We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
V.F. Corp (VFC) Gains on Q1 Earnings Beat, Sequential Growth
Read MoreHide Full Article
V.F. Corporation (VFC - Free Report) reported first-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Although the company’s sales and earnings declined year over year, it noted improvements sequentially. The company’s fiscal first-quarter results reflected sequential revenue improvements across all its brands. Moreover, VFC is on track with its Reinvent program and expects to deliver on its cost-saving target.
V.F. Corp reported an adjusted loss per share of 33 cents compared with a loss of 15 cents in the prior-year quarter. However, the bottom line was narrower than the Zacks Consensus Estimate of a loss of 35 cents.
Net revenues of $1.9 billion declined 9% year over year and 8% in constant currency. However, revenues surpassed the Zacks Consensus Estimate of $1.8 billion.
The gross margin contracted 80 basis points (bps) to 52%. This was driven by a 60-bps adverse rate impact, which includes negative transactional foreign currency, and a 20-bps impact of an unfavorable mix.
The company reported an adjusted operating loss of $76.6 million compared with an adjusted operating loss of $7.9 million in the year-ago period.
Driven by the better-than-expected first-quarter fiscal 2025 results, shares of V.F. Corp. rose 6.9% in the after-hours trading session on Aug 6. Investors seem to be optimistic about sequential growth witnessed in the quarter and the forward guidance. The Zacks Rank #3 (Hold) company's shares have rallied 30.6% in the past three months against the industry’s 16% decline.
Image Source: Zacks Investment Research
Revenue Details
On a regional basis, revenues in the Americas declined 12% year over year on both reported and constant-currency basis. The company noted that the decline softened sequentially from the 23% fall reported in the last quarter. In the EMEA region, revenues fell 5% on both reported and constant-currency basis. Revenues in the APAC region dropped 3% on a reported basis and improved 2% in constant currency. The company’s international revenues were down 5% year over year on a reported basis and 3% on a constant-currency basis.
Channel-wise, wholesale and direct-to-consumer revenues were down 8% and 10%, respectively, year over year on a reported basis. In constant currency, revenues declined 7% for the wholesale business and 9% for the direct-to-consumer channel. Our model estimated the wholesale and direct-to-consumer revenues to fall 7.6% and 12.2% year over year, respectively, for the fiscal first quarter.
Based on reporting segments, revenues in the Outdoor segment dipped 5% year over year on a reported basis and 4% on a constant-currency basis to $790.2 million. In the Active segment, revenues of $942.1 million declined 12% year over year on a reported basis and 11% on a constant-currency basis. Revenues in the Work segment dropped 8% year over year on both reported and constant-currency basis to $175 million.
Our model predicted first-quarter fiscal 2025 revenues to decline 4%, 15% and 6% year over year, respectively, for the Outdoor, Active and Work segments. In constant-currency, revenues were expected to be down 5%, 16% and 7%, respectively, for the Outdoor, Active and Work segments.
V.F. Corporation Price, Consensus and EPS Surprise
V.F. Corp ended first-quarter fiscal 2025 with cash and cash equivalents of $637.4 million, long-term debt of $3.9 billion, and shareholders’ equity of $1.4 billion. Inventories declined 24.3% year over year in first-quarter fiscal 2025.
In first-quarter fiscal 2025, VFC generated cash from operating activities of $19.8 million. It returned $35 million to shareholders through dividend payouts in the fiscal first quarter. The company declared a quarterly cash dividend of 9 cents per share, payable Sep 18, 2024, to shareholders of record as of Sep 10.
Other Updates
V.F. Corp remains on track with its Reinvent transformation program focused on brand-building and improved operating performance. The key points include improving North America results, delivering the Vans turnaround, lowering costs and reinforcing the balance sheet. The company continues pursuing opportunities to streamline its processes and invest in the business to drive brand demand and boost growth.
Concerning the Reinvent targets, VFC initiated an in-depth strategic review of the brand assets within the portfolio to ensure it owns the brands that create the greatest long-term value.
In first-quarter fiscal 2024, the company generated cost savings of $50 million through the Reinvent program. V.F. Corp targets generating about $300 million in cost savings from the program in the first half of fiscal 2025. These savings will be fully reflected in the company’s profit and loss statement in fiscal 2025.
Outlook
For second-quarter fiscal 2025, management expects the revenue trend to show a modest improvement from the fiscal first quarter. While the company still expects to report a year-over-year revenue decline in the fiscal second quarter, it expects the decline rate to moderate from the decline reported in the first quarter.
V.F. Corp anticipates the revenue growth rate for the Vans brand to improve modestly on a sequential basis, continuing the trend witnessed in the fiscal first quarter. For the North Face, the company expects to report a slight sequential decline in the revenue growth rate from that recorded in the fiscal first quarter. Notably, VFC reported 17% growth year-over-year in the second quarter of fiscal 2023.
The company anticipates the gross margin to increase slightly year over year in the fiscal second quarter. It expects SG&A expenses to be up slightly year over year in the fiscal second quarter, led by increased spending for the holiday season and reinvestments in its business, offset by Reinvent savings, and normalized incentive compensation and inflation.
For fiscal 2025, V.F. Corp reiterated its free cash flow guidance of $600 million, including proceeds from non-core physical asset sale. The company expects the Supreme divestiture to be completed by the end of the calendar year 2024.
Wolverine is engaged in the designing, manufacturing and distribution of a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year earnings of 82 cents per share indicates a substantial increase from the 5 cents reported in the year-ago period. Wolverine has a trailing four-quarter negative earnings surprise of 6.3%, on average.
Kontoor Brands, an apparel company, carries a Zacks Rank #2 (Buy) at present. KTB has a trailing four-quarter earnings surprise of 12.3%, on average.
The Zacks Consensus Estimate for Kontoor Brands’ current financial-year sales and earnings indicates growth of 0.1% and 12.7%, respectively, from the year-ago reported figures.
Skechers designs, develops, markets and distributes footwear for men, women and children in the United States and overseas. The company has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Skechers’ current financial-year sales and EPS indicates growth of 11.8% and 19.2%, respectively, from the year-ago actuals. SKX has a trailing four-quarter earnings surprise of 11.2%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
V.F. Corp (VFC) Gains on Q1 Earnings Beat, Sequential Growth
V.F. Corporation (VFC - Free Report) reported first-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Although the company’s sales and earnings declined year over year, it noted improvements sequentially. The company’s fiscal first-quarter results reflected sequential revenue improvements across all its brands. Moreover, VFC is on track with its Reinvent program and expects to deliver on its cost-saving target.
V.F. Corp reported an adjusted loss per share of 33 cents compared with a loss of 15 cents in the prior-year quarter. However, the bottom line was narrower than the Zacks Consensus Estimate of a loss of 35 cents.
Net revenues of $1.9 billion declined 9% year over year and 8% in constant currency. However, revenues surpassed the Zacks Consensus Estimate of $1.8 billion.
The gross margin contracted 80 basis points (bps) to 52%. This was driven by a 60-bps adverse rate impact, which includes negative transactional foreign currency, and a 20-bps impact of an unfavorable mix.
The company reported an adjusted operating loss of $76.6 million compared with an adjusted operating loss of $7.9 million in the year-ago period.
Driven by the better-than-expected first-quarter fiscal 2025 results, shares of V.F. Corp. rose 6.9% in the after-hours trading session on Aug 6. Investors seem to be optimistic about sequential growth witnessed in the quarter and the forward guidance. The Zacks Rank #3 (Hold) company's shares have rallied 30.6% in the past three months against the industry’s 16% decline.
Image Source: Zacks Investment Research
Revenue Details
On a regional basis, revenues in the Americas declined 12% year over year on both reported and constant-currency basis. The company noted that the decline softened sequentially from the 23% fall reported in the last quarter. In the EMEA region, revenues fell 5% on both reported and constant-currency basis. Revenues in the APAC region dropped 3% on a reported basis and improved 2% in constant currency. The company’s international revenues were down 5% year over year on a reported basis and 3% on a constant-currency basis.
Channel-wise, wholesale and direct-to-consumer revenues were down 8% and 10%, respectively, year over year on a reported basis. In constant currency, revenues declined 7% for the wholesale business and 9% for the direct-to-consumer channel. Our model estimated the wholesale and direct-to-consumer revenues to fall 7.6% and 12.2% year over year, respectively, for the fiscal first quarter.
Based on reporting segments, revenues in the Outdoor segment dipped 5% year over year on a reported basis and 4% on a constant-currency basis to $790.2 million. In the Active segment, revenues of $942.1 million declined 12% year over year on a reported basis and 11% on a constant-currency basis. Revenues in the Work segment dropped 8% year over year on both reported and constant-currency basis to $175 million.
Our model predicted first-quarter fiscal 2025 revenues to decline 4%, 15% and 6% year over year, respectively, for the Outdoor, Active and Work segments. In constant-currency, revenues were expected to be down 5%, 16% and 7%, respectively, for the Outdoor, Active and Work segments.
V.F. Corporation Price, Consensus and EPS Surprise
V.F. Corporation price-consensus-eps-surprise-chart | V.F. Corporation Quote
Financial Details
V.F. Corp ended first-quarter fiscal 2025 with cash and cash equivalents of $637.4 million, long-term debt of $3.9 billion, and shareholders’ equity of $1.4 billion. Inventories declined 24.3% year over year in first-quarter fiscal 2025.
In first-quarter fiscal 2025, VFC generated cash from operating activities of $19.8 million. It returned $35 million to shareholders through dividend payouts in the fiscal first quarter. The company declared a quarterly cash dividend of 9 cents per share, payable Sep 18, 2024, to shareholders of record as of Sep 10.
Other Updates
V.F. Corp remains on track with its Reinvent transformation program focused on brand-building and improved operating performance. The key points include improving North America results, delivering the Vans turnaround, lowering costs and reinforcing the balance sheet. The company continues pursuing opportunities to streamline its processes and invest in the business to drive brand demand and boost growth.
Concerning the Reinvent targets, VFC initiated an in-depth strategic review of the brand assets within the portfolio to ensure it owns the brands that create the greatest long-term value.
In first-quarter fiscal 2024, the company generated cost savings of $50 million through the Reinvent program. V.F. Corp targets generating about $300 million in cost savings from the program in the first half of fiscal 2025. These savings will be fully reflected in the company’s profit and loss statement in fiscal 2025.
Outlook
For second-quarter fiscal 2025, management expects the revenue trend to show a modest improvement from the fiscal first quarter. While the company still expects to report a year-over-year revenue decline in the fiscal second quarter, it expects the decline rate to moderate from the decline reported in the first quarter.
V.F. Corp anticipates the revenue growth rate for the Vans brand to improve modestly on a sequential basis, continuing the trend witnessed in the fiscal first quarter. For the North Face, the company expects to report a slight sequential decline in the revenue growth rate from that recorded in the fiscal first quarter. Notably, VFC reported 17% growth year-over-year in the second quarter of fiscal 2023.
The company anticipates the gross margin to increase slightly year over year in the fiscal second quarter. It expects SG&A expenses to be up slightly year over year in the fiscal second quarter, led by increased spending for the holiday season and reinvestments in its business, offset by Reinvent savings, and normalized incentive compensation and inflation.
For fiscal 2025, V.F. Corp reiterated its free cash flow guidance of $600 million, including proceeds from non-core physical asset sale. The company expects the Supreme divestiture to be completed by the end of the calendar year 2024.
Eye These Solid Picks
Some better-ranked companies are Wolverine World Wide (WWW - Free Report) , Kontoor Brands (KTB - Free Report) and Skechers (SKX - Free Report) .
Wolverine is engaged in the designing, manufacturing and distribution of a wide variety of casual and active apparel and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WWW’s current financial-year earnings of 82 cents per share indicates a substantial increase from the 5 cents reported in the year-ago period. Wolverine has a trailing four-quarter negative earnings surprise of 6.3%, on average.
Kontoor Brands, an apparel company, carries a Zacks Rank #2 (Buy) at present. KTB has a trailing four-quarter earnings surprise of 12.3%, on average.
The Zacks Consensus Estimate for Kontoor Brands’ current financial-year sales and earnings indicates growth of 0.1% and 12.7%, respectively, from the year-ago reported figures.
Skechers designs, develops, markets and distributes footwear for men, women and children in the United States and overseas. The company has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Skechers’ current financial-year sales and EPS indicates growth of 11.8% and 19.2%, respectively, from the year-ago actuals. SKX has a trailing four-quarter earnings surprise of 11.2%, on average.