V.F. (VFC) Up 3.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for V.F. (VFC). Shares have added about 3.3% 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 its most recent earnings report in order to get a better handle on the important catalysts.
V.F. Corporation Q3 Earnings Miss Estimates
V.F. Corporation reported third-quarter fiscal 2024 earnings, wherein the top and bottom lines missed the Zacks Consensus Estimate. Both metrics also declined year over year. The quarterly results were hurt by a shift in the timing of the wholesale deliveries, mostly pronounced for The North Face and the EMEA regions.
Q3 Highlights
V.F.’s adjusted earnings of 57 cents per share plunged 49.1% year over year and missed the Zacks Consensus Estimate of 79 cents.
Net revenues of $2,960.3 million fell 16% year over year and came below the consensus estimate of $2,995 million. At constant currency (cc), revenues also dipped 17% year over year.
Revenues in the Americas declined 24% year over year on a reported basis and 25% at cc. In the EMEA region, revenues fell 7% (down 12% at cc). Revenues in the APAC region increased 2% on a reported basis (up 3% at cc). This included Greater China revenues, which were up 5% and 7% at cc. The company’s international revenues were down 5% year over year on a reported basis (down 8% at cc).
Channel-wise, wholesale and direct-to-consumer revenues were down 26% and 8%, respectively, year over year on a reported basis. Meanwhile, our model estimated wholesale revenues and direct-to-consumer revenues to decline 6% and 6.5%, respectively. At cc, wholesale revenues fell 28%. Revenues for the direct-to-consumer channel dropped 9%.
The adjusted gross margin rose 40 basis points (bps) to 55.3%. The metric reflected 175 bps of a favorable mix, partly offset by a 135 bps adverse rate impact. Operating loss was $32.2 million against an operating income of $516 million in the year-ago period.
Segmental Details
Revenues in the Outdoor segment dipped 13% to $17.4 billion (down 15% at cc) versus our estimate of 3% growth. The Active segment reported revenues of $999.4 million, down 21% year over year on a reported basis and 22% at cc. Our model predicted Active revenues to decline 19%. Revenues in the Work segment fell 17% year over year (down 18% at cc) to $222.3 million compared with our estimate of a 16% decline.
Financial Details
V.F. ended the fiscal third quarter with cash and cash equivalents of $988 million, long-term debt of $4,755.3 million and shareholders’ equity of $21.1 billion. Inventories were down 17% year over year, amounting to $21.5 billion.
In the nine months ending December 2023, the company generated cash from operating activities of $11.1 billion. It returned $35 million to shareholders through dividend payouts in the fiscal third quarter. The company declared a quarterly cash dividend of 9 cents per share, to be paid out on Mar 20, 2024, to shareholders of record as of Mar 11.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -83.24% due to these changes.
VGM Scores
At this time, V.F. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 indicates a downward shift. Notably, V.F. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
V.F. is part of the Zacks Textile - Apparel industry. Over the past month, Columbia Sportswear (COLM), a stock from the same industry, has gained 4.2%. The company reported its results for the quarter ended December 2023 more than a month ago.
Columbia Sportswear reported revenues of $1.06 billion in the last reported quarter, representing a year-over-year change of -9.4%. EPS of $1.86 for the same period compares with $2.45 a year ago.
Columbia Sportswear is expected to post earnings of $0.36 per share for the current quarter, representing a year-over-year change of -51.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Columbia Sportswear. Also, the stock has a VGM Score of B.
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V.F. Corporation (VFC) : Free Stock Analysis Report
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