V.F. Corporation ( VFC Quick Quote VFC - Free Report) reported fourth-quarter fiscal 2023 results, with the top and bottom lines surpassing the Zacks Consensus Estimate. However, both metrics declined year over year. Despite the challenging operating environment, results gained from broad-based momentum across the company’s brands, strength in International business and positive momentum in Greater China. Shares of VFC fell 3% during the trading session of May 23. This Zacks Rank #4 (Sell) stock has lost 44.8% in the past six months compared with the industry’s decline of 9.6%. Image Source: Zacks Investment Research Q4 Highlights
V.F. Corp’s adjusted earnings per share of 17 cents declined 62% year over year but beat the Zacks Consensus Estimate of 13 cents. On a constant-currency (cc) basis, adjusted earnings per share were down 55%.
Net revenues of $2,739.6 million fell 3% year over year but beat the Zacks Consensus Estimate of $2,734 million. At cc, revenues were flat. The top line was hurt by sluggishness in the Americas region on account of a tough wholesale environment, which was partially offset by growth in the EMEA and APAC regions. Revenues in the Americas declined 7% year over year on a reported basis and at cc. In the EMEA region, revenues rose 2% (up 8% at cc). Revenues in both the APAC and Greater China regions increased by 3% on a reported basis (up 10% at cc). The company’s international revenues were up 2% year over year on a reported basis (up 8% at cc). Channel-wise, wholesale and direct-to-consumer revenues were down 5% and 1% year over year on a reported basis, respectively. At cc, wholesale revenues fell 2%, while the same for direct-to-consumer channel increased 3%. Meanwhile, the digital channel witnessed a revenue decline of 4% on a reported basis and came in flat on a cc basis. Adjusted gross margin contracted 260 basis points (bps) to 49.6% due to elevated promotional activity and higher product costs. Adjusted operating income decreased 32% year over year to $152 million on a reported basis, down 25% at cc. The adjusted operating margin contracted 230 bps to 5.6%. For fiscal 2023, the company’s adjusted earnings came in at $2.10 on a reported basis, down 34% year over year. Revenues decreased 2% year over year on a reported basis to $11,612.5 million. Segmental Details
Revenues in the Outdoor segment rose 4% to $1,320.5 million (up 7% at cc). The Active segment reported revenues of $1,131.9 million, down 11% year over year on a reported basis and 9% at cc. Revenues in the Work segment grew 5% year over year (up 7% at cc) to $287.2 million.
V.F. Corp ended the fiscal fourth quarter with cash and cash equivalents of $814.9 million, long-term debt of $5,711 million and shareholders’ equity of $2,910.7 million. Inventories were up 61.5% year over year, amounting to $2,292.8 million.
For fiscal 2023, the company used an operating cash flow of $655.8 million. It returned $117 million to shareholders through dividend payouts in the fiscal fourth quarter and $703 million in fiscal 2023. The company declared a quarterly cash dividend of 30 cents per share, to be paid out on Jun 20, 2023, to shareholders of record as of Jun 12. Other Updates
V.F. Corp. continues to adjust its business operations per the government guidelines associated with COVID-19. Most of its supply chain is operational at present. Its distribution centers have been operating per government guidelines to maintain safety and health protocols.
The company’s supply chain performance improved, driven by better execution, with increased on-time performance and a reduction in inventory of $299 million during the fiscal fourth quarter. Outlook
For fiscal 2024, it anticipates revenues to be flat to up marginally at cc. Gross margin is predicted to expand by at least 100 bps, while operating margin is also likely to increase year over year.
The bottom line is envisioned to be $2.05-$2.25. It anticipates free cash flow to be about $900 million. For first-quarter fiscal 2024, VCF predicts revenues to decline in high-single digits, indicating a challenging U.S. wholesale environment. 3 Key Picks
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