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Why Is V.F. (VFC) Up 4.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for V.F. (VFC - Free Report) . Shares have added about 4.3% in that time frame, underperforming 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. Corp Q4 Earnings & Sales Beat Estimates, Fall Y/Y
V.F. Corp 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.
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.
Financial Details
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, VFC predicts revenues to decline in high-single digits, indicating a challenging U.S. wholesale environment.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -536.92% due to these changes.
VGM Scores
At this time, V.F. has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. It's no surprise V.F. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
V.F. belongs to the Zacks Textile - Apparel industry. Another stock from the same industry, Under Armour (UAA - Free Report) , has gained 4.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Under Armour reported revenues of $1.4 billion in the last reported quarter, representing a year-over-year change of +7.5%. EPS of $0.18 for the same period compares with -$0.01 a year ago.
For the current quarter, Under Armour is expected to post a loss of $0.03 per share, indicating a change of -200% from the year-ago quarter. The Zacks Consensus Estimate has changed -50% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Under Armour. Also, the stock has a VGM Score of D.
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Why Is V.F. (VFC) Up 4.3% Since Last Earnings Report?
It has been about a month since the last earnings report for V.F. (VFC - Free Report) . Shares have added about 4.3% in that time frame, underperforming 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. Corp Q4 Earnings & Sales Beat Estimates, Fall Y/Y
V.F. Corp 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.
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.
Financial Details
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, VFC predicts revenues to decline in high-single digits, indicating a challenging U.S. wholesale environment.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -536.92% due to these changes.
VGM Scores
At this time, V.F. has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. It's no surprise V.F. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
V.F. belongs to the Zacks Textile - Apparel industry. Another stock from the same industry, Under Armour (UAA - Free Report) , has gained 4.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Under Armour reported revenues of $1.4 billion in the last reported quarter, representing a year-over-year change of +7.5%. EPS of $0.18 for the same period compares with -$0.01 a year ago.
For the current quarter, Under Armour is expected to post a loss of $0.03 per share, indicating a change of -200% from the year-ago quarter. The Zacks Consensus Estimate has changed -50% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Under Armour. Also, the stock has a VGM Score of D.