VF Corporation cut its earnings forecast and full-year profit outlook for the remainder of the year, citing a decrease in consumer demand, and also announced the departure of its CEO Steve Rendle.
BRIAN SOZZI: Welcome back. As we approach the opening bell on this Monday morning, we are also watching a few hot tickers on Yahoo Finance. First up, shares of VF Corp in focus after the North Face and Timberland maker slashed its profit outlook for the remainder of the year, citing weaker consumer demand across all brands. The company also announced the retirement of CEO Steven Rendle and as named Lead Independent Director Benno Dorer as interim president and CEO.
We'll get to the outlook in a second, but look. Benno, he was the longtime CEO of Clorox, one of my favorite CEOs. I've always appreciated his focus on, I think, the numbers of the company, product innovation. This might be the right guy at the right time just to get VF Corp, I think, going back on the right tracks, getting some margin improvement.
I think Benno's gonna spend his first few months digging into the business, even more and plotting out the strategy for next year. Now, to that point, Steve Rendle, he was the one that spent a couple billion dollars to buy Supreme, very strong brand to bring into that portfolio. He has done top work.
But, again, the holiday season, at least for VF Corp, looks to have started below expectations-- never a good thing when you-- this is only, what? Early December? And you're already dropping your guidance as a retailer.
JULIE HYMAN: Yeah. I mean, the market doesn't seem to think that the new CEO is great.
BRIAN SOZZI: Well, this is about the warning. I mean, they significantly--
JULIE HYMAN: Of course it is.
BRIAN SOZZI: --cut the outlook.
JULIE HYMAN: Yes, yes. But you would think-- it is, but you would think it would be mitigated to some extent by-- no?
BRIAN SOZZI: No, the outlook is-- they cut it big-time. And the read here is, at least, in my humble view, that they're gonna enter the first quarter of next year with a lot of excess inventory. They're gonna have to discount.
And you're not looking at VF Corp, really, with a clean balance sheet into maybe spring, summer of next year. I mean, when you miss by $0.20, $0.30 on your guidance, I mean, that is a lot of stuff in the stores right now that's just in, so.
BRAD SMITH: Yeah, they said the promotional environment specifically here, and we've heard continuously about the promotional environment from some retail companies over the course of this earnings season. And some of them, within their own outlooks, have had to acknowledge how long of a tail that may have in terms of their own financial statements. And so with that, they said promotional environment, primarily in North America, and some of the lower volumes are expected to impact profitability in the near term.
BRIAN SOZZI: And keep in mind, this is not just a VF thing. You're probably thinking, well, how is Ralph Lauren's holiday season, their key vendor into many stores? How is PVH doing? How is Tapestry doing? How are all these vendors into department stores doing in this promotional environment like you mentioned, Brad?
BRAD SMITH: Yeah, walk into Macy's and just look at all the deals that are taking place right now and, of course, in a highly promotional season, but a question of how much of that churn through inventory will also permeate over into next year, too.