Why VF Corp Stock Was Slumping Today
Shares of VF Corp (NYSE: VFC) were heading lower today as the struggling apparel company posted yet another disappointing earnings report in its fiscal fourth quarter.
As of 1:05 p.m. ET on Thursday, the stock was down 3.5% after trading as low as 11% earlier in the session.
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VF's troubles continue
Overall revenue fell 13% in the quarter to $2.4 billion, continuing a pattern of falling sales at core brands like Vans and The North Face. That was slightly below estimates at $2.41 billion.
At Vans, revenue fell 26% due in part to efforts to right-size inventories in the wholesale channel to align with demand. North Face revenue was down 5% due to ongoing wholesale weakness, though direct-to-consumer sales in the channel were up 6%.
Not surprisingly, the results were weak further down the income statement as adjusted gross margin declined 180 basis points to 48.4%, and the company reported an adjusted operating margin of negative 2.1%, down from 5.6% in the quarter a year ago. Deleveraging from declining revenue was the primary reason for the decline.
Lastly, the company reported an adjusted loss of $0.32 per share, down from a profit of $0.17 in the quarter a year ago and worse than expectations at a profit of $0.01.
CEO Bracken Darrell said: "In Q4, we made progress advancing our Reinvent transformation program. We closed the fiscal year with further inventory reductions."
What's next for VF Corp?
In its guidance for fiscal 2025, VF only called for free cash flow plus the benefit of noncore asset sales totaling $600 million, a number that is essentially meaningless as asset sales are one-time events and shouldn't be factored into free cash flow.
The data point shows that VF plans to bring in cash this year, but the lack of guidance elsewhere is a big hint that the business is still a long way away from recovery. The stock seems best avoided until the company can get back to growth.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
