VF Corp’s sales growth comes in under expectations
Vans parent company VF Corporation announced a 5% increase in third-quarter revenue (6% in constant currencies) on Thursday, falling short of analysts’ expectations, despite strong growth in China and the group’s digital channel.
For the third quarter ended December 28, 2019, the Denver, Colorado-based company, which also owns the Timberland and The North Face brands, among others, reported revenues of $3.38 billion, up from $3.23 billion in the prior year period.
FactSet analysts cited by MarketWatch had expected VF’s quarterly revenues to total $3.43 billion.
On Tuesday, VF, which spun off its denim business as a separate company named Kontoor Brands in May of last year, revealed that it was exploring strategic alternatives for its occupational work business. Excluding the performance of the occupational work business, the company’s quarterly revenue increased 6%.
Elsewhere, revenues in VF’s active segment were up 8%, led by a 12% increase at the Vans brand, while the company’s outdoor segment posted a 3% rise, including an 8% increase at The North Face.
The group’s international revenues increased 8% in the quarter, with China, in particular, posting strong growth of 30%, while Europe saw a 4% rise.
Quarterly direct-to-consumer sales increased 7%, led by a 16% increase in VF’s digital channel.
Net income for the quarter totaled $465.0 million, up slightly from $463.5 million in the same period in the previous year, while diluted earnings per share increased 11% from $1.02 to $1.13.
Year to date, VF reported revenues of $9.0 billion, up 5% from $8.6 billion. Net income for the period was $1.2 billion, up 3% from $1.1 billion, while diluted earnings per share also rose 3%, from $2.82 to 2.90%.
“Our third quarter performance was strong and our year-to-date results are at the high end of our long-term growth objectives,” said VF chairman, president and CEO Steve Rendle in a release. “Despite a mixed holiday season in the US, we're on track to deliver solid performance and are well positioned for continued growth and value creation in fiscal year 2021.”
Nonetheless, in line with its third-quarter results, VF also announced that it was revising down its full-year guidance. The company now expects its annual revenue to total around $11.75 billion, up 5% from the previous year, compared to a previous guidance of around $11.8 billion.
Adjusted earnings per share are now predicted to be $3.30, reflecting growth of about 15%, compared to a previous guidance of between $3.32 and $3.37.
Following the company’s announcement of its disappointing revenues and reduced annual guidance, shares in VF Corp fell 1.7% in premarket trading on Thursday.
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