V F Corp: Form 10-Q for the period ended Jun 29, 2024

VF Corporation (together with its subsidiaries, collectively known as “VF” or the “Company”) uses a 52/53 week fiscal year ending on the Saturday closest to March 31 of each year. The Company's current fiscal year runs from March 31, 2024 through March 29, 2025 ("Fiscal 2025"). Accordingly, this Form 10-Q presents our first quarter of Fiscal 2025. For presentation purposes herein, all references to periods ended June 2024 and June 2023 relate to the fiscal periods ended on June 29, 2024 and July 1, 2023, respectively. References to March 2024 relate to information as of March 30, 2024.

All per share amounts are presented on a diluted basis and all percentages shown in the tables below and the following discussion have been calculated using unrounded numbers.

References to the three months ended June 2024 foreign currency amounts and impacts below reflect the changes in foreign exchange rates from the three months ended June 2023 when translating foreign currencies into U.S. dollars. VF’s most significant foreign currency exposure relates to business conducted in euro-based countries. Additionally, VF conducts business in other developed and emerging markets around the world with exposure to foreign currencies other than the euro.

RECENT DEVELOPMENTS

Supreme Divestiture

On July 16, 2024, VF entered into a definitive Stock and Asset Purchase Agreement (the "Purchase Agreement") to sell the Supreme® brand business to EssilorLuxottica S.A. for an aggregate base purchase price of $1.5 billion in cash, subject to customary adjustments for cash, indebtedness, working capital and transaction expenses as more fully set forth in the Purchase Agreement.

The divestiture of the Supreme® brand business is expected to meet the "held-for-sale" criteria in the second quarter of Fiscal 2025, and VF has determined that the sale represents a strategic shift that will have a significant effect on VF's operations. As such, the results of operations, including any expected loss recognized, and related cash flows will be reclassified to discontinued operations on the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, respectively, for all periods presented beginning in the second quarter of Fiscal 2025. In addition, the assets and liabilities will be presented separately on the Consolidated Balance Sheets for both current and prior periods beginning in the second quarter of Fiscal 2025.

Reinvent

On October 30, 2023, VF introduced Reinvent, a transformation program to enhance focus on brand-building and to improve operating performance and allow VF to achieve its full potential. The first announced steps in this transformation, which cover the following priorities: improve North America results, deliver the Vans® turnaround, reduce costs and strengthen the balance sheet, are as follows:

• Establish global commercial organization, inclusive of an Americas region: VF changed the operating model with the

establishment of a global commercial structure. This included the creation of an Americas regional platform, modeled on the Company's successful operations in the Europe and Asia-Pacific regions. With this change, VF created the role of Chief Commercial Officer, with responsibility for go-to-market execution globally.

• Sharpen brand presidents' focus on sustainable growth: A direct consequence and intent of the operating model change, which is particularly critical at this stage for the Vans® brand, enables brand presidents to direct greater focus and attention to long-term brand-building, product innovation and growth strategies.
• Appoint new Vans® president: Sun Choe was appointed the new Global Brand President of Vans® effective late July 2024.
• Optimize cost structure to improve operating efficiency and profitability: Actions have been implemented in a large-scale cost reduction program, which remains in process, and is expected to deliver $300 million in fixed cost savings, by removing spend in non-strategic areas of the business, and simplifying and right-sizing VF's structure.
• Reduce debt and leverage: In addition to improving operating performance, VF is committed to deleveraging the balance sheet. VF will use the proceeds from the sale of the Supreme® brand business to pay down upcoming debt maturities.

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

SUMMARY OF THE FIRST QUARTER OF FISCAL 2025

• Revenues were down 9% to $1.9 billion compared to the three months ended June 2023, including a 1% unfavorable impact from foreign currency.
• Outdoor segment revenues decreased 5% to $790.2 million compared to the three months ended June 2023, including a 1% unfavorable impact from foreign currency.
• Active segment revenues decreased 12% to $942.1 million compared to the three months ended June 2023, including a 1% unfavorable impact from foreign currency.
• Work segment revenues decreased 8% to $175.0 million compared to the three months ended June 2023.
• Wholesale revenues were down 8% compared to the three months ended June 2023, including a 1% unfavorable impact from foreign currency.
• Direct-to-consumer revenues were down 10% compared to the three months ended June 2023, including a 1% unfavorable impact from foreign currency.
• International revenues decreased 5% compared to the three months ended June 2023, including a 2% unfavorable impact from foreign currency.
• Revenues in the Americas region decreased 12% compared to the three months ended June 2023.
• Gross margin decreased 80 basis points to 52.0% compared to the three months ended June 2023, primarily driven by higher promotional activity.
• Net loss per share was $(0.67) compared to $(0.15) in the 2023 period. The increase in net loss per share was primarily driven by the Supreme reporting unit goodwill and intangible asset impairment charges, which totaled $145.0 million on a pre-tax basis increasing diluted net loss per share by $0.30, and lower profitability across all segments during the three months ended June 2024.

ANALYSIS OF RESULTS OF OPERATIONS

Consolidated Statements of Operations

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

(In millions)

VF reported a 9% decrease in revenues for the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. The revenue decrease in the three months ended June 2024 was driven by declines across all segments. The revenue decrease in the three months ended June 2024 was also due to declines across all

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

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

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

Gross margin decreased 80 basis points in the three months ended June 2024 compared to the 2023 period. The decrease was primarily driven by higher promotional activity.

Selling, general and administrative expenses as a percentage of total revenues increased 380 basis points during the three months ended June 2024 compared to the 2023 period, reflecting lower leverage of operating expenses due to decreased revenues. Selling, general and administrative expenses decreased $23.5 million in the three months ended June 2024 compared to the 2023 period. The decrease was primarily due to cost savings from Reinvent, lower distribution expenses and a gain recognized from a sale leaseback transaction, partially offset by Reinvent charges and higher compensation costs, including performance-based compensation.

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

During the three months ended June 2024, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset. VF's assessment gave consideration to the ongoing negotiations to sell the Supreme reporting unit. The goodwill impairment charge related to the estimates of fair value subsequently confirmed by the transaction price in the Purchase Agreement signed July 16, 2024, and the indefinite-lived trademark intangible asset impairment charge related to an increase in the market-based discount rate applied.

Net interest expense increased $6.0 million during the three months ended June 2024 compared to the 2023 period. The increase in net interest expense in the three months ended June 2024 was primarily due to increased levels of short-term commercial paper borrowings at higher rates and a decrease in interest income due to lower international investment rates, partially offset by lower interest on long-term debt due to the repayment of €850.0 million ($907.1 million) of long-term notes in September 2023. Total outstanding debt averaged $6.1 billion in the three months ended June 2024 and $6.8 billion in the same period in 2023, with weighted average interest rates of 3.7% and 3.1% in the three months ended June 2024 and 2023, respectively.

Other income (expense), net decreased $1.6 million during the three months ended June 2024 compared to the 2023 period. The decrease in the three months ended June 2024 was primarily due to a $3.3 million pension settlement charge in the three months ended June 2023, which resulted from lump-sum payments of retirement benefits in the supplemental defined benefit pension plan.

The effective income tax rate for the three months ended June 2024 was 13.0% compared to 7.8% in the 2023 period. The three months ended June 2024 included a net discrete tax expense of $7.1 million, which was comprised primarily of a $3.6 million net tax expense related to unrecognized tax benefits and interest and a $4.3 million tax expense related to stock compensation. Excluding the $7.1 million net discrete tax expense in the 2024

period, the effective income tax rate would have been 15.4%. The three months ended June 2023 included a net discrete tax expense of $0.2 million, which was comprised primarily of a $4.7 million net tax expense related to unrecognized tax benefits and interest, a $3.1 million tax expense related to stock compensation and a $7.5 million net tax benefit for interest on income tax receivables. Excluding the $0.2 million net discrete tax expense in the 2023 period, the effective income tax rate would have been 8.2%. Without discrete items, the effective income tax rate for the three months ended June 2024 increased by 7.2% compared with the 2023 period primarily due to the jurisdictional mix of earnings and year-to-date losses generated in the current year, including non-deductible goodwill impairment.

As a result of the above, net loss in the three months ended June 2024 was $(258.9) million ($(0.67) per diluted share) compared to net loss of $(57.4) million ($(0.15) per diluted share) in the 2023 period. Refer to additional discussion in the “Information by Reportable Segment” section below.

Information by Reportable Segment

VF's reportable segments are: Outdoor, Active and Work. The primary financial measures used by management to evaluate the financial results of VF's reportable segments are segment revenues and segment profit. Segment profit comprises the operating income (loss) and other income (expense), net line items of each segment.

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

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

Segment Revenues:

(In millions)

Segment Profit (Loss):

(In millions)

Note: Amounts may not sum due to rounding.

(In millions)

(a) The global Timberland brand includes Timberland®, reported within the Outdoor segment and Timberland PRO®, reported within the Work segment.

Note: Amounts may not sum due to rounding.

The following sections discuss the changes in revenues and profitability by segment. For purposes of this analysis, royalty revenues have been included in the wholesale channel for all periods.

Outdoor

(Dollars in millions)

The Outdoor segment includes the following brands: The North Face®, Timberland®, Smartwool®, Altra® and Icebreaker®.

Global revenues for Outdoor decreased 5% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. Revenues in the Americas region decreased 8%. Revenues in the Europe region decreased 8%. Revenues in the Asia-Pacific region increased 11%, including a 4% unfavorable impact from foreign currency and a 24% increase in Greater China (which includes Mainland China, Hong Kong and Taiwan), including a 4% unfavorable impact from foreign currency.

Global revenues for The North Face® brand decreased 3% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. The decrease in the three months ended June 2024 was driven by a decline in the Americas region, which decreased 10% compared to the 2023 period. Revenues in the Europe region decreased 6% in the three months ended June 2024. Revenues in the Asia-Pacific region increased 30% in the three months ended June 2024, including a 5% unfavorable impact from foreign currency.

Global revenues for the Timberland® brand decreased 14% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. Revenues in the Europe region decreased 16% in the three

months ended June 2024, including a 1% unfavorable impact from foreign currency. Revenues in the Asia-Pacific region decreased 25% in the three months ended June 2024 compared to the 2023 period, including a 4% unfavorable impact from foreign currency. Revenue in the Americas region decreased 4% in the three months ended June 2024.

Global direct-to-consumer revenues for Outdoor increased 3% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. The increase was primarily due to The North Face® brand in the Europe and Asia-Pacific regions. Global wholesale revenues decreased 10% in the three months ended June 2024 compared to the 2023 period. The decrease includes a 1% unfavorable impact from foreign currency. The decrease was primarily driven by declines in the Americas and Europe regions across The North Face® and Timberland® brands.

Operating margin decreased in the three months ended June 2024 compared to the 2023 period, reflecting increased direct-to-consumer expenses and lower gross margin, primarily driven by higher promotional activity, partially offset by favorable pricing and mix.

Active

(Dollars in millions)

The Active segment includes the following brands: Vans®, Supreme®, Kipling®, Napapijri®, Eastpak® and JanSport®.

Global revenues for Active decreased 12% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. Revenues in the Americas region decreased 16%. Revenues in the Asia-Pacific region decreased 11%, including a 5% unfavorable impact from foreign currency, and a 27% decrease in Greater China, including a 2% unfavorable impact from foreign currency. Revenues in the Europe region decreased 3% including a 1% unfavorable impact from foreign currency.

Vans® brand global revenues decreased 21% in the three months ended June 2024 compared to the 2023 period. The overall decline was most significantly impacted by a 25% decrease in the Americas region for the three months ended June 2024. Revenues in the Asia-Pacific region decreased 29% in the three months ended June 2024, including a 2% unfavorable impact from foreign currency. Revenues in the Europe region decreased 3% in the three months ended June 2024.

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

including a 1% unfavorable impact from foreign currency. The decrease was primarily driven by a decline in the Americas region, which decreased 21% in the three months ended June 2024. Global wholesale revenues decreased 6% in the three months ended June 2024, including a 1% unfavorable impact from foreign currency. The decrease was primarily due to a 7% decrease in the Americas region in the three months ended June 2024. Wholesale revenues in the Asia-Pacific region decreased 18% in the three months ended June 2024, and included a 2% unfavorable impact from foreign currency. Wholesale revenues in the Europe region increased 1% in the three months ended June 2024, including a 1% unfavorable impact from foreign currency.

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

Work

(Dollars in millions)

The Work segment includes the following brands: Dickies® and Timberland PRO®.

Global Work revenues decreased 8% in the three months ended June 2024 compared to the 2023 period. Revenues in the Americas region decreased 6%. Revenues in the Asia-Pacific region decreased 35%, including a 3% unfavorable impact from foreign currency. Revenues in the Europe region decreased 3%, including a 1% unfavorable impact from foreign currency.

Dickies® brand global revenues decreased 15% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. The decline in the three months ended June 2024 was primarily driven by a decrease in the Americas region of 13%, reflecting lower

inventory replenishment and weakness with certain key U.S. wholesale customer accounts. The decline was also attributed to a decrease in the Asia-Pacific region of 35% in the three months ended June 2024, including a 3% unfavorable impact from foreign currency, primarily due to broad-based weakness in Greater China. Revenues in the Europe region decreased 3% in the three months ended June 2024, including a 1% unfavorable impact from foreign currency.

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

Reconciliation of Segment Profit to Loss Before Income Taxes

There are three types of costs necessary to reconcile total segment profit to consolidated loss before income taxes. These costs are (i) impairment of goodwill and indefinite-lived intangible assets, which was discussed in the “Consolidated Statements of Operations” section and is excluded from segment profit because these costs are not part of the ongoing operations of the respective businesses, (ii) corporate and other expenses, discussed below, and (iii) interest expense, net, which was discussed in the “Consolidated Statements of Operations” section.

(Dollars in millions)

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

The increase in corporate and other expenses was primarily due to Reinvent charges and higher compensation costs, including performance-based compensation, partially offset by cost savings from Reinvent in the three months ended June 2024.

International

International revenues decreased 5% in the three months ended June 2024 compared to the 2023 period. Foreign currency had an unfavorable impact of 2% on international revenues in the three months ended June 2024.

Revenues in the Europe region decreased 5% in the three months ended June 2024. In the Asia-Pacific region, revenues decreased 3% in the three months ended June 2024. Foreign currency had an unfavorable impact of 5% on Asia-Pacific revenues in the three months ended June 2024. Revenues in

Greater China remained flat in the three months ended June 2024, including a 4% unfavorable impact from foreign currency. Revenues in the Americas (non-U.S.) region decreased 6% in the three months ended June 2024, including a 1% favorable impact from foreign currency.

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

Direct-to-Consumer

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

VF's e-commerce business decreased 5% during the three months ended June 2024, including a 1% unfavorable impact from foreign currency. The decrease was primarily driven by declines in the e-commerce business in the Americas region, which decreased 8% in the three months ended June 2024.

Revenues from VF-operated retail stores decreased 14% during the three months ended June 2024, including a 1% unfavorable impact from foreign currency. There were 1,175 VF-operated retail stores at June 2024 compared to 1,250 at June 2023.

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

Wholesale

Wholesale revenues decreased 8% in the three months ended June 2024 compared to the 2023 period, including a 1% unfavorable impact from foreign currency. The decrease was primarily driven by declines in the wholesale business in the Americas region.

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

ANALYSIS OF FINANCIAL CONDITION

Consolidated Balance Sheets

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

• Decrease in accounts receivable — primarily due to the seasonality of the business and the timing of collections.
• Increase in inventories — primarily due to the seasonality of the business.
• Increase in the current portion of long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025.
• Increase in accounts payable — primarily due to the timing of payments to vendors and seasonality of inventory purchases.
• Decrease in accrued liabilities — primarily due to a decrease in returns allowances and lower accrued income taxes.
• Decrease in long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025.

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

• Decrease in accounts receivable — primarily due to lower wholesale shipments.
• Decrease in inventories — driven by VF reducing elevated inventory levels, primarily in core and replenishment products.
• Increase in other currents assets — primarily due to higher prepaid income taxes.
• Decrease in property, plant and equipment, net — primarily due to asset disposals and write-downs.
• Decrease in goodwill — primarily due to $507.6 million in impairment charges related to the Timberland, Dickies and Icebreaker reporting units recorded in the third and fourth quarters of Fiscal 2024 and a $94.0 million impairment charge related to the Supreme reporting unit recorded in the first quarter of Fiscal 2025.
• Decrease in other assets — primarily due to the write-off of the $875.7 million income tax receivable in the second quarter of Fiscal 2024 due to the unfavorable decision in the Timberland tax case related to 2011 taxes and interest disputed with the Internal Revenue Service ("IRS").
• Increase in short-term borrowings — primarily due to an increase in commercial paper borrowings to support seasonal working capital requirements.
• Increase in the current portion of long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025 and the reclassification of $1.0 billion of long-term debt due in December 2024 related to our delayed draw Term Loan ("DDTL"), partially offset by the repayment of €850.0 million ($907.1 million) of long-term notes in September 2023.
• Decrease in accounts payable — primarily due to the timing of payments to vendors and lower inventory purchases.
• Decrease in accrued liabilities — primarily due to lower accrued income taxes.
• Decrease in long-term debt — due to the reclassification of $750.0 million of long-term notes due in April 2025 and the reclassification of $1.0 billion of long-term debt due in December 2024 related to our DDTL.

Liquidity and Capital Resources

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

(Dollars in millions)

The decrease in working capital and the current ratio at June 2024 compared to March 2024 was primarily due to a net increase in current liabilities driven by a higher current portion of long-term debt and higher accounts payable, as discussed in the "Consolidated Balance Sheets" section above. The decrease in working capital at June 2024 compared to June 2023 was primarily due to a net decrease in current assets driven by lower accounts receivable and inventories, and a net increase in current liabilities due to a higher current portion of long-term debt, as discussed in the "Consolidated Balance Sheets" section above.

For the ratio of net debt to total capital, net debt is defined as short-term and long-term borrowings, in addition to operating lease liabilities, net of unrestricted cash. Total capital is defined

as net debt plus stockholders’ equity. The increase in the net debt to total capital ratio at June 2024 compared to March 2024 was driven by a decrease in stockholders' equity for the periods compared. The decrease in stockholders' equity was primarily driven by the net loss for the period and payments of dividends. The increase in the net debt to total capital ratio at June 2024 compared to June 2023 was driven by a decrease in stockholders' equity, partially offset by a decrease in net debt for the periods compared. The decrease in stockholders' equity was primarily driven by the net loss in the period and payments of dividends. The decrease in net debt at June 2024 compared to June 2023 was driven by the repayment of €850.0 million in aggregate principal amount of Senior Notes due in September 2023, partially offset by higher short-term borrowings, as discussed in the "Consolidated Balance Sheet" section above.

VF’s primary source of liquidity is its expected annual cash flow from operating activities. Cash from operations is typically lower in the first half of the calendar year as inventory builds to support peak sales periods in the second half of the calendar year. Cash provided by operating activities in the second half of the calendar year is substantially higher as inventories are sold

and accounts receivable are collected. Additionally, direct-to-consumer sales are highest in the fourth quarter of the calendar year. VF's additional sources of liquidity include available borrowing capacity against its Global Credit Facility, available cash balances and international lines of credit.

In summary, our cash flows were as follows:

(In thousands)

Cash Provided by Operating Activities

Cash flows related to operating activities are dependent on net loss, adjustments to net loss and changes in working capital. The decrease in cash provided by operating activities in the three months ended June 2024 compared to June 2023 was primarily due to lower earnings for the periods compared and an increase in net cash used by working capital.

Cash Used by Investing Activities

The decrease in cash used by investing activities in the three months ended June 2024 was primarily due to proceeds from the sale of assets of $45.6 million in the period, primarily related to a sale leaseback transaction of a distribution center and sale of a corporate-owned aircraft. The decrease was also due to a decrease in capital expenditures of $36.6 million and a decrease in software purchases of $6.7 million in the three months ended June 2024 compared to the 2023 period.

Cash Used by Financing Activities

The decrease in cash used by financing activities during the three months ended June 2024 was primarily due to a $81.6 million decrease in dividends paid for the periods compared. The decrease was partially offset by a $47.3 million net decrease in short-term borrowings for the periods compared.

Share Repurchases

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

As of the end of June 2024, VF had $2.5 billion remaining for future repurchases under its share repurchase authorization. VF's capital deployment priorities in the near-to-medium term will be focused on reducing leverage and optimizing the performance of the current portfolio.

Revolving Credit Facility, DDTL Agreement and Short-term Borrowings

VF relies on its ability to generate cash flows to finance its ongoing operations. In addition, VF has significant liquidity from its available cash balances and credit facilities. VF maintains a $2.25 billion senior unsecured revolving line of credit (the “Global Credit Facility”) that expires in November 2026. VF may

request an unlimited number of one-year extensions so long as each extension does not cause the remaining life of the Global Credit Facility to exceed five years, subject to stated terms and conditions; however, granting of any extension is at the discretion of the lenders. The Global Credit Facility may be used to borrow funds in U.S. dollars or any alternative currency (including euros and any other currency that is freely convertible into U.S. dollars, approved at the request of the Company by the lenders) and has a $75.0 million letter of credit sublimit. The Global Credit Facility supports VF’s global commercial paper program for short-term, seasonal working capital requirements and general corporate purposes. Outstanding short-term balances may vary from period to period depending on the level of corporate requirements.

VF has restrictive covenants on its Global Credit Facility and DDTL Agreement, including a consolidated net indebtedness to consolidated net capitalization financial ratio covenant, as defined in the agreements as amended in August 2024 (effective for the three months ended June 2024), starting at 70% with future step downs. The calculation of consolidated net indebtedness is net of unrestricted cash and the calculation of consolidated net capitalization permits certain addbacks, including non-cash impairment charges and material impacts resulting from adverse legal rulings, as defined in the amended agreements. The covenant calculation also excludes consolidated operating lease liabilities. Additionally, the amended agreements restrict the total amount of cash dividends and share repurchases to $500.0 million annually, on a calendar-year basis and require the repayment of the DDTL upon the completion of the sale of the Supreme® brand business. As of June 2024, VF was in compliance with all covenants.

VF has a global commercial paper program that allows for borrowings of up to $2.25 billion to the extent that it has borrowing capacity under the Global Credit Facility. There were $250.0 million in U.S. commercial paper borrowings as of June 2024. In addition to the U.S. commercial paper program, VF commenced a euro commercial paper borrowing program during the second quarter of Fiscal 2024. As of June 2024, there were no outstanding euro commercial paper borrowings under this program. Standby letters of credit issued under the Global Credit Facility as of June 2024 were $0.6 million, leaving approximately $2.0 billion available for borrowing against the Global Credit Facility at June 2024, subject to applicable financial covenants.

VF has $86.3 million 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 $13.7 million at June 2024.

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

Supply Chain Financing Program

VF facilitates a voluntary supply chain finance ("SCF") program that enables a significant portion of our inventory suppliers to leverage VF's credit rating to receive payment from participating financial institutions prior to the payment date specified in the terms between VF and the supplier. The SCF program is administered through third-party platforms that allow participating suppliers to track payments from VF and elect which receivables, if any, to sell to the financial institutions. The transactions are at the sole discretion of both the suppliers and financial institutions, and VF is not a party to the agreements and has no economic interest in the supplier's decision to sell a receivable. The terms between VF and the supplier, including the amount due and scheduled payment terms (which are generally within 90 days of the invoice date) are not impacted by a supplier's participation in the SCF program. All amounts due to suppliers that are eligible to participate in the SCF program are included in the accounts payable line item in VF's Consolidated Balance Sheets and VF payments made under the SCF program are reflected in cash flows from operating activities in VF's Consolidated Statements of Cash Flows. At June 2024, March 2024 and June 2023, the accounts payable line item in VF’s Consolidated Balance Sheets included total outstanding obligations of $843.0 million, $485.0 million and $931.0 million, respectively, due to suppliers that are eligible to participate in the SCF program.

Rating Agencies

At the end of June 2024, VF’s long-term debt ratings were ‘BBB-’ by Standard & Poor’s ("S&P") Global Ratings and ‘Baa3' by Moody’s Investors Service ("Moody's"), and U.S. commercial paper ratings by those rating agencies were ‘A-3’ and ‘P-3’, respectively. The Moody's rating for VF's euro commercial paper was also 'P-3' at the end of June 2024. There is no active market for euro commercial paper based on VF's current rating. VF's

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

VF’s credit agency ratings allow for access to additional liquidity at competitive rates. Further downgrades to VF's ratings would negatively impact borrowing costs.

None of VF’s long-term debt agreements contain acceleration of maturity clauses based solely on changes in credit ratings. However, if there were a change in control of VF, and as a result of the change in control the notes were rated below investment grade by recognized rating agencies, then VF would be obligated to repurchase the notes at 101% of the aggregate principal amount, plus any accrued and unpaid interest, if required by the respective holders of the notes. The change of control provision applies to all notes, except for the notes due in 2033.

Dividends

The Company paid cash dividends of $0.09 per share during the three months ended June 2024, and the Company declared a cash dividend of $0.09 per share that is payable in the second quarter of Fiscal 2025. Subject to approval by its Board of Directors, VF intends to continue to pay quarterly dividends.

Contractual Obligations

Management’s Discussion and Analysis in the Fiscal 2024 Form 10-K provided a table summarizing VF’s material contractual obligations and commercial commitments at the end of Fiscal 2024 that would require the use of funds. As of June 2024, there have been no material changes in the amounts of unrecorded commitments disclosed in the Fiscal 2024 Form 10-K, except as noted below:

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

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

Recent Accounting Pronouncements

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

Critical Accounting Policies and Estimates

Management has chosen accounting policies it considers to be appropriate to accurately and fairly report VF’s operating results and financial position in conformity with generally accepted accounting principles in the United States of America. Our critical accounting policies are applied in a consistent manner. Significant accounting policies are summarized in Note 1 to the consolidated financial statements included in the Fiscal 2024 Form 10-K. There have been no material changes in VF's accounting policies from those disclosed in our Fiscal 2024 Form 10-K.

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

current trends and other factors believed to be reasonable under the circumstances. Management evaluates these estimates and assumptions, and may retain outside consultants to assist in the evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known.

The accounting policies that involve the most significant estimates, assumptions and management judgments used in preparation of the consolidated financial statements, or are the most sensitive to change from outside factors, are discussed in Management’s Discussion and Analysis in the Fiscal 2024 Form 10-K. Refer to Note 15 to VF's consolidated financial statements for additional information regarding VF's critical accounting policies and estimates during Fiscal 2025 related to fair value measurements.

Cautionary Statement on Forward-looking Statements

From time to time, VF may make oral or written statements, including statements in this quarterly report, that constitute “forward-looking statements” within the meaning of the federal securities laws. You can identify these statements by the fact that they use words such as "will," "anticipate," "believe," "estimate," "expect," "should," and "may," and other words and terms of similar meaning or use of future dates. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements include statements concerning plans, objectives, projections and expectations relating to VF’s operations or economic performance and assumptions related thereto. Forward-looking statements are made based on management’s expectations and beliefs concerning future events impacting VF and therefore involve a number of risks and uncertainties. Forward-looking statements are not guarantees, and actual results could differ materially from those expressed or implied in the forward-looking statements. VF undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Potential risks and uncertainties that could cause the actual results of operations or financial condition of VF to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: the level of consumer demand for apparel and footwear; disruption to VF’s distribution system; changes in global economic conditions and the financial strength of VF’s consumers and customers, including as a result of current inflationary pressures; fluctuations in the price, availability and quality of raw materials and finished products; disruption and volatility in the global capital and credit markets; VF’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; VF's ability to maintain the image, health and equity of its brands, including through investment in brand building and product innovation; intense competition from online retailers and other direct-to-consumer business risks; increasing pressure on margins; retail industry changes and challenges; VF's ability to execute our Reinvent transformation program and other business priorities, including measures to streamline and right-size our cost base and strengthen the balance sheet while reducing leverage, including any sale of the Supreme® brand business; VF’s ability to successfully establish a global commercial organization, and identify and capture efficiencies in our business model; any inability of VF or third parties on which we rely, to maintain the strength and security of information technology systems; the fact that VF’s facilities and systems, and those of third parties on which we rely, are frequent targets of cyber-attacks of varying levels of severity, and may in the future be vulnerable to such attacks, and any inability or failure by us or such third parties to anticipate or detect data or information security breaches or other cyber-attacks, including the cyber incident that was reported by VF in December 2023, could result in data or financial loss, reputational harm, business disruption,

damage to our relationships with customers, consumers, employees and third parties on which we rely, litigation, regulatory investigations, enforcement actions or other negative impacts; any inability by VF or third parties on which we rely to properly collect, use, manage and secure business, consumer and employee data and comply with privacy and security regulations; VF’s ability to adopt new technologies, including artificial intelligence, in a competitive and responsible manner; foreign currency fluctuations; stability of VF's vendors' manufacturing facilities and VF's ability to establish and maintain effective supply chain capabilities; continued use by VF’s suppliers of ethical business practices; VF’s ability to accurately forecast demand for products; actions of activist and other shareholders; VF's ability to recruit, develop or retain key executive or employee talent or successfully transition executives; continuity of members of VF’s management; changes in the availability and cost of labor; VF’s ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment such as the impairment charges related to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset; maintenance by VF’s licensees and distributors of the value of VF’s brands; VF’s ability to execute acquisitions and dispositions, integrate acquisitions and manage its brand portfolio, including the proposed sale of the Supreme® brand business; whether and when the required regulatory approvals for the proposed sale of the Supreme® brand business will be obtained, whether and when the closing conditions will be satisfied and whether and when the proposed sale of the Supreme® brand business will close, if at all; our ability to execute, and realize benefits, successfully, or at all, from the proposed sale of the Supreme® brand business; business resiliency in response to natural or man-made economic, public health, cyber, political or environmental disruptions; changes in tax laws and additional tax liabilities; legal, regulatory, political, economic, and geopolitical risks, including those related to the current conflicts in Ukraine and the Middle East and tensions between the U.S. and China; changes to laws and regulations; adverse or unexpected weather conditions, including any potential effects from climate change; VF's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent VF from fulfilling its financial obligations; VF's ability to pay and declare dividends or repurchase its stock in the future; climate change and increased focus on environmental, social and governance issues; VF's ability to execute on its sustainability strategy and achieve its sustainability-related goals and targets; risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic; and tax risks associated with the spin-off of our Jeanswear business completed in 2019. More information on potential factors that could affect VF’s financial results is included from time to time in VF’s public reports filed with the Securities and Exchange Commission, including VF’s Annual Report on Form 10-K.

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

Disclosure controls and procedures:

Under the supervision of the Chief Executive Officer and Chief Financial Officer, a Disclosure Committee comprising various members of management has evaluated the effectiveness of the disclosure controls and procedures at VF and its subsidiaries as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of the Evaluation Date that such controls and procedures were effective.

Changes in internal control over financial reporting:

There have been no changes during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, VF's internal control over financial reporting.

You should carefully consider the risk factors set forth under Part I, “Item 1A. Risk Factors” in the Fiscal 2024 Form 10-K, which could materially affect our business, financial condition and future results. The risks described in the Fiscal 2024 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operating results.

Other than the risk factors identified below, there have been no material changes to the risk factors identified in Part I, “Item 1A. Risk Factors” in the Fiscal 2024 Form 10-K.

BUSINESS AND OPERATIONAL RISKS

There are risks associated with VF’s acquisitions, divestitures and portfolio management, including our pending sale of the Supreme® brand business to EssilorLuxottica.

Any acquisitions, divestitures or mergers by VF, including our pending sale of the Supreme® brand business to EssilorLuxottica, will be accompanied by the risks commonly encountered in acquisitions or divestitures of companies, businesses or brands. These risks include, among other things, higher than anticipated acquisition or divestiture costs and expenses, the difficulty and expense of integrating or separating the operations, systems and personnel of the companies, businesses or brands, the loss of key employees and consumers as a result of changes in management or ownership, and slower progress toward environmental, social and governance goals given challenges with data acquisition and integration, the difficulty of accessing and disclosing sufficient environmental, social and governance data to comply with current and emerging environmental, social and governance regulations, and integration of environmental, social and governance initiatives overall. In addition, geographic distances may make integration of acquired businesses more difficult. We may not be successful in overcoming these risks or any other problems encountered in connection with any acquisitions or divestitures. Moreover, failure to effectively manage VF’s portfolio of brands in line with growth targets and shareholder expectations, including acquisition choices, integration approach, transaction pricing

and divestiture timing could result in unfavorable impacts to growth and value creation.

Our acquisitions and divestitures may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges. We also make certain estimates and assumptions in order to determine purchase price allocation and estimate the fair value of assets acquired and liabilities assumed. If our estimates or assumptions used to value these assets and liabilities are not accurate, we may be exposed to losses that may be material.

On July 17, 2024, we announced that we entered into a definitive agreement for EssilorLuxottica to acquire the Supreme® brand business from VF for $1.5 billion in cash. The sale, which is expected to close by the end of calendar year 2024, is subject to customary closing conditions, including obtaining necessary regulatory approvals. We and EssilorLuxottica may be unable to satisfy such closing conditions in a timely manner or at all and, accordingly, the sale of the Supreme® brand business may be delayed or may not be completed. Failure to complete the sale of the Supreme® brand business could have a material and adverse effect on us, including by delaying our strategic and other objectives relating to the separation of the Supreme® brand business and adversely affecting our plans to use the proceeds from the sale. Even if the sale is completed, we may not realize some or all the expected benefits. In addition, executing the sale of the Supreme® brand business will require significant time and attention from management, which could divert attention from the management of our operations and the pursuit of our business strategies.

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, such as the recent impairment charges related to the Supreme reporting unit goodwill and indefinite-lived intangible asset.

VF’s policy is to evaluate indefinite-lived intangible assets and goodwill for possible impairment as of the beginning of the fourth quarter of each year, or whenever events or changes in circumstances indicate that the fair value of such assets may be below their carrying amount. In addition, intangible assets that are being amortized are tested for impairment whenever events or circumstances indicate that their carrying value may not be recoverable. For these impairment tests, we use various valuation methods to estimate the fair value of our business units and intangible assets. If the fair value of an asset is less than its carrying value, we would recognize an impairment charge for the difference.

During the first quarter of Fiscal 2025, VF determined that a triggering event had occurred requiring impairment testing of the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset. Our assessment gave consideration to the ongoing negotiations to sell the Supreme reporting unit. As a result of the impairment testing performed, VF recorded impairment charges of $94.0 million and $51.0 million to the Supreme reporting unit goodwill and indefinite-lived trademark

intangible asset, respectively. The goodwill impairment charge related to the estimates of fair value subsequently confirmed by the transaction price in the definitive agreement for EssilorLuxottica to acquire the Supreme® brand business signed on July 16, 2024, and the indefinite-lived trademark intangible asset impairment charge related to an increase in the market-based discount rate applied.

It is possible that we could have another impairment charge for goodwill or trademark and trade name intangible assets in future periods if (i) the businesses do not perform as projected, (ii) overall economic conditions in Fiscal 2025 or future years vary from our current assumptions (including changes in discount rates and foreign currency exchange rates), (iii) business conditions or our strategies for a specific business unit change from our current assumptions, (iv) investors require higher rates of return on equity investments in the marketplace, or (v) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible assets. Any future impairment charge for goodwill or intangible assets could have a material effect on our consolidated financial position or results of operations.