacks, luggage Eagle Creek ® Luggage, backpacks, travel accessories Work Dickies ® Work and work-inspired lifestyle apparel and footwear Timberland PRO ® Protective work footwear, work and work-inspired lifestyle apparel (1) VF acquired the Supreme ® b rand on December 28, 2020.
VF Corporation Fiscal 2022 Form 10-K 1 Table of Contents The following table summarizes VF’s brands by reportable segment: REPORTABLE SEGMENT BRANDS PRIMARY PRODUCTS Outdoor The North Face ® High performance outdoor apparel, footwear, equipment, accessories Timberland ® Outdoor-adventure inspired lifestyle footwear, apparel, accessories Smartwool ® Performance merino wool and other natural fibers-based apparel and accessories Icebreaker ® High performance apparel and accessories based on natural fibers Altra ® Performance-based footwear Active Vans ® Youth culture/action sports-inspired footwear, apparel, accessories Supreme ® Streetwear apparel, footwear, accessories Napapijri ® Premium outdoor-inspired apparel, footwear, accessories Kipling ® Handbags, luggage, backpacks, totes, accessories Eastpak ® Backpacks, luggage JanSport ® Backpacks, luggage Work Dickies ® Work and work-inspired lifestyle apparel and footwear Timberland PRO ® Protective work footwear, work and work-inspired lifestyle apparel Financial information regarding VF’s reportable segments is included in Note 20 to the consolidated financial statements.
We expect our direct-to-consumer business to continue growing as we accelerate our consumer-minded, retail-centric, hyper-digital business model transformation. In addition to our direct-to-consumer operations, independent parties own and operate approximately 2,900 partnership stores. These are primarily mono-brand retail locations selling VF products that have the appearance of VF-operated stores.
In addition to our direct-to-consumer operations, independent parties own and operate approximately 2,700 partnership stores. These are primarily mono-brand retail locations selling VF products that have the appearance of VF-operated stores.
We offer a comprehensive and competitive benefits program to our full-time associates that is designed to provide choices and flexibility to meet their needs now and in the future.
We define wellbeing as not only physical health, but also emotional, social, financial and career wellbeing. We offer a comprehensive and competitive benefits program to our full-time associates that is designed to provide choices and flexibility to meet their needs now and in the future.
We also offer sales incentive programs directly to consumers in the form of discounts, rebates and coupon offers that are eligible for use in certain VF-operated stores, brand e-commerce sites and concession retail locations. In addition to sponsorships and activities that directly benefit our products and brands, VF and its associates actively support our communities and various charities.
We also offer sales incentive programs directly to consumers in the form of discounts, rebates and coupon offers that are eligible for use in certain VF-operated stores, brand e-commerce sites and concession retail locations. VF also offers loyalty programs for certain brands that provide a range of benefits to consumers.
Our human capital management strategy focuses on ensuring that we attract, develop and retain diverse talent through practices that promote inclusion, diversity and equity; development opportunities for associates across the organization; competitive rewards and benefits; and programs that support wellbeing in an engaging work environment built on enduring guiding principles and values.
Our Human Capital Management ("HCM") practices are designed to promote inclusion, diversity and equity; provide development opportunities for associates across the organization; offer competitive rewards and benefits; and sponsor programs that support wellbeing in an engaging work environment built on enduring guiding principles and longstanding values.
Kipling ® branded handbags, luggage, backpacks, totes and accessories are sold globally through department, specialty and luggage stores, independently-operated partnership stores, independent distributors, concession retail stores, more than 60 VF-operated stores, on websites with strategic digital partners and online at www.kipling.com. The Napapijri ® brand offers outdoor-inspired casual outerwear, sportswear and accessories at a premium price.
Kipling ® branded handbags, luggage, backpacks, totes and accessories are sold globally through department, specialty and luggage stores, independently-operated partnership stores, independent distributors, concession retail stores, approximately 40 VF-operated stores, on websites with strategic digital partners and online at www.kipling.com.
Managing this complexity is made possible by the use of a network of information systems for product development, forecasting, order management and warehouse management, along with our core enterprise resource management platforms. In Fiscal 2021, 96% of our units were obtained from independent contractors.
Managing this complexity is made possible by the use of a network of information systems for product development, forecasting, order management and warehouse management, along with our core enterprise resource management platforms. Products obtained from contractors in the Western Hemisphere generally have a higher cost than products obtain ed from contractors in Asia.
Earlier in his career, he served as President — Action Sports Coalition from 2009 until 2010 and President of the Vans ® brand from August 2004 until 2009. Mr. Murray originally joined VF in 2004.
Earlier in his career, he served as President — Action Sports Coalition from 2009 until 2010 and President of the Vans ® brand from August 2004 until 2009. Mr. Murray originally joined VF in 2004. Jennifer S. Sim , 48, has been Executive Vice President, General Counsel and Secretary since May 2022.
Vans ® products are available globally through chain stores, specialty stores, independent distributors and licensees, independently-operated partnership stores, concession retail store s, more than 700 VF-operated stores, on websites with strategic digital partners and online at www.vans.com. The Supreme ® brand was acquired by VF on December 28, 2020.
Vans ® products are available globally through chain stores, specialty stores, independent distributors and licensees, independently-operated partnership stores, concession retail stores, more than 700 VF-operated stores, on websites with strategic digital partners and online at www.vans.com. Supreme ® is a leading streetwear brand that offers apparel, accessories and footwear.
Global brands have been combined into reportable segments based on similar economic characteristics and qualitative factors. The reportable segments for financial reporting purposes have been identified as: Outdoor, Active and Work.
VF's chief operating decision maker allocates resources and assesses performance based on a global brand view which represents VF's operating segments. Global brands have been combined into reportable segments based on similar economic characteristics and qualitative factors. The reportable segments for financial reporting purposes have been identified as: Outdoor, Active and Work.
Examples of our key programs and initiatives that are focused to achieve our objectives include: Inclusion, Diversity, Equity, Action (IDEA) IDEA is fundamental to our business and we aim to sustain a workplace that celebrates the diversity of our associates.
Inclusion, Diversity, Equity, Action ("IDEA") IDEA is fundamental to our business as we aim to sustain a workplace that celebrates the diversity of our associates.
Mr. Bailey joined VF in 2004. Martino Scabbia Guerrini , 56, has been Executive Vice President and Group President — EMEA since January 2018.
Mr. Bailey joined VF in 2004. Martino Scabbia Guerrini , 57, has been Executive Vice President, and President EMEA and Emerging Brands since March 2022. He served as Executive Vice President and Group President — EMEA from January 2018 until March 2022.
In addition, we sell products on a direct-to-consumer basis through VF-operated stores, concession retail stores, brand e-commerce sites and other digital platforms. Our sales in international markets are growing and represented 50% of our total revenues in the year ended March 2021, the majority of which were in Europe.
In addition, we sell products on a direct-to-consumer basis through VF-operated stores, concession retail stores, brand e-commerce sites and other digital platforms. Our international sales represented 48% of our total revenues in the year ended March 2022, with Europe being the largest international market. Sales to VF’s ten largest customers amounted to approximately 17% of total revenues in Fiscal 2022.
In Fiscal 2021, VF sourced or produced approximately 295 million units spread across our brands. Our products were primarily obtained from approximately 265 independent contractor manufacturing facilities in approximately 36 countries. Additionally, we operate 29 distribution centers and 1,374 retail stores.
In Fiscal 2022, VF sourced approximately 408 million units spread across our brands. Our products were primarily obtained from approximately 252 independent contractor manufacturing facilities in approximately 37 countries. Ad ditionally, we operate 25 distribution centers and 1,322 retail stores.
We maintain an ongoing audit program to ensure compliance with these requirements by using dedicated internal staff and externally contracted firms. Additional information about VF’s Code of Business Conduct, Global Compliance Principles, Terms of Engagement and Environmental Compliance Guidelines, along with a Global Compliance Report, is available on the VF website at www.vfc.com.
Additional information about VF’s Code of Business Conduct, Global Compliance Principles, Terms of Engagement and Environmental Compliance Guidelines, along with a Global Compliance Report, is available on the VF website at www.vfc.com.
VF does not directly 4 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts or indirectly source products from suppliers in countries that are prohibited by the U.S. State Department. No single supplier represented more than 7% of our total cost of goods sold during Fiscal 2021.
VF does not directly or indirectly source products from suppliers in countries that are prohibited by the U.S. State Department. No single supplier represented more than 7% of our total cost of goods sold during Fiscal 2022. All independent contractor facilities that manufacture VF products, must comply with VF’s Global Compliance Principles.
The use of contracted production with different geographic regions and cost structures, provides a flexible approach to product sourcing. We will continue to manage our supply chain from a global perspective and adjust as needed to changes in the global production environment. Independent contractors generally own the raw materials and ship finished, ready-for-sale products to VF.
We will continue to manage our supply chain from a global perspective and adjust as needed to changes in the global production environment. Independent contractors generally own the raw materials and ship finished, ready-for-sale products to VF. These contractors are engaged through VF sourcing hubs in Singapore (with satellite offices across Asia) and Panama.
We expect continued long-term growth in our Outdoor segment as we focus on product innovation, extend our brands into new product categories, grow our direct-to-consumer business including our digital presence, expand wholesale channel partnerships, develop geographically and acquire additional brands. 2 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts ACTIVE SEGMENT Our Active segment is a group of activity-based lifestyle brands.
Key drivers of long-term growth in our Outdoor segment are expected to be a focus on product innovation, extension of our brands into new product categories, growth in our direct-to-consumer business including our digital presence, expansion of wholesale channel partnerships, geographical diversification and development, as well as the potential for the acquisition of additional brands. 2 VF Corporation Fiscal 2022 Form 10-K Table of Contents ACTIVE SEGMENT Our Active segment is a group of activity-based lifestyle brands.
Investing in our brands to realize their full potential, while ensuring the composition of our portfolio positions us to win in evolving market conditions; • Distort investments to Asia. Investing in and scaling our business across the Asia-Pacific region, especially China, to unlock growth opportunities for our brands in this fast-growing region; • Elevate direct channels.
Investing in and scaling our business across the Asia-Pacific region, especially China, to unlock growth opportunities for our brands in this fast-growing region; • Elevate direct channels.
We provide support to these business partners and ensure the integrity of our brand names by taking an active role in the design, quality control, advertising, marketing and distribution of licensed products. Licensing arrangements relate to a broad range of VF brands and are for fixed terms of generally 3 to 5 years, with conditional renewal options.
We provide support to these business partners and ensure the integrity of our brand names by taking an active role in the design, quality control, advertising, marketing and distribution of licensed products.
Mr. Rendle joined VF in 1999. Scott A. Roe , 56, has been Executive Vice President and Chief Financial Officer of VF since March 2019.
Mr. Rendle joined VF in 1999. Matthew H. Puckett , 48, has been Executive Vice President and Chief Financial Officer of VF since June 2021.
In addition, VF’s Executive Leadership Team is regularly engaged in the development and management of key talent systems, guiding our culture, employee value proposition and talent development programs.
In addition, VF’s Executive Leadership Team is regularly engaged in the development and management of key talent systems, guiding our culture, employee value proposition and talent development programs. The sections that follow provide further background on our associate base, as well as examples of our key programs and initiatives that are focused on the achievement of our objectives.
Revenues from the direct-to-consumer business represente d 45% of VF’s total Fiscal 2021 revenues. In addition to selling directly into international markets, many of our brands also sell products throu gh licensees, agents and distributors.
Revenues from the direct-to-consumer business represented 46% of VF’s total Fiscal 2022 revenues. In addition to selling directly into international markets, many of our brands also sell products through licensees, agents and distributors. In Fiscal 2022, VF derived 57% of its revenues from the Americas, 29% from Europe and 14% from Asia-Pacific.
Financial information regarding VF’s reportable segments is included in Note 20 to the consolidated financial statements. OUTDOOR SEGMENT Our Outdoor segment is a group of authentic outdoor-based lifestyle brands. Product offerings include performance-based and outdoor apparel, footwear and equipment. The North Face ® is the largest brand in our Outdoor segment.
OUTDOOR SEGMENT Our Outdoor segment is a group of authentic outdoor-based lifestyle brands. Product offerings include performance-based and outdoor apparel, footwear and equipment. The North Face ® is the largest brand in our Outdoor segment. The North Face ® brand features performance-based apparel, outerwear, sportswear and footwear for men, women and children.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDollar, and volatility in the availability and prices for commodities and raw materials we use for our products and in our supply chain; • inability to meet our consumers’ and customers’ needs for inventory production and fulfillment due to disruptions in our supply chain and increased costs associated with mitigating the effects of the pandemic caused by, among other things: reduction or loss of workforce due to illness, quarantine or other restrictions or facility closures, scarcity of and/or increased prices for raw materials, scrutiny or embargoing of goods produced in infected areas, and increased freight and logistics costs, expenses and times; failure of third parties on which we rely, including our suppliers, customers, distributors, service providers and commercial banks, to meet their obligations to us or to timely meet those obligations, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, including business failure or insolvency and collectability of existing receivables; • significant changes in the conditions in markets in which we do business, including quarantines, governmental or regulatory actions, closures or other restrictions, including voluntarily adopted practices, that limit or close our operating and manufacturing facilities and restrict our employees’ ability to perform necessary business functions, including operations necessary for the design, development, production, distribution, sale, marketing and support of our products and increase the likelihood of litigation; • increased costs, including increased employee costs, such as for expanded benefits and essential employee incentives, and increased operating costs, including those associated with provision of personal protective 10 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts equipment and compliance with governmental or public health organization mandates or guidance, allowances or extended payment terms for customers, and inventory write-offs, all of which have negatively impacted our profitability; • increased risk to the health, safety and wellness, including mental and emotional health, of our employees due to the virus or the impact of related restrictions; and • amplified data security risks as a result of more employees working remotely, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks, and an increase in the number of points of potential attack, such as laptops and mobile devices.
Biggest changeDollar, and volatility in the availability and prices for commodities and raw materials we use for our products and in our supply chain; • inability to meet our consumers’ and customers’ needs for inventory production and fulfillment due to disruptions in our supply chain and increased costs associated with mitigating the effects of the pandemic caused by, among other things: reduction or loss of workforce due to illness, quarantine or other restrictions or facility closures, including vaccine mandates or return to work policies, scarcity of and/or increased prices for raw materials, scrutiny or embargoing of goods produced in infected areas, capacity constraints, vessel, container and other transportation shortages, and port congestion and increased freight and logistics costs, expenses and times; failure of third parties on which we rely, including our suppliers, customers, distributors, service providers and commercial banks, to meet their obligations to us or to timely meet those obligations, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, including business failure or insolvency and collectability of existing receivables; • significant changes in the conditions in markets in which we do business, including quarantines, governmental or regulatory actions, closures or other restrictions, including voluntarily adopted practices, that limit or close operating and manufacturing facilities and restrict our employees’ ability to perform necessary business functions, including operations necessary for the design, development, production, distribution, sale, marketing and support of our products and increase the likelihood of litigation; • increased costs, including increased employee costs, such as for expanded benefits and essential employee 10 VF Corporation Fiscal 2022 Form 10-K Table of Contents incentives, and increased operating costs, including those associated with provision of personal protective equipment and compliance with governmental or public health organization mandates or guidance, allowances or extended payment terms for customers, and inventory write-offs, all of which have negatively impacted our profitability; • increased risk to the health, safety and wellness, including mental and emotional health, of our employees due to the virus or the impact of related restrictions; • increased tax risk related to employees working remotely in a tax location other than their normal work location; and • amplified data security risks as a result of more employees working remotely, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks, and an increase in the number of points of potential attack, such as laptops and mobile devices.
If global economic and financial market conditions do not improve, adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on VF. The coronavirus (COVID-19) pandemic has and will continue to materially and adversely affect our business, financial condition and results of operations.
If global economic and financial market conditions do not improve, adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on VF. The coronavirus (COVID-19) pandemic has and could continue to materially and adversely affect our business, financial condition and results of operations.
VF and its customers could suffer harm if valuable business data, or employee, customer and other proprietary information were corrupted, lost or accessed or misappropriated by third parties due to a security failure in VF’s systems or due to one of our third-party service providers or our employees.
VF and its customers could suffer harm if valuable business data, or employee, customer and other confidential and proprietary information were corrupted, lost or accessed or misappropriated by third parties due to a security failure in VF’s systems or due to one of our third-party service providers or our employees.
Our future success also depends on our ability to attract, develop, and retain talent with the necessary knowledge, skills and experience and maintain a culture of wellbeing, empowerment and diversity to ensure VF is innovative and remains competitive in a rapidly-changing global marketplace.
Our future success also depends on our ability to attract, develop, and retain talent with the necessary knowledge, skills and experience and maintain a culture of wellbeing, empowerment and diversity and inclusion to ensure VF is innovative and remains competitive in a rapidly-changing global marketplace.
Competition for experienced and well-qualified personnel is intense and we may not be successful in attracting and retaining such personnel, which could impact VF’s ability to remain competitive.
Competition for experienced and well-qualified personnel is intense and we may not be successful in attracting, developing, and retaining such personnel, which could impact VF’s ability to remain competitive.
VF’s ability to compete within the apparel and footwear industries depends on our ability to: • anticipate and respond to changing consumer preferences and product trends in a timely manner; • develop attractive, innovative and high quality products that meet consumer needs; • maintain strong brand recognition; • price products appropriately; • provide best-in-class marketing support and intelligence; • ensure product availability and optimize supply chain efficiencies; • obtain sufficient retail store space and effectively present our products at retail; • produce or procure quality products on a consistent basis; and • adapt to a more digitally driven consumer landscape.
VF’s ability to compete within the apparel and footwear industries depends on our ability to: • anticipate and respond to changing consumer preferences and product trends in a timely manner; • develop attractive, innovative and high quality products that meet consumer needs; • maintain strong brand recognition; • price products appropriately; • provide best-in-class marketing support and intelligence and optimize and react to available consumer data; • ensure product availability and optimize supply chain efficiencies; • obtain sufficient retail store space and effectively present our products at retail; • produce or procure quality products on a consistent basis; and • adapt to a more digitally driven consumer landscape.
Further, the global economy periodically experiences recessionary conditions with rising unemployment, reduced availability of credit, increased savings rates and declines in real estate and securities values. These recessionary conditions, including as a result of the current COVID-19 pandemic, could have a negative impact on retail sales of apparel and other consumer products.
Further, the global economy periodically experiences recessionary conditions with rising unemployment, reduced availability of credit, increased savings rates and declines in real estate and securities values. These recessionary conditions, including as a result of the COVID-19 pandemic, could have a negative impact on retail sales of apparel, footwear and other consumer products.
As a global company, we determine our income tax liability in various tax jurisdictions based on an analysis and interpretation of U.S. and local tax laws and regulations. This analysis requires a significant amount of judgment and estimation and is often based on various assumptions about the future actions of the tax authorities.
As a global company, we determine our income tax liability in various tax jurisdictions based on an analysis and interpretation of U.S. and international tax laws and regulations. This analysis requires a significant amount of judgment and estimation and is often based on various assumptions about the future actions of tax authorities.
Any inadequacy, interruption, integration failure or security failure of this technology could harm VF’s ability to effectively operate its business. Our ability to effectively manage and operate our business depends significantly on information technology systems. We rely heavily on information technology to track sales and inventory and manage our supply chain.
VF relies significantly on information technology. Any inadequacy, interruption, integration failure or security failure of this technology could harm VF’s ability to effectively operate its business. Our ability to effectively manage and operate our business depends significantly on information technology systems. We rely heavily on information technology to track sales and inventory and manage our supply chain.
We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices.
We could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices and regulations.
Our business has been, and will continue to be, impacted by the effects of the COVID-19 pandemic in countries and territories where we operate and our employees, suppliers, third-party service providers, consumers or customers are located.
Our business has been, and could continue to be, impacted by the effects of the COVID-19 pandemic in countries and territories where we operate and our employees, suppliers, third-party service providers, consumers or customers are located.
To the extent any future guidance differs from our interpretation of the law, or the new U.S. Presidential Administration takes further action, including through its recent proposal of a higher U.S. federal corporate tax rate and increased taxation of offshore income, such guidance or action could have a material effect on our financial position and results of operations.
To the extent any future guidance differs from our interpretation of the law, or the current U.S. Presidential Administration takes further action, including through its proposal of a higher U.S. federal corporate tax rate and increased taxation of offshore income, such guidance or action could have a material effect on our financial position and results of operations.
The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach in security of these systems could adversely impact the operations of VF’s business, including our reputation, management of inventory, ordering and replenishment of products, manufacturing and distribution of products, e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media.
The failure of these systems to operate effectively or remain innovative, problems with transitioning to upgraded or replacement systems, difficulty in integrating new systems or systems of acquired businesses or a breach in security of these systems could adversely impact the operations of VF’s business, including our reputation, management of inventory, ordering and replenishment of products, sourcing and distribution of products, e-commerce operations, retail business credit card transaction authorization and processing, corporate email communications and our interaction with the public on social media.
Future volatility in the financial and credit markets, including the recent volatility due, in part, to the current COVID-19 pandemic, could make it more difficult for us to obtain financing or refinance existing debt when the need arises, including upon maturity, or on terms that would be acceptable to us.
Future volatility in the financial and credit markets, including the recent volatility due, in part, to the COVID-19 pandemic and/or the conflict in Ukraine, could make it more difficult for us to obtain financing or refinance existing debt when the need arises, including upon maturity, or on terms that would be acceptable to us.
Increased frequency of extreme weather (storms and floods) could cause increased incidence of disruption to the production and distribution of our products and an adverse impact on consumer demand and spending.
Increased frequency and severity of extreme weather events (storms and floods) could cause increased incidence of disruption to the production and distribution of our products and an adverse impact on consumer demand and spending.
If our estimates or assumptions used to value these assets and liabilities are not accurate, we may be exposed to losses that may be material. VF uses third-party suppliers and manufacturing facilities worldwide for a substantial portion of its raw materials and finished products, which poses risks to VF’s business operations.
If our estimates or assumptions used to value these assets and liabilities are not accurate, we may be exposed to losses that may be material. VF uses third-party suppliers and manufacturing facilities worldwide for its raw materials and finished products, which poses risks to VF’s business operations.
Some of VF’s brands, such as The North Face ® , Timberland ® , Vans ® , JanSport ® , Dickies ® and Supreme ® enjoy significant worldwide consumer recognition, and the higher pricing of those products creates additional risk of counterfeiting and infringement. VF’s trademarks, trade names, patents, trade secrets and other intellectual property are important to VF’s success.
Some of VF’s brands, such as Vans ® , The North Face ® , Timberland ® , Dickies ® and Supreme ® enjoy significant worldwide consumer recognition, and the higher pricing of certain of the brands' products creates additional risk of counterfeiting and infringement. VF’s trademarks, trade names, patents, trade secrets and other intellectual property are important to VF’s success.
We have implemented systems and processes designed to protect against unauthorized access to or use of personal information, and rely on encryption and authentication technology to effectively secure transmission of confidential customer information, including credit card information.
We have implemented systems and processes designed to protect against unauthorized access to or use of personal information and other confidential information, and rely on encryption and authentication technology to effectively secure transmission of such information, including credit card information.
These impacts have placed, and will continue to place limitations on our ability to execute our business plan and materially and adversely affect our business, financial condition and results of operations. We continue to monitor the situation and may adjust our current policies and procedures as more information and guidance become available regarding the evolving situation.
These impacts have placed, and could continue to place limitations on our ability to execute our business plan and materially and adversely affect our business, financial condition and results of operations. We continue to monitor the situation and may adjust our current policies and procedures as more information and guidance become available.
For example, it could: • require VF to dedicate a substantial portion of its cash flow from operations to repaying its indebtedness, which would reduce the availability of its cash flow to fund working capital requirements, capital expenditures, future acquisitions, dividends, repurchase VF’s common stock and for other general corporate purposes; • limit VF’s flexibility in planning for or reacting to general adverse economic conditions or changes in its business and the industries in which it operates; • place VF at a competitive disadvantage compared to its competitors that have less indebtedness outstanding; and • negatively affect VF's credit ratings and limit, along with the financial and other restrictive covenants in VF’s debt documents, its ability to borrow additional funds.
For example, it could: • require VF to dedicate a substantial portion of its cash flow from operations to repaying its indebtedness, which would reduce the availability of its cash flow to fund working capital requirements, capital expenditures, future acquisitions, dividends, repurchase VF’s common stock and for other general corporate purposes; • limit VF’s flexibility in planning for or reacting to general adverse economic conditions or changes in its business and the industries in which it operates; VF Corporation Fiscal 2022 Form 10-K 19 Table of Contents • place VF at a competitive disadvantage compared to its competitors that have less indebtedness outstanding; and • negatively affect VF's credit ratings and limit, along with the financial and other restrictive covenants in VF’s debt documents and its ability to borrow additional funds.
Because substantially all of VF’s products are distributed from a relatively small number of locations, VF’s operations could also be interrupted by earthquakes, floods, fires or other natural disasters or other events outside VF's control affecting its distribution centers.
Because substantially all of VF’s products are distributed from a relatively small number of locations, VF’s operations could also be interrupted by earthquakes, floods, fires or other natural disasters or other events outside VF's control affecting its distribution centers, including political or labor instability.
Although VF generally has significant control over its licensees’ products and advertising, we rely on our licensees for, among other things, operational and financial controls over their businesses.
A lthough VF generally has significant control over its licensees’ products and advertising, we rely on our licensees for, among other things, operational and financial controls over their businesses.
Any of the following could impact our ability to produce or VF Corporation Fiscal 2021 Form 10-K 13 Table of Conte nts deliver VF products, or our cost of producing or delivering products and, as a result, our profitability: • political or labor instability in countries where VF’s facilities, contractors and suppliers are located; • changes in local economic conditions in countries where VF’s facilities, contractors and suppliers are located; • public health issues, such as the current COVID-19 pandemic, could result in (or continue to result in) closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; • political or military conflict could cause a delay in the transportation of raw materials and products to VF and an increase in transportation costs; • disruption at ports of entry, could cause delays in product availability and increase transportation times and costs; • heightened terrorism security concerns could subject imported or exported goods to additional, more frequent or lengthier inspections, leading to delays in deliveries or impoundment of goods for extended periods; • decreased scrutiny by customs officials for counterfeit goods, leading to more counterfeit goods and reduced sales of VF products, increased costs for VF’s anti-counterfeiting measures and damage to the reputation of its brands; • disruptions at manufacturing or distribution facilities caused by natural and man-made disasters; • imposition of regulations and quotas relating to imports and our ability to adjust timely to changes in trade regulations could limit our ability to produce products in cost-effective countries that have the required labor and expertise; • imposition of duties, taxes and other charges on imports; and • imposition or the repeal of laws that affect intellectual property rights.
Any of the following could impact our ability to source or deliver VF products, or our cost of sourcing or delivering products and, as a result, our profitability: • political or labor instability in countries where VF’s contractors and suppliers are located; • changes in local economic conditions in countries where VF’s contractors and suppliers are located; • public health issues, such as the COVID-19 pandemic, have resulted in (or could continue to result in) closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; • political or military conflict could cause a delay in the transportation of products to VF and an increase in transportation costs; • disruption at ports of entry, could cause delays in product availability and increase transportation times and costs; • heightened terrorism security concerns could subject imported or exported goods to additional, more frequent or lengthier inspections, leading to delays in deliveries or impoundment of goods for extended periods; • decreased scrutiny by customs officials for counterfeit goods, leading to more counterfeit goods and reduced sales of VF products, increased costs for VF’s anti-counterfeiting measures and damage to the reputation of its brands; • disruptions at manufacturing or distribution facilities or in shipping and transportation locations caused by natural and man-made disasters; • imposition of regulations and quotas relating to imports and our ability to adjust timely to changes in trade regulations could limit our ability to source products in cost-effective countries that have the required labor and expertise; • imposition of duties, taxes and other charges on imports; and • imposition or the repeal of laws that affect intellectual property rights.
The impact of disruptions may vary based on the length and severity of the disruption. VF’s failure to create systems of monitoring, prevention, response, crisis management, continuity and recovery to mitigate potential threats impacting its business, people, processes and facilities could result in extended disruptions and unpredictability.
The impact of disruptions may vary based on the length and severity of the disruption. VF’s failure to create and implement systems of monitoring, prevention, response, crisis management, continuity and recovery to anticipate, prepare, prevent, mitigate, and respond to potential threats impacting its business, people, processes and facilities could result in extended disruptions and unpredictability.
This disruption or volatility could adversely affect our liquidity and funding resources or significantly increase our cost of capital. An inability to access capital and credit markets may have an adverse effect on our business, results of operations, financial condition and cash flows. In addition, the U.K.
This disruption or volatility could adversely affect our liquidity and funding resources or significantly increase our cost of capital. An inability to access capital and credit markets may have an adverse effect on our business, results of operations, financial condition and cash flows.
For example: • We may have difficulty completing acquisitions or dispositions to reshape our portfolio, and we may not be able to successfully integrate a newly acquired business or achieve the expected growth, cost savings or synergies from such integration, or it may disrupt our current business. • We may not be able to transform our model to be more consumer- and retail-centric. • We may not be able to transform our model to be more digitally focused. • We may not be able to expand our market share with winning customers, or our wholesale customers may encounter financial difficulties and thus reduce their purchases of VF products. • We may not be able to expand our brands in Asia or other geographies. • We may not be able to achieve the expected results from our supply chain initiatives and establish and maintain effective supply chain capabilities, infrastructure, and the sourcing strategy necessary to optimally meet current and future business needs. • We may have difficulty recruiting, developing or retaining qualified employees. • We may not be able to achieve our direct-to-consumer expansion goals, including in e-commerce or other new channels, manage our growth effectively, successfully integrate the planned new stores into our operations, operate our new, remodeled and expanded stores profitably, adapt our business model or develop relationships with consumers for e-commerce or other new channels. • We may not be able to offset rising commodity or conversion costs in our product costs with pricing actions or efficiency improvements.
For example: • We may have difficulty completing acquisitions or dispositions to reshape our portfolio, and we may not be able to successfully integrate a newly acquired business or achieve the expected growth, cost savings or synergies from such integration, or it may disrupt our current business. • We may not be able to transform our model to be more consumer- and retail-centric. • We may not be able to transform our model to be more digitally focused. • We may not be able to expand our market share with winning customers, or our wholesale customers may encounter financial difficulties and thus reduce their purchases of VF products. • We may not be able to successfully distort investments to Asia or meet evolving consumer needs to unlock growth opportunities for our brands or expand in other geographies. • We may not be able to effectively deploy resources and allocate capital towards investments in new and organic businesses and capabilities in order to drive strategic objectives. • We may not be able to achieve the expected results from our supply chain initiatives and establish and maintain effective supply chain systems, data, and capabilities, infrastructure, and the sourcing strategy necessary to optimally meet current and future business needs. • We may have difficulty recruiting, developing or retaining qualified employees. • We may not be able to achieve our direct-to-consumer expansion goals, including in e-commerce or other new channels, manage our growth effectively, successfully integrate the planned new stores into our operations, operate our new, remodeled and expanded stores profitably, adapt our business model or develop relationships with consumers for e-commerce or other new channels. • We may not be able to offset rising commodity or conversion costs in our product costs with pricing actions or efficiency improvements.
It is possible that we could have an impairment charge for goodwill or trademark and trade name intangible assets in future periods if (i) overall economic conditions in Fiscal 2022 or future years vary from our current assumptions, (ii) business conditions or our strategies for a specific business unit change from our current assumptions, (iii) investors require higher rates of return on equity investments in the marketplace, or (iv) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible assets.
It is possible that we could have an impairment charge for goodwill or trademark and trade name intangible assets in future periods if (i) overall economic conditions in Fiscal 2023 or future years vary from our current assumptions, (ii) business conditions or our strategies for a specific business unit change from our current assumptions (including changes in discount rates), (iii) investors require higher rates of return on equity investments in the marketplace, or (iv) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible 18 VF Corporation Fiscal 2022 Form 10-K Table of Contents assets.
Fluctuations in the price, availability and quality of fabrics, leather or other raw materials used by VF in its manufactured products, or of purchased finished goods, could have a material adverse effect on VF’s cost of goods sold or its ability to meet its customers’ demands.
Fluctuations in the price, availability and quality of purchased finished goods or the fabrics, leather, cotton or other raw materials used therein could have a material adverse effect on VF’s cost of goods sold or its ability to meet its customers’ demands.
VF’s direct-to-consumer business includes risks that could have an adverse effect on its results of operations. VF sells merchandise direct-to-consumer through VF-operated stores and e-commerce sites. Its direct-to-consumer business is subject to numerous risks that could have a material adverse effect on its results.
VF sells merchandise direct to consumer through VF-operated stores and e-commerce sites. Its direct-to-consumer business is subject to numerous risks that could have a material adverse effect on its results.
Changes in currency exchange rates affect the U.S. dollar value of the foreign currency-denominated amounts at which VF’s international businesses purchase products, incur costs or sell products. In addition, for VF’s U.S.-based businesses, the majority of products are sourced from independent contractors or VF plants located in foreign countries.
VF’s international businesses operate in functional currencies other than the U.S. dollar. Changes in currency exchange rates affect the U.S. dollar value of the foreign currency-denominated amounts at which VF’s international businesses purchase products, incur costs or sell products. In addition, for VF’s U.S.-based businesses, the majority of products are sourced from independent contractors located in foreign countries.
Sales to VF’s ten largest customers wer e approximately 16% of total revenues in Fiscal 2021, with our largest customer accounting for approximately 2% of revenues. Sales to our customers are generally on a purchase or der basis and not subject to long-term agreements.
Sales to VF’s ten largest customers were approximately 17% of total revenues in Fiscal 2022, with our largest customer accounting for approximately 2% of revenues. Sales to our customers are generally on a purchase or der basis and not subject to long-term agreements.
Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future. We also make certain estimates and assumptions in order to determine purchase price allocation and estimate the fair value of assets acquired and liabilities assumed.
VF Corporation Fiscal 2022 Form 10-K 13 Table of Contents Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future. We also make certain estimates and assumptions in order to determine purchase price allocation and estimate the fair value of assets acquired and liabilities assumed.
VF is required to comply with certain financial and other restrictive debt covenants in its debt documents. Failure by VF to comply with these covenants could result in an event of default that, if not cured or waived, could have a material adverse effect on VF if the lenders declare any outstanding obligations to be immediately due and payable.
Failure by VF to comply with these covenants could result in an event of default that, if not cured or waived, could have a material adverse effect on VF if the lenders declare any outstanding obligations to be immediately due and payable.
Due to the large scale of our U.S. and international business activities, many of these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate and harm our financial position and results of operations. 16 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts We may have additional tax liabilities from new or evolving government or judicial interpretation of existing tax laws.
Due to the large scale of our U.S. and international business activities, many of these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate and harm our financial position and results of operations. We may have additional tax liabilities from new or evolving government or judicial interpretation of existing tax laws.
Risks include, but are not limited to, (i) U.S. or international resellers purchasing merchandise and reselling it overseas outside VF’s control, (ii) failure of the systems that operate the stores and websites, and their related support systems, including computer viruses, theft of customer information, privacy concerns, telecommunication failures and electronic break-ins and similar disruptions, (iii) credit card fraud, and (iv) risks related to VF’s direct-to-consumer distribution centers and processes.
Risks include, but are not limited to, (i) U.S. or international resellers purchasing merchandise and reselling it overseas outside VF’s control, (ii) failure or interruption of the systems that operate the stores and websites, and their related support systems, including due to computer viruses, theft of customer information, privacy concerns, telecommunication failures, electronic break-ins and similar disruptions, technical malfunctions, and natural disasters or other causes (iii) credit card fraud, (iv) risks related to VF’s direct-to-consumer distribution centers and processes, and (v) shift in consumer preferences away from retail stores.
Failure to continue to obtain or maintain high-quality sponsorships and endorsers could harm our business. In addition, actions taken by those individuals associated with our products could harm their reputations, which could adversely affect the images of our brands. VF’s revenues and cash requirements are affected by the seasonal nature of its business.
Failure to continue to obtain or maintain high-quality sponsorships and endorsers could harm our business. In addition, actions taken by those individuals associated with our products could harm their reputations, which could adversely affect the images of our brands.
Failure to successfully execute VF’s transformation agenda at a fast enough pace with clear objectives, assignments, accountability, project management, governance and appropriate consideration for change management could result in a diminished ability to remain competitive. Further, organizational effectiveness, agility and execution are important to VF’s success.
Failure to successfully execute VF’s transformation agenda at a fast enough pace with clear objectives, assignments, accountability, project management, governance and 12 VF Corporation Fiscal 2022 Form 10-K Table of Contents appropriate consideration for change management could result in a diminished ability to remain competitive. Further, organizational effectiveness, agility and execution are important to VF’s success.
Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a material adverse effect on our business, financial condition and results of operations.
Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a 16 VF Corporation Fiscal 2022 Form 10-K Table of Contents material adverse effect on our business, financial condition and results of operations.
If these factors cause us to reduce our sales prices to retailers and consumers, and we fail to sufficiently reduce our product costs or operating expenses, VF’s profitability will decline. This could have a material adverse effect on VF’s results of operations, liquidity and financial condition.
Customers may increasingly seek markdown allowances, incentives and other forms of economic support. If these factors cause us to reduce our sales prices to retailers and consumers, and we fail to sufficiently reduce our product costs or operating expenses, VF’s profitability will decline. This could have a material adverse effect on VF’s results of operations, liquidity and financial condition.
Our business is subject to comprehensive national, state and local laws and regulations on a wide range of environmental, consumer protection, employment, privacy, safety and other matters. VF could be adversely affected by costs of compliance with or violations of those laws and regulations.
Our business is subject to comprehensive national, state and local laws and regulations on a wide range of environmental, VF Corporation Fiscal 2022 Form 10-K 17 Table of Contents climate change, consumer protection, employment, privacy, safety and other matters. VF could be adversely affected by costs of compliance with or violations of those laws and regulations.
A decline in the fair value of an intangible asset or of a business unit could result in an asset impairment charge, which would be recorded as an operating expense in VF’s Consolidated Statement of Operations and could be material.
FINANCIAL RISKS VF’s balance sheet includes a significant amount of intangible assets and goodwill. A decline in the fair value of an intangible asset or of a business unit could result in an asset impairment charge, which would be recorded as an operating expense in VF’s Consolidated Statement of Operations and could be material.
Tariffs and other changes in U.S. trade policy have in the past and could continue to trigger retaliatory actions by affected countries, and certain foreign governments have instituted, considered or are considering imposing retaliatory measures on certain U.S. goods.
For example, the U.S. government has instituted changes in trade policies imposing higher tariffs on imports into the U.S. from China. Tariffs and other changes in U.S. trade policy have in the past and could continue to trigger retaliatory actions by affected countries, and certain foreign governments have instituted, considered or are considering imposing retaliatory measures on certain U.S. goods.
A significant portion of the sales of our products is dependent in part on the weather and is likely to decline in years in which weather conditions do not favor the use of these products.
We may be adversely affected by weather conditions. Our business is adversely affected by unseasonable weather conditions. A significant portion of the sales of our products is dependent in part on the weather and is likely to decline in years in which weather conditions do not favor the use of these products.
VF is subject to the risk that its licensees may not generate expected sales or maintain the value of VF’s brands. During Fiscal 2021, $51.7 million of VF’s rev enues were derived from licensing royalties.
VF is subject to the risk that its licensees may not generate expected sales or maintain the value of VF’s brands. During Fiscal 2022, $66.6 million of VF’s revenues were derived from licensing royalties.
However, we may not be able to grow our existing businesses.
However, we may not be able to grow our business.
Any of these effects of Brexit, and others we cannot anticipate could adversely affect our business, results of operations and financial condition. Changes to U.S. or international trade policy, tariff and import/export regulations or our failure to comply with such regulations may have a material adverse effect on our reputation, business, financial condition and results of operations.
Changes to U.S. or international trade policy, tariff and import/export regulations or our failure to comply with such regulations may have a material adverse effect on our reputation, business, financial condition and results of operations.
As of April 3, 2021, VF had approximately $5.7 billion of debt outstanding. VF’s debt and interest payment requirements could have important consequences on its business, financial condition and results of operations.
As of April 2, 2022, VF had approximately $5.4 billion of debt outstanding. V F’s debt and interest payment requirements could have important consequences on its business, financial condition and results of operations.
A substantial portion of VF’s revenues and gross profit is derived from a small number of large customers. The loss of any of these customers or the inability of any of these customers to pay VF could substantially reduce VF’s revenues and profits. A few of VF’s customers account for a significant portion of revenues.
The loss of any of these customers or the inability of any of these customers to pay VF could substantially reduce VF’s revenues and profits. A few of VF’s customers account for a significant portion of revenues.
The apparel industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, pressure from retailers to reduce the costs of products, changes in consumer demand and shifts to online shopping and purchasing. Consumers may increasingly seek markdown allowances, incentives and other forms of economic support.
The apparel industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, inflation, rising freight costs, rising labor costs, pressure from retailers to reduce the costs of products, changes in consumer demand and shifts to online shopping and purchasing.
The funded status of the pension plans is dependent on many factors, including returns on investment assets and the discount rate used to determine pension obligations.
VF currently has obligations under its defined benefit pension plans. The funded status of the pension plans is dependent on many factors, including returns on investment assets and the discount rates used to determine pension obligations.
A growing portion of our revenues are direct-to-consumer sales through VF-operated stores. In order to generate customer traffic, we locate many of our stores in prominent locations within successful retail shopping centers or in fashionable shopping districts.
VF’s net sales depend on the volume of traffic to its stores and the availability of suitable lease space. A significant portion of our revenues are direct-to-consumer sales through VF-operated stores. In order to generate customer traffic, we locate many of our stores in prominent locations within successful retail shopping centers or in fashionable shopping districts.
Data security breaches are increasingly sophisticated, and are difficult to detect for long periods of time. Accordingly, if unauthorized parties gain access to our networks or databases, or those of our third-party service providers, they may be able to steal, publish, delete, hold ransom or modify our private and sensitive information, including credit card information and personal information.
Accordingly, if unauthorized parties gain access to our networks or databases, or those of our third-party service providers, they may be able to steal, publish, delete, hold ransom or modify our private and sensitive information, including credit card information, personal information, and confidential or other proprietary business information.
In the future, retailers are likely to further consolidate, undergo restructurings or reorganizations or bankruptcies, realign their affiliations or reposition their stores’ target markets. In addition, consumers have continued to transition away from traditional wholesale retailers to large online retailers.
These changes could impact VF’s opportunities in the market and increase VF’s reliance on a smaller number of large customers. In the future, retailers are likely to further consolidate, undergo restructurings or reorganizations or bankruptcies, realign their affiliations or reposition their stores’ target markets. In addition, consumers have continued to transition away from traditional wholesale retailers to large online retailers.
Despite these security measures, there is no guarantee that they are adequate and our facilities and systems and those of our third-party service providers may be vulnerable and unable to anticipate or detect security breaches and data loss. In addition, employees may intentionally or inadvertently cause data security breaches that result in the unauthorized release of personal or confidential information.
Despite these security measures, there is no guarantee that they will prevent all unauthorized access to our systems and information, and our facilities and systems and those of our third-party service providers may be vulnerable and unable to anticipate or detect security breaches and data loss.
As a result, we may incur significant costs to comply with laws regarding the privacy and security of personal information and we may not be able to comply with new regulations such as the General Data Protection Regulation in the European Union, the California Consumer Privacy Act and the Virginia Consumer Data Protection Act.
As a result, we may incur significant costs to comply with laws regarding the privacy and security of personal information and we may not be able to comply with new data protection laws and regulations being adopted around the world.
Due to the high fixed-cost structure associated with our direct-to-consumer operations, a decline in sales or the closure of or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and employee-related costs. 14 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts VF’s net sales depend on the volume of traffic to its stores and the availability of suitable lease space.
Due to the high fixed-cost structure associated with our direct-to-consumer operations, a decline in sales or the closure of or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and employee-related costs.
The success of VF’s business depends on consumer spending on apparel and footwear, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions, disposable consumer income, interest rates, consumer credit availability, unemployment, stock market performance, weather conditions, energy prices, public health issues (including the COVID-19 pandemic), consumer discretionary spending patterns and tax rates in the international, national, regional and local markets where VF’s products are sold.
The success of VF’s business depends on consumer spending on apparel and footwear, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions, disposable consumer income, interest rates, consumer credit availability, inflationary pressures (such as current inflation related to global supply chain disruptions), unemployment, stock market performance, weather conditions and natural disasters, energy prices, public health issues (including the COVID-19 pandemic), geopolitical instability (such as the current conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others), consumer discretionary spending patterns and tax rates in the international, national, regional and local markets where VF’s products are sold.
The misuse of a brand by a licensee, including through the marketing of products under one of our brand names that do not meet our quality standards, could have a material adverse effect on that brand and on VF.
The misuse of a brand by a licensee, including through the marketing of products under one of our brand names that do not meet our quality standards, could have a material adverse effect on that brand and on VF. Volatility in securities markets, interest rates and other economic factors could substantially increase VF’s defined benefit pension costs.
Competition is generally based upon brand name recognition, price, design, product quality, selection, service and purchasing convenience. Some of our competitors are larger and have more resources than VF in some product categories and regions. In addition, VF competes directly with the private label brands of its wholesale customers.
Some of our competitors are larger and have more resources than VF in some product categories and regions. In addition, VF competes directly with the private label brands of its wholesale customers.
VF Corporation Fiscal 2021 Form 10-K 11 Table of Conte nts BUSINESS AND OPERATIONAL RISKS VF’s business and the success of its products could be harmed if VF is unable to maintain the images of its brands.
VF Corporation Fiscal 2022 Form 10-K 11 Table of Contents BUSINESS AND OPERATIONAL RISKS VF’s business and the success of its products could be harmed if VF is unable to maintain the images of its brands. VF’s success to date has been due in large part to the growth of its brands’ images and VF’s customers’ connection to its brands.
We may not be successful in overcoming these risks or any other problems encountered in connection with any acquisitions. Moreover, failure to effectively manage VF’s portfolio of brands in line with growth targets and shareholder expectations, including acquisition choices, integration approach and divestiture timing could result in unfavorable impact to growth and value creation.
Moreover, failure to effectively manage VF’s portfolio of brands in line with growth targets and shareholder expectations, including acquisition choices, integration approach and divestiture timing could result in unfavorable impacts to growth and value creation.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, and stakeholders have focused increasingly on the environmental, VF Corporation Fiscal 2021 Form 10-K 17 Table of Conte nts social and governance ("ESG") and related sustainability practices of companies. These parties have placed increased importance on the implications of the social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, and other stakeholders, including non-governmental organizations, employees, and consumers, have focused increasingly on the environmental, social and governance ("ESG") and related sustainability practices of companies. These parties have placed increased importance on the implications of the social cost of their investments and/or have higher expectations of corporate conduct.
VF relies on owned or independently-operated distribution facilities to warehouse and ship product to its customers. VF’s distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures.
VF’s distribution system includes computer-controlled and automated equipment, which may be subject to a VF Corporation Fiscal 2022 Form 10-K 15 Table of Contents number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures.
These risks include, among other things, higher than anticipated acquisition costs and expenses, the difficulty and expense of integrating the operations, systems and personnel of the companies and the loss of key employees and customers as a result of changes in management. In addition, geographic distances may make integration of acquired businesses more difficult.
Any acquisitions or mergers by VF will be accompanied by the risks commonly encountered in acquisitions of companies. These risks include, among other things, higher than anticipated acquisition costs and expenses, the difficulty and expense of integrating the operations, systems and personnel of the companies and the loss of key employees and customers as a result of changes in management.
Also, our failure, or perceived failure, to manage reputational threats and meet expectations with respect to socially responsible activities and sustainability commitments could negatively impact our credibility, employee retention, and the willingness of our customers and suppliers to do business with us. FINANCIAL RISKS VF’s balance sheet includes a significant amount of intangible assets and goodwill.
Also, our failure, or perceived failure, to manage reputational threats and meet stakeholder expectations or shifting consumer preferences with respect to socially responsible activities and products and packaging and sustainability commitments and regulations could negatively impact our brand, image, reputation, credibility, employee retention, and the willingness of our customers and suppliers to do business with us.
VF’s business is seasonal, with a higher proportion of revenues and operating cash flows generated during the second half of the calendar year, which includes the fall and holiday selling seasons. Poor sales in the second half of the calendar year would have a material adverse effect on VF’s full year operating results and cause higher inventories.
VF’s revenues and cash requirements are affected by the seasonal nature of its business. VF’s business is seasonal, with a higher proportion of revenues and operating cash flows generated during the second half of the calendar year, which includes the fall and holiday selling seasons.
Although VF only enters into hedging contracts with counterparties having investment grade credit ratings, it is possible that the credit quality of a counterparty could be downgraded or a counterparty could default on its obligations, which could have a material adverse impact on VF’s financial condition, results of operations and cash flows. 18 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts Our ability to obtain short-term or long-term financing on favorable terms, if needed, could be adversely affected by geopolitical risk and volatility in the capital markets.
Although VF only enters into hedging contracts with counterparties having investment grade credit ratings, it is possible that the credit quality of a counterparty could be downgraded or a counterparty could default on its obligations, which could have a material adverse impact on VF’s financial condition, results of operations and cash flows.
Negative claims or publicity regarding VF, its brands or its products, including licensed products, could adversely affect our reputation and sales regardless of whether such claims are accurate. Social media, which accelerates the dissemination of information, can increase the challenges of responding to negative claims.
Negative claims or publicity regarding VF, its brands or its products, including licensed products, or its culture and values, or its employees, endorsers, sponsors or suppliers could adversely affect our reputation and sales regardless of whether such claims are accurate.
For example, the cost of the materials that are used in our manufacturing process, such as oil-related commodity prices and other raw materials, such as cotton, dyes and chemical and other costs, such as fuel, energy and utility costs, can fluctuate as a result of inflation and other factors.
For example, the cost and availability of the materials that are used in our products, such as oil-related commodity prices and other raw materials, such as cotton, dyes and chemical and other costs, such as fuel, energy and utility costs, can fluctuate significantly as a result of inflation in addition to many other factors, including general economic conditions and demand, crop yields, energy prices, weather patterns, public health issues (such as the COVID-19 pandemic) and speculation in the commodities markets.
Even if we react appropriately to changes in consumer preferences, consumers may consider our brands’ images to be outdated or associate our brands with styles that are no longer popular. In addition, brand value is based in part on consumer perceptions on a variety of qualities, including merchandise quality and corporate integrity.
If we are unable to timely and appropriately respond to changing consumer demand, the names and images of our brands may be impaired. Even if we react appropriately to changes in consumer preferences, consumers may consider our brands’ images to be outdated or associate our brands with styles that are no longer popular.
Our ability to maintain the current level of operations in our existing markets and to capitalize on growth in existing and new markets is subject to legal, regulatory, political and economic uncertainty and risks. These include the burdens of complying with U.S. and international laws and regulations, and unexpected changes in regulatory requirements.
LEGAL, REGULATORY AND COMPLIANCE RISKS VF’s operations and earnings may be affected by legal, regulatory, political and economic uncertainty and risks. Our ability to maintain the current level of operations in our existing markets and to capitalize on growth in existing and new markets is subject to legal, regulatory, political and economic uncertainty and risks.
In addition, although we audit our third-party material suppliers and contracted manufacturing facilities and set strict compliance standards, actions by a third-party supplier or manufacturer that fail to comply could result in such third-party supplier failing to manufacture products that consistently meet our quality standards and/or expose VF to claims for damages, financial penalties and reputational harm, any of which could have a material adverse effect in our business and operations.
In addition, although we audit our third-party material suppliers and contracted manufacturing facilities and set strict compliance standards, actions by a third-party supplier or manufacturer that fail to comply could result in such third-party supplier failing to manufacture products that consistently meet our quality standards or engaging in unfavorable labor practices or providing unfavorable working conditions that negatively impact worker health, safety and wellness.
Failure to create an agile and efficient operating model and organizational structure or to effectively define, prioritize, and align on clear achievable and appropriately resourced strategic priorities could result in an inability to remain competitive in a rapidly changing marketplace. 12 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts VF relies significantly on information technology.
Failure to create an agile and efficient operating model and organizational structure or to effectively define, prioritize, and align on clear achievable and appropriately resourced strategic priorities could result in an inability to remain competitive in a rapidly changing marketplace and lead to increase in costs, inefficient resource allocation, reduced productivity, organizational confusion, and reduced employee morale.
Any disruption in the capital markets could limit the availability of funds or the ability or willingness of financial institutions to extend capital in the future.
Our ability to obtain financing on favorable terms, if needed, could be adversely affected by geopolitical risk and volatility in the capital markets. Any disruption in the capital markets could limit the availability of funds or the ability or willingness of financial institutions to extend capital in the future.
Moreover, failure to provide effective digital capabilities and information technology infrastructure could result in an inability to meet current and future business needs and a resulting loss of brand competitiveness. VF is subject to data security and privacy risks that could negatively affect its business operations, results of operations or reputation.
Moreover, failure to provide effective digital (including omnichannel) capabilities and information technology infrastructure could result in an inability to meet current and future business needs and a resulting loss of brand competitiveness, leading to loss of revenue and market share and decreased business agility.
If our ESG practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our brands, reputation and employee retention may be negatively impacted. It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.
If our ESG practices do not meet investor or other stakeholder expectations and standards, including related to climate change, sustainability, and human rights, and do not meet related regulations and expectations for increased transparency, which continue to evolve, our brands, reputation and employee retention may be negatively impacted.
Prices of purchased finished products also depend on wage rates in Asia and other geographic areas where our independent contractors are located, as well as freight costs from those regions. Inflation can also have a long-term impact on us because increasing costs of materials and labor may impact our ability to maintain satisfactory margins.
Prices of purchased finished products may depend on wage rate increases required by legal or industry standards in Asia and other geographic areas where our independent contractors are located, as well as increasing freight costs from those regions.
This situation is dynamic and changing rapidly and additional impacts may arise that we are not aware of currently. The apparel and footwear industries are highly competitive, and VF’s success depends on its ability to gauge consumer preferences and product trends, and to respond to constantly changing markets. VF competes with numerous apparel and footwear brands and manufacturers.
The apparel and footwear industries are highly competitive, and VF’s success depends on its ability to gauge consumer preferences and product trends, and to respond to constantly changing markets. VF competes with numerous apparel and footwear brands and manufacturers. Competition is generally based upon brand name recognition, price, design, product quality, selection, service and purchasing convenience.
In addition, unilateral actions in the U.S. or other countries, including changes to or the repeal of laws recognizing trademark or other intellectual property rights, could have an impact on VF’s ability to enforce those rights.
In addition, unilateral actions in the U.S. or other countries, including changes to or the repeal of laws recognizing trademark or other intellectual property rights, such as the Russian government's recent announcements that it would not protect intellectual property rights, including patent rights and rights that could block parallel imports of gray market goods, as a result of the sanctions imposed on Russia in connection with the Russia-Ukraine conflict, could have an impact on VF’s ability to enforce those rights.
VF depends on the services and management experience of its executive officers and business leaders who have substantial experience and expertise in VF’s business. The unexpected loss of services of one or more of these individuals or the inability to effectively identify a suitable successor to a key role could have a material adverse effect on VF.
The unexpected loss of services of one or more of these individuals or the inability to effectively identify a suitable successor to a key role could have a material adverse effect on VF. 14 VF Corporation Fiscal 2022 Form 10-K Table of Contents VF’s direct-to-consumer business includes risks that could have an adverse effect on its results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur largest fully-operational distribution centers by region are located in Visalia, California, Prague, Czech Republic and Shanghai, China. In total, we operate 29 owned or leased distribution centers primarily in the U.S., but also in the United Kingdom, Belgium, the Netherlands, Canada, Mexico, Israel, Japan and France.
Biggest changeIn total, we operate 25 owned or leased distribution centers primarily in the U.S., but also in the Czech Republic, United Kingdom, the Netherlands, China, Canada, Mexico, Belgium, Israel, Japan and France. In addition to the principal properties described above, we lease many offices worldwide for sales and administrative purposes.
VF owns a 236,000 square foot facility in Appleton, Wisconsin that serves as a shared services center for certain Outdoor, Active and Work brands in North America. We own a 180,000 square foot facility in Greensboro, North Carolina that serves as a corporate shared service center.
We also own or lease brand headquarters facilities throughout the world. VF owns a 236,000 square foot facility in Appleton, Wisconsin that serves as a shared service center for certain brands in North America. We own a 180,000 square foot facility in Greensboro, North Carolina that serves as a corporate shared service center.
ITEM 2. PROPERTIES. The following is a summary of VF Corporation’s principal owned and leased properties as of April 3, 2021. VF’s global headquarters are located in a 285,000 square foot, leased facility in Denver, Colorado.
ITEM 2. PROPERTIES. The following is a summary of VF Corporation’s principal owned and leased properties as of April 2, 2022. VF’s global headquarters are located in a 285,000 square foot, leased facility in Denver, Colorado. In addition, we own facilities in Stabio, Switzerland and lease offices in Shanghai, China, which serve as our European and Asia-Pacific regional headquarters, respectively.
We own and lease shared service facilities in Bornem and Antwerp, Belgium that support our European operations. We also lease a shared service facility in Dalian, China that supports our Asia-Pacific operations. Our sourcing hubs are located in Hong Kong, China and Panama City, Panama.
We own and lease shared service facilities in Antwerp, Belgium; Kuala Lumpur, Malaysia and Dalian, China that support our European and Asia-Pacific operations. Our sourcing hubs are located in Singapore and Panama City, Panama. Our largest distribution centers by region are located in Visalia, California, Prague, Czech Republic and Shanghai, China.
In addition to the principal properties described above, we lease many offices worldwide for sales and administrative purposes. We operat e 1,374 r etail stores across the Americas, Europe and Asia-Pacific regions. Retail stores are generally leased under operating leases and include renewal options.
We operate 1,322 retail stores across the Americas, Europe and Asia-Pacific regions. Retail stores are generally leased under operating leases and include renewal options. We believe all facilities and machinery and equipment are in good condition and are suitable for VF’s needs.
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In addition, we own facilities in Stabio, Switzerland and lease offices in Hong Kong, China, which serve as our European and Asia-Pacific regional headquarters, respectively. We also own or lease segment and brand headquarters facilities throughout the world.
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We believe all facilities and machinery and equipment are in good condition and are suitable for VF’s needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS. There are no pending material legal proceedings, other than ordinary, routine litigation incidental to the business, to which VF or any of its subsidiaries is a party or to which any of their property is the subject.
Biggest changeITEM 3. LEGAL PROCEEDINGS. Other than the IRS dispute in the U.S. Tax Court discussed in Note 21 — Commitments and Contingencies, there are no pending material legal proceedings, other than ordinary, routine litigation incidental to the business, to which VF or any of its subsidiaries is a party or to which any of their property is the subject.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFiscal Period Total Number of Shares Purchased Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Dollar Value of Shares that May Yet be Purchased Under the Program December 27, 2020 — January 23, 2021 — $ — — $ 2,836,975,339 January 24, 2021 — February 20, 2021 — — — 2,836,975,339 February 21, 2021 — April 3, 2021 — — — 2,836,975,339 Total — —
Biggest changeFiscal Period Total Number of Shares Purchased Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Dollar Value of Shares that May Yet be Purchased Under the Program January 2, 2022 — January 29, 2022 — $ — — $ 2,536,975,459 January 30, 2022 — February 26, 2022 775,371 64.49 775,371 2,486,971,057 February 27, 2022 — April 2, 2022 — — — 2,486,971,057 Total 775,371 775,371 ITEM 6. [RESERVED] Not applicable.
The S&P 1500 Apparel Index at the end of Fiscal 2021 consisted of Capri Holdings Limited, Carter’s, Inc., Columbia Sportswear Company, Fossil, Inc., G-III Apparel Group, Ltd., Hanesbrands Inc., Kontoor Brands, Inc., Movado Group, Inc., Oxford Industries, Inc., PVH Corp., Ralph Lauren Corporation, Tapestry, Inc., Under Armour, Inc., Vera Bradley, Inc. and VF Corporation.
The S&P 1500 Apparel Index at the end of Fiscal 2022 consisted of Capri Holdings Limited, Carter’s, Inc., Columbia Sportswear Company, Fossil, Inc., G-III Apparel Group, Ltd., Hanesbrands Inc., Kontoor Brands, Inc., Movado Group, Inc., Oxford Industries, Inc., PVH Corp., Ralph Lauren Corporation, Tapestry, Inc., Under Armour, Inc., Vera Bradley, Inc. and VF Corporation.
PERFORMANCE GRAPH: The following graph compares the cumulative total shareholder return on VF Common Stock with that of the Standard & Poor’s (“S&P”) 500 Index and the S&P 1500 Apparel, Accessories & Luxury Goods Subindustry Index (“S&P 1500 Apparel Index”) for Fiscal 2016 through Fiscal 2021.
PERFORMANCE GRAPH: The following graph compares the cumulative total shareholder return on VF Common Stock with that of the Standard & Poor’s (“S&P”) 500 Index and the S&P 1500 Apparel, Accessories & Luxury Goods Subindustry Index (“S&P 1500 Apparel Index”) for Fiscal 2017 through Fiscal 2022.
The graph assumes that $100 was invested at the end of Fiscal 2015 in each of VF Common Stock, the S&P 500 Index and the S&P 1500 Apparel Index, and that all dividends were reinvested. The graph plots the respective values on the last trading day of Fiscal 2015 through Fiscal 2021.
The graph assumes that $100 was invested at the end of Fiscal 2016 in each of VF Common Stock, the S&P 500 Index and the S&P 1500 Apparel Index, and that all dividends were reinvested. The graph plots the respective values on the last trading day of Fiscal 2016 through Fiscal 2022.
ITEM 5. MARKET FOR VF’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. VF’s Common Stock is listed on the New York Stock Exchange under the symbol “VFC”. As of May 1, 2021 there were 2,975 shareholders of record.
ITEM 5. MARKET FOR VF’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. VF’s Common Stock is listed on the New York Stock Exchange under the symbol “VFC”. As of April 30, 2022 there were 2,854 shareholders of record.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF VF COMMON STOCK, S&P 500 INDEX AND S&P 1500 APPAREL INDEX VF Common Stock closing price on April 3, 2021 was $79.49 Company / Index Base Period 1/2/2016 12/31/16 12/30/17 3/30/19 3/28/20 4/3/21 VF Corporation $ 100.00 $ 87.86 $ 125.42 $ 151.67 $ 109.66 $ 154.75 S&P 500 Index 100.00 111.96 136.40 148.22 135.54 218.13 S&P 1500 Apparel, Accessories & Luxury Goods 100.00 89.92 107.34 108.78 57.44 113.21 22 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts ISSUER PURCHASES OF EQUITY SECURITIES: The following table sets forth VF’s repurchases of our Common Stock during the fiscal quarter ended April 3, 2021 under the share repurchase program authorized by VF’s Board of Directors in 2017.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF VF COMMON STOCK, S&P 500 INDEX AND S&P 1500 APPAREL INDEX VF Common Stock closing price on April 2, 2022 was $56.54 Company / Index Base Period 12/31/16 12/30/17 3/30/19 3/28/20 4/3/21 4/2/22 VF Corporation $ 100.00 $ 142.75 $ 172.63 $ 124.81 $ 176.14 $ 129.00 S&P 500 Index 100.00 121.83 132.39 121.06 194.83 223.43 S&P 1500 Apparel, Accessories & Luxury Goods 100.00 119.36 120.97 63.87 125.90 106.30 22 VF Corporation Fiscal 2022 Form 10-K Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES: The following table sets forth VF’s repurchases of our Common Stock during the fiscal quarter ended April 2, 2022 under the share repurchase program authorized by VF’s Board of Directors in 2017.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeLiquidity and Cash Flows We consider the following to be measures of our liquidity and capital resources: (Dollars in millions) March 2021 March 2020 Working capital $2,113.1 $1,518.8 Current ratio 2.0 to 1 1.5 to 1 Net debt to total capital 68.2% 53.4% The increase in the current ratio at March 2021 compared to March 2020 was primarily due to a net decrease in current liabilities driven by lower short-term borrowings, as discussed in the "Balance Sheets" section above.
Biggest changeANALYSIS OF FINANCIAL CONDITION Balance Sheets The following discussion refers to significant changes in balances for continuing operations at March 2022 compared to March 2021: • Increase in accounts receivable — primarily due to higher wholesale shipments driven by recovery from the negative impact of COVID-19 on the comparative period. • Increase in inventories — primarily due to recovery from the negative impact of COVID-19 on the comparative period. • Decrease in short-term investments — due to the sale of short-term investments. • Increase in short-term borrowings — due to an increase in commercial paper borrowings. • Increase in the current portion of long-term debt — due to the reclassification of $500.0 million of long-term notes due in April 2022. • Increase in accrued liabilities — primarily due to an increase in accrued income taxes resulting from the reclassification of a portion of the accrual for unrecognized tax benefits and certain deferred income taxes from other liabilities due to the timing of expected settlement and payment, and the reclassification of the contingent consideration liability associated with the Supreme acquisition from other liabilities. • Decrease in long-term debt — due to the reclassification of $500.0 million of long-term notes due in April 2022 and the early redemption of $500.0 million of long-term notes in December 2021. • Decrease in other liabilities — primarily due to lower deferred income taxes and a decrease in the accrual for unrecognized tax benefits resulting from the reclassification of certain amounts to accrued liabilities, and the reclassification of the contingent consideration liability associated with the Supreme acquisition to accrued liabilities. 32 VF Corporation Fiscal 2022 Form 10-K Table of Contents Liquidity and Cash Flows We consider the following to be measures of our liquidity and capital resources: (Dollars in millions) March 2022 March 2021 Working capital $1,272.7 $2,113.1 Current ratio 1.4 to 1 2.0 to 1 Net debt to total capital 61.0% 68.2% The decrease in the current ratio at March 2022 compared to March 2021 was primarily due to a net increase in current liabilities driven by a higher current portion of long-term debt, higher short-term borrowings and higher accrued liabilities, as discussed in the "Balance Sheets" section above.
The U.S. dollar value of net investments in foreign subsidiaries fluctuates with changes in the underlying functional currencies. In February 2020, VF issued €1.0 billion of euro-denominated fixed-rate notes and in September 2016, VF issued €850 million of euro-denominated fixed-rate notes. These notes have been designated as net investment hedges of VF’s investment in certain foreign operations.
The U.S. dollar value of net investments in foreign subsidiaries fluctuates with changes in the underlying functional currencies. In February 2020, VF issued €1.0 billion of euro-denominated fixed-rate notes and in September 2016, VF issued €850.0 million of euro-denominated fixed-rate notes. These notes have been designated as net investment hedges of VF’s investment in certain foreign operations.
Management believes that VF’s cash and investment balances and expected funds to be provided by operating activities, as well as its Global Credit Facility, additional borrowing capacity and access to capital markets, taken as a whole, provide (i) adequate liquidity to meet all of its current and long-term obligations when due, (ii) adequate liquidity to fund capital expenditures and to maintain the planned dividend, and (iii) flexibility to meet investment opportunities that may arise.
Management believes that VF’s cash and equivalents balances and expected funds to be provided by operating activities, as well as its Global Credit Facility, additional borrowing capacity and access to capital markets, taken as a whole, provide (i) adequate liquidity to meet all of its current and long-term obligations when due, (ii) adequate liquidity to fund capital expenditures and to maintain the planned dividend, and (iii) flexibility to meet investment opportunities that may arise.
Our products are also marketed to consumers through our own direct-to-consumer operations, which include VF-operated stores, concession retail stores, brand e-commerce sites and other digital platforms. VF is organized by groupings of businesses represented by its reportable segments for financial reporting purposes. The three reportable segments are Outdoor, Active and Work.
Our products are also marketed to consumers through our own direct-to-consumer operations, which include VF-operated stores, concession retail stores, brand e-commerce sites and other digital platforms. VF is organized by groupings of brands and businesses represented by its reportable segments for financial reporting purposes. The three reportable segments are Outdoor, Active and Work.
If management’s assessment of these qualitative factors indicates that it is not more likely than not that the fair value of the intangible asset or reporting unit is less than its carrying value, then no further testing is required. Otherwise, the intangible asset or reporting unit must be quantitatively tested for impairment.
If management’s assessment of these qualitative factors indicates that it is more likely than not that the fair value of the intangible asset or reporting unit is more than its carrying value, then no further testing is required. Otherwise, the intangible asset or reporting unit must be quantitatively tested for impairment.
Additionally, direct-to-consumer sales are typically 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 and investment balances and international lines of credit.
Additionally, direct-to-consumer sales are typically 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.
Management believes the assumptions used in determining the estimated fair value of the Supreme ® trademark are reasonable, but are inherently uncertain and unpredictable. As a result, actual results may differ from estimates.
Management believes the assumptions used in determining the estimated fair value of the Supreme ® trademark were reasonable, but are inherently uncertain and unpredictable. As a result, actual results may differ from estimates.
Rating Agencies VF’s favorable credit agency ratings allow for access to additional liquidity at competitive rates. At the end of March 2021, VF’s long-term debt ratings were ‘A-’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa1’ by Moody’s Investors Service, both with 'stable' outlooks, and commercial paper ratings by those rating agencies were ‘A-2’ and ‘P-2’, respectively.
Rating Agencies VF’s favorable credit agency ratings allow for access to additional liquidity at competitive rates. At the end of March 2022, VF’s long-term debt ratings were ‘A-’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa1’ by Moody’s Investors Service, both with 'stable' outlooks, and commercial paper ratings by those rating agencies were ‘A-2’ and ‘P-2’, respectively.
If applicable, performance in recent years was compared to forecasts included in prior valuations. Based on the results of the qualitative assessment, VF concluded it was not more likely than not the carrying values of the goodwill and indefinite-lived trademark intangible assets were greater than their fair values, and that further quantitative testing was not necessary.
If applicable, performance in recent years was compared to forecasts included in prior valuations. Based on the results of the qualitative assessment, VF concluded it was more likely than not the carrying values of the goodwill and indefinite-lived trademark intangible assets were less than their fair values, and that further quantitative testing was not necessary.
All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers. References to the year ended March 2021 foreign currency amounts below reflect the changes in foreign exchange rates from the year ended March 2020 and their impact on translating foreign currencies into U.S. dollars.
All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers. References to the year ended March 2022 foreign currency amounts below reflect the changes in foreign exchange rates from the year ended March 2021 and their impact on translating foreign currencies into U.S. dollars.
Included in other income (expense), net in Fiscal 2021 is $42.4 million expense related to the release of currency translation amounts associated with the substantial liquidation of foreign entities in certain countries in South America and $21.5 million of net periodic pension income driven by the return on plan assets.
Other income (expense), net in Fiscal 2021 included $42.4 million expense related to the release of currency translation amounts associated with the substantial liquidation of foreign entities in certain countries in South America and $21.5 million of net periodic pension income driven by the expected return on plan assets.
Income tax expense could be materially affected to the extent VF prevails in a tax position or when the statute of limitations expires for a tax position for which a liability for unrecognized tax benefits or valuation allowances have been established, or to the extent VF is required to pay amounts greater than the established liability for unrecognized tax benefits.
Income tax expense could be materially affected to the extent VF prevails in a tax position or when the statute of limitations expires for a tax position for which a liability for unrecognized tax benefits or valuation allowances has been established, or to the extent VF is required to pay amounts greater than the established liability for unrecognized tax benefits.
The following discussion and analysis focuses on our financial results for the years ended March 2021 and 2020 and year-to-year comparisons between these years. A discussion of our results of operations for the year ended March 2020 compared to the year ended March 2019 is included in Part II, Item 7.
The following discussion and analysis focuses on our financial results for the years ended March 2022 and 2021 and year-to-year comparisons between these years. A discussion of our results of operations for the year ended March 2021 compared to the year ended March 2020 is included in Part II, Item 7.
In response to COVID-19, various government programs have been announced to provide financial relief to affected businesses including the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act, among other things, provides employer payroll tax credits for wages paid to employees unable to work during the COVID-19 pandemic and options to defer payroll tax payments.
In response to COVID-19, various government programs were announced to provide financial relief to affected businesses including the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act, among other things, provides employer payroll tax credits for wages paid to employees unable to work during the COVID-19 pandemic and options to defer payroll tax payments.
The acquired assets include the estimated fair value of $1.20 billion for the Supreme ® trademark, which is an identifiable intangible asset management believes to have an indefinite life.
The acquired assets included the estimated fair value of $1.20 billion for the Supreme ® trademark, which is an identifiable intangible asset management believes to have an indefinite life.
There can be no assurance that the estimates and assumptions used in our goodwill and indefinite-lived intangible asset impairment testing will prove to be accurate predictions of the future, if, for example, (i) the businesses do not perform as projected, (ii) overall economic conditions in Fiscal 2022 or future years vary from current assumptions (including changes in discount rates), (iii) business conditions or strategies for a specific reporting unit change from current assumptions, including loss of major customers, (iv) investors require higher rates of return on equity investments in the marketplace, or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and EBITDA.
There can be no assurance that the estimates and assumptions used in our goodwill and indefinite-lived intangible asset impairment testing will prove to be accurate predictions of the future, if, for example, (i) the businesses do not perform as projected, (ii) overall economic conditions in Fiscal 2023 or future years vary from current assumptions (including changes 40 VF Corporation Fiscal 2022 Form 10-K Table of Contents in discount rates), (iii) business conditions or strategies for a specific reporting unit change from current assumptions, including loss of major customers, (iv) investors require higher rates of return on equity investments in the marketplace, or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and EBITDA.
Foreign currency exchange rate risks VF is a global enterprise subject to the risk of foreign currency fluctuations. Approximately 50% of VF’s revenues in the year ended March 2021 were generated in international markets. Most of VF’s foreign businesses operate in functional currencies other than the U.S. dollar.
Foreign currency exchange rate risks VF is a global enterprise subject to the risk of foreign currency fluctuations. Approximately 48% of VF’s revenues in the year ended March 2022 were generated in international markets. Most of VF’s foreign businesses operate in functional currencies other than the U.S. dollar.
During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. During the fourth quarter of Fiscal 2021, VF completed the acquisition of Supreme Holdings, Inc. ("Supreme").
During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. During the fourth quarter of Fiscal 2021, VF completed the acquisition of Supreme Holdings, Inc. ("Supreme") for $2.4 billion.
VF has also implemented measures that are designed to ensure the health, safety and well-being of associates employed in its distribution, fulfillment and manufacturing centers around the world. VF-operated retail stores across the globe were significantly impacted during Fiscal 2021 due to temporary closures for varying periods of time.
VF has also implemented measures that are designed to ensure the health, safety and well-being of associates employed in its distribution and fulfillment centers around the world. VF-operated retail stores across the globe were impacted during Fiscal 2022 and 2021 due to temporary closures for varying periods of time due to COVID-19.
Management allocated the preliminary purchase price of the acquired Supreme business to the preliminary estimated fair values of the acquired assets and assumed liabilities at the date of acquisition, which resulted in excess purchase price of $1.25 billion that has been recorded as goodwill.
Management allocated the purchase price of the acquired Supreme business to the estimated fair values of the acquired assets and assumed liabilities at the date of acquisition, which resulted in excess purchase price of $1.25 billion that was recorded as goodwill.
Some potential risks are discussed below: Insured risks VF is self-insured for a significant portion of its employee medical, workers’ compensation, vehicle and general liability exposures. VF purchases insurance from highly-rated commercial carriers to cover other risks, including directors and officers, property and umbrella, and to establish stop-loss limits on self-insurance arrangements.
Some potential risks are discussed below: Insured risks VF is self-insured for a significant portion of its employee medical, workers’ compensation, vehicle and general liability exposures. VF purchases insurance from highly-rated commercial carriers to cover other risks, including directors and officers, cyber, property, cargo, employment practices, wage and hour and umbrella, and to establish stop-loss limits on self-insurance arrangements.
Kipling Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis In conjunction with VF's annual goodwill and indefinite-lived intangible asset impairment testing as of the beginning of the fourth quarter of Fiscal 2021, management performed a quantitative impairment analysis of the Kipling reporting unit goodwill and indefinite-lived trademark intangible asset.
Supreme Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis In conjunction with VF's annual goodwill and indefinite-lived intangible asset impairment testing as of the beginning of the fourth quarter of Fiscal 2022, management performed a quantitative impairment analysis of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.
In this qualitative assessment, VF considered relevant events and circumstances for each reporting unit, including (i) current year results and performance versus management's 40 VF Corporation Fiscal 2021 Form 10-K Table of Contents annual and strategic plans, (ii) financial outlook based on the latest strategic plan, (iii) changes in the reporting unit carrying value since prior year and the amounts relative to the size of the respective business, (iv) industry and market conditions in which the reporting unit operates, (v) macroeconomic conditions, including discount rate changes, and (vi) changes in products or services offered by the reporting unit.
In this qualitative assessment, VF considered relevant events and circumstances for each reporting unit, including (i) current year results and performance versus management's annual and strategic plans, (ii) financial outlook based on the latest strategic plan, (iii) changes in the reporting unit carrying value since prior year and the amounts relative to the size of the respective business, (iv) industry and market conditions in which the reporting unit operates, (v) macroeconomic conditions, including discount rate changes, and (vi) changes in products or services offered by the reporting unit.
Impairment of goodwill and indefinite-lived intangible assets and net interest expense are discussed in the “Consolidated Statements of Operations” section, and corporate and other expenses are discussed below.
Impairment of goodwill and indefinite-lived intangible assets, net interest expense and loss on debt extinguishment are discussed in the “Consolidated Statements of Operations” section, and corporate and other expenses are discussed below.
VF had other financial commitments at the end of Fiscal 2021 that are not included in the above table but may require the use of funds under certain circumstances: • $118.1 million of surety bonds, custom bonds, standby letters of credit and international bank guarantees are not included in the table above because they represent contingent guarantees of performance under self-insurance and other programs and would only be drawn upon if VF were to fail to meet its other obligations. • Purchase orders for goods or services in the ordinary course of business are not included in the above table because they represent authorizations to purchase rather than binding commitments.
VF had other financial commitments and contingent obligations at the end of Fiscal 2022 that are not included in the above table but may require the use of funds under certain circumstances: • $110.2 million of surety bonds, custom bonds, standby letters of credit and international bank guarantees are not included in the table above because they represent contingent guarantees of performance under self-insurance and other programs and would only be drawn upon if VF were to fail to meet its other obligations. • Purchase orders for goods or services in the ordinary course of business are not included in the above table because they represent authorizations to purchase rather than binding commitments. • As previously reported, VF petitioned the U.S.
Management's revenue and profitability forecasts used in the Kipling reporting unit and indefinite-lived trademark intangible asset valuations considered historical performance, strategic initiatives and industry trends. Assumptions used in the valuations were similar to those that would be used by market participants performing independent valuations of the business.
The Supreme reporting unit is included in the Active reportable segment. Management's revenue and profitability forecasts used in the Supreme reporting unit and indefinite-lived trademark intangible asset valuations considered historical performance, strategic initiatives and industry trends. Assumptions used in the valuations were similar to those that would be used by market participants performing independent valuations of the business.
Based on the average amount of variable rate borrowings and cash equivalents during Fiscal 2021, the effect of a hypothetical 1% increase in interest rates would be an increase in reported net income of approximately $15.0 million and a hypothetical 1% decrease in interest rates would be a decrease in reported net income of approximately $15.0 million.
Based on the average amount of variable rate borrowings and cash equivalents during Fiscal 2022, the effect of a hypothetical 1% increase in interest rates would be an increase in reported net income of approximately $8.1 million and a hypothetical 1% decrease in interest rates would be a decrease in reported net income of approximately $8.3 million.
All references to the years ended March 2021 ("Fiscal 2021"), March 2020 ("Fiscal 2020") and March 2019 ("Fiscal 2019") relate to the 53-week fiscal year ended April 3, 2021 and the 52-week fiscal years ended March 28, 2020 and March 30, 2019, respectively.
All references to the years ended March 2022 ("Fiscal 2022"), March 2021 ("Fiscal 2021") and March 2020 ("Fiscal 2020") relate to the 52-week fiscal year ended April 2, 2022, the 53-week fiscal year ended April 3, 2021 and the 52-week fiscal year ended March 28, 2020, respectively.
Defined benefit pension plan risks At the end of Fiscal 2021, VF’s defined benefit pension plans were overfunded by a net total of $13.7 million.
Defined benefit pension plan risks At the end of Fiscal 2022, VF’s defined benefit pension plans were overfunded by a net total of $85.7 million.
Since all of VF’s long-term debt has fixed interest rates, the exposure relates to changes in interest rates on variable rate short-term borrowings (which averaged approximately $244.0 million during Fiscal 2021). However, any change in interest rates would also affect interest income earned on VF’s cash equivalents.
Since all of VF’s long-term debt has fixed interest rates, the exposure relates to changes in interest rates on variable rate short-term borrowings (which averaged approximately $64.0 million at a 2.1% rate during Fiscal 2022). However, any change in interest rates would also affect interest income earned on VF’s cash equivalents.
Under the acquisition method, the consolidated financial statements reflect the operations of an acquired business starting from the closing date of the acquisition. All assets acquired and liabilities assumed are recorded at fair value as of the acquisition date.
Business Combinations VF accounts for business combinations using the acquisition method of accounting. Under the acquisition method, the consolidated financial statements reflect the operations of an acquired business starting from the closing date of the acquisition. All assets acquired and liabilities assumed are recorded at fair value as of the acquisition date.
VF’s diverse portfolio meets consumer needs across a broad spectrum of activities and lifestyles. Our long-term growth strategy is focused on four drivers — drive and optimize our portfolio, distort investments to Asia, elevate direct channels and accelerate our consumer-minded, retail-centric, hyper-digital business model transformation. VF is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
Our long-term growth strategy is focused on four drivers — drive and optimize our portfolio, distort investments to Asia, elevate direct channels and accelerate our consumer-minded, retail-centric, hyper-digital business model transformation. VF is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended March 28, 2020 , filed with the SEC on May 27, 2020, and is incorporated by reference into this Form 10-K. All per share amounts are presented on a diluted basis.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" of o ur Annual Report on Form 10-K for the year ended April 3, 2021 , filed with the SEC on May 27, 2021, and is incorporated by reference into this Form 10-K. All per share amounts are presented on a diluted basis.
If the pre-tax undiscounted cash flows of the asset or asset group are less than its carrying value, the estimated fair value of the asset or asset group is calculated considering what a market participant would pay to lease the asset for its highest and best use, and an impairment charge is recognized for the difference between the estimated fair value of the asset or asset group and its carrying value.
If the pre-tax undiscounted cash flows of the asset or asset group are less than its carrying value, the 38 VF Corporation Fiscal 2022 Form 10-K Table of Contents estimated fair value of the asset or asset group is calculated considering what a market participant would pay to lease the asset for its highest and best use, and an impairment charge is recognized for the difference between the estimated fair value of the asset or asset group and its carrying value.
The increase in cash provided by operating activities in Fiscal 2021 compared to Fiscal 2020 is primarily due to a decrease in net cash usage for working capital, partially offset by lower earnings for the periods compared.
The decrease in cash provided by operating activities in Fiscal 2022 compared to Fiscal 2021 is primarily due to a decrease in net cash provided by working capital, partially offset by higher earnings for the periods compared.
Other income (expense), net primarily consists of components of net periodic pension cost (excluding the service cost component), foreign currency gains and losses and other non-operating gains and losses. Other income (expense) netted to $(24.7) million and $(68.7) million in Fiscal 2021 and Fiscal 2020, respectively.
Other income (expense), net primarily consists of components of net periodic pension cost (excluding the service cost component), foreign currency gains and losses and other non-operating gains and losses. Other income (expense) netted to $26.2 million and $(24.7) million in Fiscal 2022 and Fiscal 2021, re spectively.
VF monitors net foreign currency market exposures and enters into derivative foreign currency contracts to hedge the effects of exchange rate fluctuations for a significant portion of forecasted foreign currency cash flows or specific foreign currency transactions (relating to cross-border inventory purchases, production costs, product sales, operating costs and intercompany royalty payments).
VF monitors net foreign currency market exposures and enters into derivative foreign currency contracts to hedge the effects of exchange rate fluctuations for a significant portion of forecasted 36 VF Corporation Fiscal 2022 Form 10-K Table of Contents foreign currency cash flows or specific foreign currency transactions (relating to cross-currency inventory purchases, product sales, operating costs and intercompany royalty payments).
Based on the range of estimated fair values developed from the income and market-based methods, VF determines the estimated fair value for the reporting unit. If the estimated fair VF Corporation Fiscal 2021 Form 10-K 39 Table of Contents value of the reporting unit exceeds its carrying value, the goodwill is not impaired and no further review is required.
Based on the range of estimated fair values developed from the income and market-based methods, VF determines the estimated fair value for the reporting unit. If the estimated fair value of the reporting unit exceeds its carrying value, the goodwill is not impaired and no further review is required.
VF’s policy is to review property, plant and equipment, definite-lived intangible assets and operating lease right-of-use assets for potential impairment whenever events or changes in circumstances indicate the carrying value of an asset or asset group may not be recoverable.
When deemed reasonably certain, the renewal and termination options are included in the determination of lease term. VF’s policy is to review property, plant and equipment, definite-lived intangible assets and operating lease right-of-use assets for potential impairment whenever events or changes in circumstances indicate the carrying value of an asset or asset group may not be recoverable.
The change of control provision applies to all notes, except for the 2033 note. Dividends Cash dividends totaled $1.94 per share in Fiscal 2021 compared to $1.90 in Fiscal 2020. The dividend payout ratio was 186.5% of diluted earnings per share in Fiscal 2021 compared to 111.8% in Fiscal 2020.
The change of control provision applies to all notes, except for the 2033 notes. Dividends Cash dividends totaled $1.98 per share in Fiscal 2022 compared to $1.94 in Fiscal 2021. The dividend payout ratio was 56.0% of diluted earnings per share in Fiscal 2022 compared to 186.5% in Fiscal 2021.
Corporate Headquarters’ Costs Headquarters’ costs include compensation and benefits of corporate management and staff, legal and professional fees, and general and administrative expenses that have not been allocated to the segments.
Costs to develop new software and related applications are generally not allocated to the segments. Corporate Headquarters’ Costs Headquarters’ costs include compensation and benefits of corporate management and staff, legal and professional fees, and general and administrative expenses that have not been allocated to the segments.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW VF Corporation (together with its subsidiaries, collectively known as “VF” or the "Company”) is a global leader in the design, procurement, production, marketing and distribution of branded lifestyle apparel, footwear and related products.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OVERVIEW VF Corporation (together with its subsidiaries, collectively known as “VF” or the "Company”) is a global leader in the design, procurement, marketing and distribution of branded lifestyle apparel, footwear and related products. VF’s diverse portfolio meets consumer needs across a broad spectrum of activities and lifestyles.
The following table presents the percentage relationship to net revenues for components of the Consolidated Statements of Operations: Year Ended March 2021 2020 Gross margin (net revenues less cost of goods sold) 52.7 % 55.3 % Selling, general and administrative expenses 45.9 43.4 Impairment of goodwill and intangible assets 0.2 3.1 Operating margin 6.6 % 8.8 % Year Ended March 2021 Compared to Year Ended March 2020 Gross margin decreased 260 basis points to 52.7% in Fiscal 2021 compared to 55.3% in Fiscal 2020.
The following table presents the percentage relationship to net revenues for components of the Consolidated Statements of Operations: Year Ended March 2022 2021 Gross margin (net revenues less cost of goods sold) 54.5 % 52.7 % Selling, general and administrative expenses 40.7 45.9 Impairment of goodwill and intangible assets — 0.2 Operating margin 13.8 % 6.6 % Year Ended March 2022 Compared to Year Ended March 2021 Gross margin increased 180 basis points to 54.5% in Fiscal 2022 compared to 52.7% in Fiscal 2021.
Additionally, the EU has initiated proceedings related to individual rulings granted by Belgium, including the ruling granted to VF. If this matter is adversely resolved, these amounts will not be collected by VF. The calculation of income tax liabilities involves uncertainties in the application of complex tax laws and regulations, which are subject to legal interpretation and significant management judgment.
If this matter is adversely resolved, these amounts will not be collected by VF. The calculation of income tax liabilities involves uncertainties in the application of complex tax laws and regulations, which are subject to legal interpretation and significant management judgment.
Other This category includes (i) costs of corporate programs or corporate-managed decisions that are not allocated to the segments, (ii) costs of registering, maintaining and enforcing certain of VF’s trademarks, and (iii) miscellaneous consolidated costs, the most significant of which is related to activity associated with VF’s centrally-managed U.S. defined benefit pension plans.
Other This category includes (i) costs of corporate programs or corporate-managed decisions that are not allocated to the segments, (ii) costs of registering, maintaining and enforcing certain of VF’s trademarks, and (iii) miscellaneous consolidated VF Corporation Fiscal 2022 Form 10-K 31 Table of Contents activities, the most significant of which is related to VF’s centrally-managed U.S. defined benefit pension plans.
Management performed a qualitative analysis for all other reporting units and trademark intangible assets, as discussed below in the “Other Reporting Units - Qualitative Impairment Analysis” section.
See additional discussion in the "Supreme Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis" section below. Management performed a qualitative analysis for all other reporting units and trademark intangible assets, as discussed below in the “Other Reporting Units - Qualitative Impairment Analysis” section.
Included in this Other category are results primarily related to the sale of non-VF products. 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 and other income (expense), net line items of each segment.
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 and other income (expense), net line items of each segment.
Cash Provided by Financing Activities The increase in cash provided by financing activities in Fiscal 2021 compared to Fiscal 2020 was primarily due to the increase in net proceeds from long-term debt issuances of $1.9 billion, a $1.0 billion decrease in share repurchases and a $647.4 million decrease in payments on long-term debt, which was partially offset by a $1.8 billion net decrease in short-term borrowings for the periods compared.
Cash Provided (Used) by Financing Activities The decrease in cash provided by financing activities in Fiscal 2022 compared to Fiscal 2021 was primarily due to the net proceeds from long-term debt issuances of $3.0 billion fixed-rate notes in Fiscal 2021, a $502.5 million increase in payments on long-term debt and a $350.0 million increase in share repurchases in Fiscal 2022, which were partially offset by a $1.5 billion net decrease in short-term borrowings for the periods compared.
VF’s reported earnings are subject to risks due to the volatility of its pension cost (income), which has ranged in recent years from cost of $39.7 million in the year ended March 201 9 to income of $5.7 million in the year ended March 2021.
VF’s reported earnings are subject to risks due to the volatility of its pension cost (income), which has ranged in recent years from cost of $23.6 million in the year ended March 2020 to income of $7.3 million in the year ended March 2022.
The overfunded status includes a $117.6 million liability related to our U.S. unfunded supplemental defined benefit plan, $58.4 million of net liabilities related to our non-U.S. defined benefit plans, and a $189.7 million net asset related to our U.S. qualified defined benefit plan.
The overfunded status includes a $93.6 million liability related to our U.S. unfunded supplemental defined benefit plan, $20.5 million of net liabilities related to our non-U.S. defined benefit plans, and a $199.8 million net asset related to our U.S. qualified defined benefit plan.
Selling, general and administrative expenses decreased $307.0 million in Fiscal 2021 compared to Fiscal 2020 primarily due to cost controls taken in response to COVID-19 and payroll relief from the CARES Act and other governmental packages.
Selling, general and administrative expenses increased $583.2 million in Fiscal 2022 compared to Fiscal 2021 primarily due to cost controls taken in the prior year in response to COVID-19 and payroll relief in the prior year period from the CARES Act and other governmental packages.
VF measures recoverability of the carrying value of an asset or asset group by comparison to the estimated pre-tax undiscounted cash flows expected to be generated by the asset. 38 VF Corporation Fiscal 2021 Form 10-K Table of Contents If the forecasted pre-tax undiscounted cash flows to be generated by the asset are not expected to be adequate to recover the asset’s carrying value, a fair value analysis must be performed, and an impairment charge is recorded if there is an excess of the asset’s carrying value over its estimated fair value.
If the forecasted pre-tax undiscounted cash flows to be generated by the asset are not expected to be adequate to recover the asset’s carrying value, a fair value analysis must be performed, and an impairment charge is recorded if there is an excess of the asset’s carrying value over its estimated fair value.
If the brand is unable to achieve the financial projections, an impairment on the indefinite-lived trademark intangible asset or the reporting unit goodwill could occur in the future.
If the brand is unable to achieve the financial projections, an impairment of the indefinite-lived trademark intangible asset or the reporting unit goodwill could occur in the future. Management performed sensitivity analyses on the impairment models used to test the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.
The decrease in direct-to-consumer revenues was primarily due to the negative impact of COVID-19 and related closures of VF-operated retail stores, as discussed in the "Impact of COVID-19" section above. Our e-commerce business grew 67% in Fiscal 2021, including a 3% favorable impact from foreign currency and a 9% contribution from the Supreme acquisition.
The increase in direct-to-consumer revenues was primarily due to the reopening of VF-operated retail stores, which had significant temporary closures in Fiscal 2021 due to COVID-19, as discussed in the "Impact of COVID-19" section above. Our e-commerce business grew 14% in Fiscal 2022, including a 1% favorable impact from foreign currency and a 15% contribution from the Supreme acquisition.
The business results for Supreme have been included in the Active segment. All references to contributions from acquisition below represent the operating results of Supreme from its date of acquisition. Refer to Note 3 to VF's consolidated financial statements for additional information on acquisitions.
The business results for Supreme have been included in the Active segment. All references to contributions from acquisition below represent the operating results of Supreme through the one-year anniversary of the acquisition. Refer to Note 3 to VF's consolidated financial statements for additional information on the acquisition. On June 28, 2021, VF completed the sale of its Occupational Workwear business.
Outdoor Year Ended March (Dollars in millions) 2021 2020 Percent Change Segment revenues $ 4,127.6 $ 4,644.0 (11.1) % Segment profit 342.2 516.1 (33.7) % Operating margin 8.3 % 11.1 % The Outdoor segment includes the following brands: The North Face ® , Timberland ® , Smartwool ® , Icebreaker ® and Altra ® .
Outdoor Year Ended March (Dollars in millions) 2022 2021 Percent Change Segment revenues $ 5,327.6 $ 4,127.6 29.1 % Segment profit 795.5 342.2 132.5 % Operating margin 14.9 % 8.3 % The Outdoor segment includes the following brands: The North Face ® , Timberland ® , Smartwool ® , Icebreaker ® and Altra ® .
The appropriate discount rate is based on the reporting unit’s WACC that considers market participant assumptions, plus a spread that factors in the risk of the intangible asset.
The discount rate is based on the reporting unit’s WACC that considers market participant assumptions and is adjusted, as appropriate, to factor in the risk of the intangible asset.
VF Corporation Fiscal 2021 Form 10-K 25 Table of Conte nts ANALYSIS OF RESULTS OF OPERATIONS Consolidated Statements of Operations The following table presents a summary of the changes in net revenues for the year ended March 2021 compared to the year ended March 2020: (In millions) Year Ended March Net revenues — 2020 $ 10,488.6 Organic (1,562.7) Acquisition 142.0 Impact of foreign currency 170.9 Net revenues — 2021 $ 9,238.8 Year Ended March 2021 Compared to Year Ended March 2020 VF reported a 12% decrease in revenues in Fiscal 2021 compared to Fiscal 2020, including a 2% favorable impact from foreign currency.
VF Corporation Fiscal 2022 Form 10-K 25 Table of Contents ANALYSIS OF RESULTS OF OPERATIONS Consolidated Statements of Operations The following table presents a summary of the changes in net revenues for the year ended March 2022 compared to the year ended March 2021: (In millions) Year Ended March Net revenues — 2021 $ 9,238.8 Organic 2,098.7 Acquisition 438.5 Impact of foreign currency 65.8 Net revenues — 2022 $ 11,841.8 Year Ended March 2022 Compared to Year Ended March 2021 VF reported a 28% increase in revenues in Fiscal 2022 compared to Fiscal 2021, including a 1% favorable impact from foreign currency.
VF Corporation Fiscal 2021 Form 10-K 29 Table of Conte nts Active Year Ended March (Dollars in millions) 2021 2020 Percent Change Segment revenues $ 4,160.9 $ 4,919.4 (15.4) % Segment profit 648.5 1,136.8 (43.0) % Operating margin 15.6 % 23.1 % The Active segment includes the following brands: Vans ® , Supreme ® , Kipling ® , Napapijri ® , Eastpak ® , JanSport ® and Eagle Creek ® .
VF Corporation Fiscal 2022 Form 10-K 29 Table of Contents Active Year Ended March (Dollars in millions) 2022 2021 Percent Change Segment revenues $ 5,380.3 $ 4,160.9 29.3 % Segment profit 979.7 648.5 51.1 % Operating margin 18.2 % 15.6 % The Active segment includes the following brands: Vans ® , Supreme ® , Napapijri ® , Kipling ® , Eastpak ® and JanSport ® .
The assumptions that impact actuarial gains and losses include the rate of return on investments held by the pension plans, the discount rate used to value participant liabilities and demographic characteristics of the participants.
The assumptions that impact actuarial gains and losses include the rate of return on investments held by the pension plans, the discount rate used to value participant liabilities and demographic characteristics of the participants. VF has taken a series of steps to manage the risk and volatility in the pension plans and their impact on the financial statements.
The increase was also attributed to a decrease in stockholders' equity, driven by payments of dividends, partially offset by current period income. VF’s primary source of liquidity is its expected strong annual cash flow from operating activities.
The decrease in the net debt to total capital ratio was also due to an increase in stockholders' equity, which was driven by net income in the period, partially offset by payments of dividends and share repurchases. VF’s primary source of liquidity is its expected annual cash flow from operating activities.
The Occupational Workwear business is comprised primarily of the following brands and businesses: Red Kap ® , VF Solutions ® , VF Corporation Fiscal 2021 Form 10-K 23 Table of Conte nts Bulwark ® , Workrite ® , Walls ® , Terra ® , Kodiak ® , Work Authority ® and Horace Small ® .
The Occupational Workwear business was comprised primarily of the following brands and businesses: Red Kap ® , VF Solutions ® , Bulwark ® , Workrite ® , Walls ® , Terra ® , Kodiak ® , Work Authority ® and Horace Small ® .
The decrease in Fiscal 2021 was partially offset by cost controls taken in response to COVID-19, contribution from the Supreme acquisition and payroll relief from the CARES Act and other governmental packages. 30 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts Work Year Ended March (Dollars in millions) 2021 2020 Percent Change Segment revenues $ 945.7 $ 886.4 6.7 % Segment profit 27.1 50.4 (46.1) % Operating margin 2.9 % 5.7 % The Work segment includes the following brands: Dickies ® and Timberland PRO ® .
Fiscal 2021 also included cost controls taken in response to COVID-19 and payroll relief from the CARES Act and other governmental packages. 30 VF Corporation Fiscal 2022 Form 10-K Table of Contents Work Year Ended March (Dollars in millions) 2022 2021 Percent Change Segment revenues $ 1,133.1 $ 945.7 19.8 % Segment profit 193.5 27.1 * Operating margin 17.1 % 2.9 % *Calculation not meaningful The Work segment includes the following brands: Dickies ® and Timberland PRO ® .
VF Corporation Fiscal 2021 Form 10-K 33 Table of Conte nts In summary, our cash flows from continuing operations were as follows: Year Ended March (In millions) 2021 2020 Cash provided by operating activities $ 1,233.3 $ 800.4 Cash used by investing activities (2,892.0) (285.3) Cash provided by financing activities 1,052.9 309.7 Cash Provided by Operating Activities Cash flow related to operating activities is dependent on net income, adjustments to net income and changes in working capital.
In summary, our cash flows from continuing operations were as follows: Year Ended March (In millions) 2022 2021 Cash provided by operating activities $ 858.2 $ 1,233.3 Cash provided (used) by investing activities 904.3 (2,892.0) Cash provided (used) by financing activities (1,268.8) 1,052.9 Cash Provided by Operating Activities Cash flow related to operating activities is dependent on net income, adjustments to net income and changes in working capital.
Accordingly, the Company has reported the results of the Occupational Workwear business and the related cash flows as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively. The related held-for-sale assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets.
The results of the Occupational Workwear business and the related cash flows have been reported as discontinued operations in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively, through the date of sale.
During Fiscal 2020, VF purchased 12.0 million shares of its Common Stock in open market transactions at a total cost of $1.0 billion (average price per share of $83.33) under the share repurchase program authorized by VF's Board of Directors.
Share Repurchases During Fiscal 2022, VF purchased 4.8 million shares of its Common Stock in open market transactions at a total cost of $350.0 million (average price per share of $72.84) under the share repurchase program authorized by VF's Board of Directors. VF did not purchase shares of its Common Stock in the open market during Fiscal 2021.
The Company has declared a dividend of $0.49 per share that is payable in the first quarter of Fiscal 2022. Subject to approval by its Board of Directors, VF intends to continue to pay its regularly scheduled dividend and is not contemplating the suspension of its dividend at this time.
The Company paid a cash dividend of $1.98 per share during the year ended March 2022, and has declared a cash dividend of $0.50 per share that is payable in the first quarter of Fiscal 2023. Subject to approval by its Board of Directors, VF intends to continue to pay its regularly scheduled dividend.
Management will continue to evaluate actions that may help to reduce VF’s risks related to its defined benefit plans. Interest rate risks VF limits the risk of interest rate fluctuations by managing the mix of fixed and variable interest rate debt. In addition, VF may use derivative financial instruments to manage risk.
Interest rate risks VF limits the risk of interest rate fluctuations by managing the mix of fixed and variable interest rate debt. In addition, VF may use derivative financial instruments to manage risk.
However, due to the uncertainty of the duration and severity of the COVID-19 pandemic, governmental actions in response to the pandemic, and the impact on us and our consumers, customers and suppliers, there is no certainty that the measures we take will be sufficient to mitigate the risks posed by COVID-19. See "Item 1A. Risk Factors." for additional discussion.
However, there continues to be uncertainty about the duration and extent of the impact of COVID-19, governmental actions in response to the pandemic, and the impact on us and our consumers, customers and suppliers. See "Item 1A. Risk Factors." for additional discussion.
E-commerce revenues increased 67% in the year ended March 2021 compared to the year ended March 2020, including a 3% favorable impact from foreign currency and a 9% contribution from the Supreme acquisition. • International revenues decreased 7% compared to the year ended March 2020, including a 4% favorable impact from foreign currency.
E-commerce revenues increased 14% in the year ended March 2022 compared to the year ended March 2021, driven by a 15% contribution from the Supreme acquisition and a 1% favorable impact from foreign currency. • International revenues increased 23% compared to the year ended March 2021, including a 1% favorable impact from foreign currency.
Fiscal 2021 Impairment Testing Management performed its annual goodwill and indefinite-lived intangible asset impairment testing as of the beginning of the fourth quarter of Fiscal 2021. VF elected to bypass the qualitative analysis for the Kipling reporting unit goodwill and indefinite-lived trademark intangible asset. See additional discussion in the "Kipling Reporting Unit and Indefinite-Lived Intangible Asset Impairment Analysis" section below.
Fiscal 2022 Impairment Testing Management performed its annual goodwill and indefinite-lived intangible asset impairment testing as of the beginning of the fourth quarter of Fiscal 2022. VF elected to bypass the qualitative VF Corporation Fiscal 2022 Form 10-K 39 Table of Contents analysis for the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset.
Standby letters of credit issued as of March 2021 were $24.1 million, leaving approximately $2.2 billion available for borrowing against the Global Credit Facility at March 2021. Additionally, VF had approximately $1.4 billion of cash and equivalents and short-term investments at March 2021.
There was $330.0 million in commercial paper borrowings as of March 2022. Standby letters of credit issued as of March 2022 were $24.3 million, leaving approximately $1.9 billion available for borrowing against the Global Credit Facility at March 2022. Additionally, VF had approximately $1.3 billion of cash and equivalents at March 2022.
VF also typically utilizes third-party valuation specialists to assist management in the determination of the fair value of assets acquired and liabilities assumed. Management estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Management estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
The pandemic significantly impacted global economic conditions, as well as VF's business operations and financial performance during Fiscal 2021. Throughout the global impact of COVID-19, VF has remained 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.
As the global impact 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.
Because this debt qualified as a nonderivative hedging instrument, foreign currency transaction gains or losses of the debt are deferred in the foreign currency translation and other component of accumulated OCI as an offset to the foreign currency translation adjustments on the hedged investments. 36 VF Corporation Fiscal 2021 Form 10-K Table of Conte nts Any amounts deferred in accumulated OCI will remain until the hedged investment is sold or substantially liquidated.
Because this debt qualified as a nonderivative hedging instrument, foreign currency transaction gains or losses of the debt are deferred in the foreign currency translation and other component of accumulated OCI as an offset to the foreign currency translation adjustments on the hedged investments.
Greater China (which includes Mainland China, Hong Kong and Taiwan) revenues were up 24%, including a 4% favorable impact from foreign currency.
Greater China (which includes Mainland China, Hong Kong and Taiwan) revenues were up 1%, including a 5% favorable impact from foreign currency, partially offset by COVID-19 resurgence in Fiscal 2022.
VF has $63.9 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 $11.1 million and $13.8 million at March 2021 and March 2020, respectively.
VF has $55.7 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 $5.5 million at March 2022. Borrowings under these arrangements had a weighted average interest rate of 26.0% at March 2022.
Management’s Use of Estimates and Assumptions Management made its estimates based on information available as of the date of our assessments, using assumptions we believe market participants would use in performing an independent valuation of the business.
Management’s Use of Estimates and Assumptions Management made its estimates based on information available as of the date of our assessments, using assumptions we believe market participants would use in performing an independent valuation of the business. It is possible that VF’s conclusions regarding impairment of goodwill or indefinite-lived intangible assets in any reporting unit could change in future periods.
The international effective tax rate was 14.7% for Fiscal 2021. As a result of the above, income from continuing operations in Fiscal 2021 was $354.9 million ($0.91 per diluted share), compared to $629.1 million ($1.57 per diluted share) in Fiscal 2020. Refer to additional discussion in the “Information by Reportable Segment” section below.
As a result of the above, income from continuing operations in Fiscal 2022 was $1.2 billion ($3.10 per diluted share), compared to $354.9 million ($0.91 per diluted share) in Fiscal 2021. Refer to additional discussion in the “Information by Reportable Segment” section below. Information by Reportable Segment VF's reportable segments are: Outdoor, Active and Work.
Key assumptions developed by management and used in the quantitative analysis of the Kipling reporting unit and indefinite-lived trademark intangible asset include: • Financial projections and future cash flows, including a base year reflecting deterioration of actual results including the impact of COVID-19, delayed and extended recovery from the COVID-19 pandemic in relation to other VF brands, ultimately trending towards growth rates and profitability in-line with historical trends and terminal growth rates based on the expected long-term growth rate of the brand; • Tax rates based on the statutory rates for the countries in which the brand operates and the related intellectual property is domiciled; • Royalty rates based on market data as well as active license agreements with similar VF brands; and, • Market-based discount rates.
Key assumptions developed by management and used in the quantitative analysis of the Supreme reporting unit and indefinite-lived trademark intangible asset include: • Financial projections and future cash flows, including a base year reflecting actual results lower than the forecast used in the initial business combination valuation primarily driven by the impact of short-term supply chain disruptions in Fiscal 2022, revenue growth and profitability improvement throughout the forecast period that reflects the long-term strategy for the business which is unchanged from the business combination valuation, and terminal growth rates based on the expected long-term growth rate of the business; • Tax rates based on the statutory rates for the countries in which the brand operates and the related intellectual property is domiciled, which consider intellectual property transfers completed by the Company during Fiscal 2022 that resulted in lower tax rates when compared to the business combination valuation assumptions; • Royalty rates based on market data as well as active license agreements with similar VF brands, which are consistent with the business combination valuation assumptions; and, • Market-based discount rates.

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