VF Corp. felt the pain of the COVID-19 shutdown just like nearly every other company, but the corporate parent to Vans, The North Face and Timberland was able to fortify its already strong financial position as the crisis started.
The company reported sales declines for its fourth quarter and steep losses after a Timberland writedown on Friday, but said it has $3 billion in cash on hand and another $2.2 billion available under its revolving credit facility — that’s access to funds on par with about half of the company’s annual revenues of $10.5 billion. VF has also suspended its share repurchase plan to conserve cash.
Steve Rendle, chairman, president and chief executive officer, said: “From the early days of the outbreak, VF has taken a people-first approach in our COVID-19 response, prioritizing the health and safety of our people, while also protecting their financial well-being. As we’ve implemented measures to care for and protect our people, we’ve also taken several key actions to advance our Enterprise Protection Strategy. These prudent actions, most of which have been precautionary, have helped us preserve liquidity and given us more flexibility to manage our global business operations through the prolonged crisis. Moving forward we’re committed to using this moment to set VF and our brands up for the next successful chapter in our 121-year history.”
Although it remains to be seen just how long the COVID-19 crisis will last, VF is eyeing just when it can get back up and running.
All of the company’s stores in the Asia Pacific region have reopened — although traffic is down significantly — and a phased reopening in its Europe, Middle East and Africa regions has started.
In North America, the company plans to start a phased reopening and expects most of its stores will be open by “mid-calendar year,” or June-ish.
The worst of the COVID-19 fallout didn’t come until the last few weeks of the quarter and still VF felt the pain acutely.
For its fiscal fourth quarter ended March 28, VF’s net losses tallied $483.8 million, or $1.22 a diluted share — mostly attributable to a $323 million noncash goodwill impairment charge for the Timberland brand. Adjusted earnings per share fell 70 percent to 10 cents.
The quarter’s gross margin decreased 150 basis points to 53.1 percent as VF moved to clear excess inventory.
Revenues fell 10.8 percent to $2.1 billion from $2.4 billion.