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Why Is V.F. (VFC) Up 1.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for V.F. (VFC - Free Report) . Shares have added about 1.7% 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 its most recent earnings report in order to get a better handle on the important drivers.
V.F. Corp’s Q1 Loss Per Share Wider, Revenues Dip Y/Y
V.F. Corp reported a wider-than-expected loss per share in first-quarter fiscal 2024. The top and bottom lines compared unfavorably with the year-earlier quarter’s figures. However, sales surpassed the Zacks Consensus Estimate.
Q1 Highlights
V.F. Corp’s adjusted loss per share of 15 cents came wider than the Zacks Consensus Estimate of a loss of 13 cents per share. The company reported adjusted earnings of 9 cents per share in the year-earlier quarter.
Net revenues of $2,086.3 million fell 8% year over year but beat the consensus estimate of $2,060 million. At constant-currency (cc), revenues also dipped 8% year over year. The top line was hurt by sluggishness in the Americas and EMEA regions, which was partially offset by growth in the APAC region.
Revenues in the Americas declined 15% year over year on a reported basis and at cc. In the EMEA region, revenues dipped 2% (down 3% at cc). Revenues in the APAC region increased 13% on a reported basis (up 18% at cc). The company’s international revenues were up 3% year over year on a reported basis (up 4% at cc).
Channel-wise, wholesale and direct-to-consumer revenues were down 12% and 3% year over year on a reported basis, respectively. At cc, wholesale revenues fell 12%, while the same for the direct-to-consumer channel dropped 2%. Excluding Vans, direct-to-consumer revenues were up 7% in cc. Meanwhile, the digital channel witnessed a revenue decline of 4% on a reported basis and 3% on a cc basis.
The adjusted gross margin contracted 130 basis points (bps) to 52.8% due to elevated promotional activity and higher product costs. The metric reflected 200 bps of adverse rate impact (including promotions) and 10 bps of adverse foreign currency exchange rates, partly offset by 80 bps of mix benefits.
Adjusted operating loss was $7.9 million versus adjusted operating income of $77.5 million reported in the year-earlier quarter. Adjusted operating margin of 0.4% was down 380 bps, due to 130 bps of adverse gross margin impact and 250 bps of deleverage.
Segmental Details
Revenues in the Outdoor segment rose 8% to $829.7 million (up 8% at cc). The Active segment reported revenues of $1,066 million, down 15% year over year on a reported basis and at cc. Revenues in the Work segment fell 20% year over year (down 20% at cc) to $190.6 million.
Financial Details
V.F. Corp ended the fiscal first quarter with cash and cash equivalents of $806.5 million, long-term debt of $5,722.4 million and shareholders’ equity of $2,716.8 million. Inventories were up 19% year over year, amounting to $2,787 million.
During first-quarter fiscal 2024, the company provided an operating cash flow of $163.6 million. It returned $117 million to shareholders through dividend payouts in the fiscal first quarter. The company declared a quarterly cash dividend of 30 cents per share, to be paid out on Sep 20, 2023, to shareholders of record as of Sep 11.
Outlook
Management reiterated earnings view for the current fiscal year. For fiscal 2024, the company anticipates revenues to be modestly down to flat year over year, driven by the persistent weakness in its wholesale business and a longer-than-expected turnaround for Vans. The company’s wholesale business, mainly in the U.S., remains challenging as its major partners are having a more cautious approach on forward orders. Vans performance is also concerning.
However, the North Face and China business have been experiencing momentum. The company is also seeing an improved performance in the supply chain, allowing it to capitalize on revenue opportunities. It has also been managing costs and inventory position. Overall, management expects a better second-half revenue performance with respect to the first half on improving wholesale performance, moderating declines at Vans and easing year-over-year comparisons.
For fiscal 2024, the bottom line is envisioned to be $2.05-$2.25 per share. It anticipates free cash flow to be about $900 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted 13.16% due to these changes.
VGM Scores
Currently, V.F. has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, V.F. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is V.F. (VFC) Up 1.7% Since Last Earnings Report?
It has been about a month since the last earnings report for V.F. (VFC - Free Report) . Shares have added about 1.7% 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 its most recent earnings report in order to get a better handle on the important drivers.
V.F. Corp’s Q1 Loss Per Share Wider, Revenues Dip Y/Y
V.F. Corp reported a wider-than-expected loss per share in first-quarter fiscal 2024. The top and bottom lines compared unfavorably with the year-earlier quarter’s figures. However, sales surpassed the Zacks Consensus Estimate.
Q1 Highlights
V.F. Corp’s adjusted loss per share of 15 cents came wider than the Zacks Consensus Estimate of a loss of 13 cents per share. The company reported adjusted earnings of 9 cents per share in the year-earlier quarter.
Net revenues of $2,086.3 million fell 8% year over year but beat the consensus estimate of $2,060 million. At constant-currency (cc), revenues also dipped 8% year over year. The top line was hurt by sluggishness in the Americas and EMEA regions, which was partially offset by growth in the APAC region.
Revenues in the Americas declined 15% year over year on a reported basis and at cc. In the EMEA region, revenues dipped 2% (down 3% at cc). Revenues in the APAC region increased 13% on a reported basis (up 18% at cc). The company’s international revenues were up 3% year over year on a reported basis (up 4% at cc).
Channel-wise, wholesale and direct-to-consumer revenues were down 12% and 3% year over year on a reported basis, respectively. At cc, wholesale revenues fell 12%, while the same for the direct-to-consumer channel dropped 2%. Excluding Vans, direct-to-consumer revenues were up 7% in cc. Meanwhile, the digital channel witnessed a revenue decline of 4% on a reported basis and 3% on a cc basis.
The adjusted gross margin contracted 130 basis points (bps) to 52.8% due to elevated promotional activity and higher product costs. The metric reflected 200 bps of adverse rate impact (including promotions) and 10 bps of adverse foreign currency exchange rates, partly offset by 80 bps of mix benefits.
Adjusted operating loss was $7.9 million versus adjusted operating income of $77.5 million reported in the year-earlier quarter. Adjusted operating margin of 0.4% was down 380 bps, due to 130 bps of adverse gross margin impact and 250 bps of deleverage.
Segmental Details
Revenues in the Outdoor segment rose 8% to $829.7 million (up 8% at cc). The Active segment reported revenues of $1,066 million, down 15% year over year on a reported basis and at cc. Revenues in the Work segment fell 20% year over year (down 20% at cc) to $190.6 million.
Financial Details
V.F. Corp ended the fiscal first quarter with cash and cash equivalents of $806.5 million, long-term debt of $5,722.4 million and shareholders’ equity of $2,716.8 million. Inventories were up 19% year over year, amounting to $2,787 million.
During first-quarter fiscal 2024, the company provided an operating cash flow of $163.6 million. It returned $117 million to shareholders through dividend payouts in the fiscal first quarter. The company declared a quarterly cash dividend of 30 cents per share, to be paid out on Sep 20, 2023, to shareholders of record as of Sep 11.
Outlook
Management reiterated earnings view for the current fiscal year. For fiscal 2024, the company anticipates revenues to be modestly down to flat year over year, driven by the persistent weakness in its wholesale business and a longer-than-expected turnaround for Vans. The company’s wholesale business, mainly in the U.S., remains challenging as its major partners are having a more cautious approach on forward orders. Vans performance is also concerning.
However, the North Face and China business have been experiencing momentum. The company is also seeing an improved performance in the supply chain, allowing it to capitalize on revenue opportunities. It has also been managing costs and inventory position. Overall, management expects a better second-half revenue performance with respect to the first half on improving wholesale performance, moderating declines at Vans and easing year-over-year comparisons.
For fiscal 2024, the bottom line is envisioned to be $2.05-$2.25 per share. It anticipates free cash flow to be about $900 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted 13.16% due to these changes.
VGM Scores
Currently, V.F. has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, V.F. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.