It has been about a month since the last earnings report for V.F. (VFC Quick QuoteVFC - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is V.F. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

V.F. Corp Posts Narrower-Than-Expected Loss in Q1

V.F. Corporation has reported narrower-than-expected loss per share in the first-quarter fiscal 2021 results, while the top line beat the Zacks Consensus Estimate. However, the company’s fiscal first-quarter results reflected significant impacts of the coronavirus pandemic. Consequently, revenues declined on a year-over-year basis.

Notably, the company executed its store-reopening plans during the fiscal first quarter, which slightly aided results. It had all its stores in the APAC region, including Mainland China, operational in the reported quarter. Moreover, it reopened about 90% of its stores in Europe during the quarter. Stores that remained closed in Europe primarily included those in the U.K. Further, it reopened nearly 75% of its stores in the United States by the end of the fiscal first quarter. Moreover, the company’s wholesale customers in APAC, North America and EMEA have re-opened most of their retail stores. Additionally, its supply chain and distribution centers remained operational during the quarter.

Backed by the uncertainty surrounding the global markets due to the pandemic, it withheld its guidance for fiscal 2021. However, it expects a revenue decline of less than 25% in the fiscal second quarter. Moreover, it anticipates free cash flow of more than $600 million in fiscal 2021.

Q1 Highlights

V.F. Corp’s reported adjusted loss of 57 cents per share against adjusted earnings of 22 cents in the year-ago quarter. However, the bottom line was narrower than the Zacks Consensus Estimate of a loss of 68 cents.

Net revenues of $1,076.3 million declined 47.5% year over year but surpassed the Zacks Consensus Estimate of $960.3 million. Constant-dollar revenues declined 47%. The decline can primarily be attributed to lower demand and store closures due to the coronavirus outbreak and resulting government restrictions.

Moreover, the company reported a 39% decline (down 37% in constant dollars) in International revenues. Revenues in Europe fell 48% (down 47% in constant dollars), with Greater China revenues remaining flat (up 3% in constant dollars). Revenues for Greater China reflected 5% growth (up 9% in constant dollars) in Mainland China.

Revenues at the company’s direct-to-consumer business dropped 37% in the fiscal first quarter, while digital revenues rose 78% (up 81% in constant dollars).

Adjusted gross margin contracted 220 basis points (bps) year over year to 54.1%, owing to increased promotional activity to clear excess inventory, offset by a positive mix shift toward higher-margin businesses. The company reported adjusted operating loss of $230 million against adjusted operating income of $125.8 million in the year-ago quarter.

Segmental Details

Revenues at the Active segment declined 54% to $571.3 million (down 53% in constant-currency basis). This included a 52% decline (51% decline in constant dollars) for the Vans brand.

The Outdoor segment reported revenues of $341.2 million, down 44% year over year (a 43% decline in constant currency). This included a decline of 45% (down 44% in constant currency) for the North Face brand.

Revenues at the Work segment fell 19% year over year to $162.4 million (18% decline in constant-currency). This included a 16% decline (down 15% in constant currency) for the Dickies brand.

Other revenues were $1.3 million compared with $6.3 million reported in the year-ago quarter.

Financial Details

V.F. Corp ended first-quarter fiscal 2021 with cash and cash equivalents of $2,145.1 million, long-term debt of $5,609.8 million, and shareholders’ equity of $2,912.6 million. Additionally, it had $2.23 billion remaining under its revolving credit facility. Inventories were up 2% at the end of the fiscal first quarter.

In the fiscal first quarter, the company returned $187 million to shareholders, through dividend payouts. As part of its liquidity preservation actions amid the coronavirus outbreak, the company previously suspended its share repurchase program on a temporary basis. As of Jun 30, 2020, it had $2.8 billion remaining under its current share repurchase authorization.

Concurrent to the earnings release, the company declared a quarterly dividend of 48 cents per share, payable Sep 21 to shareholders of record as of Sep 10.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -10.2% due to these changes.

VGM Scores

At this time, V.F. has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

V.F. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.