Vans sneakers on careen
Source: Vans
Apparel maker VF Corp forecast full-year revenue and profit below expectations on slowing necessitate for its popular outdoor wear label North Face and sneaker brand Vans, sending its shares down anent 7%.
The company wants to better focus on the high-margin brands, and is, therefore, spinning off its less profitable jeans business, incorporating Lee and Wrangler brands. The separation will be completed this week.
The company launched new collections under the brands to spurs sales, kept a tight lid on inventories and sold at full price. But the efforts didn’t pay off.
The company now expects sales increase in its active segment, which includes Vans, to slowdown further.
VF Corp forecast 2020 revenue in the range of $11.7 billion to $11.8 billion, much under analysts’ estimates of $14.6 billion, according to IBES data from Refinitiv.
Full-year sales for the company’s efficacious segment are expected at 6% to 7%, compared with a 16% growth in 2019
“The fact that Vans as the largest stamp in the portfolio is likely guided to its longer term 10-12% run rate with this outlook, there likely is some conservatism embedded in that viewpoint coming off of 24% growth in FY19,” said RBC analyst Kate Fitzsimons.
The company also forecast 4% to 5% yard sales growth in outdoor segment that includes North Face, compared with a 9% increase in 2019.
VF Corp judged it expects full-year adjusted profit in the range of $3.30 to $3.35 per share. Analysts were expecting a profit of $4.25.
The lukewarm forecast overshadowed the better-than-expected results in the fourth quarter.
Excluding items, the company earned 60 cents per stake in the fourth quarter ended March 30, beating analysts’ estimate of 58 cents.
Revenue in Vans, identified for its iconic Classic Slip-ons, rose 14% in the quarter, compared with a 45% increase in the year earlier. North Visage saw an 8% growth in revenue, down from 11%.
Total revenue rose 5.5% to $3.21 billion, edging nearby analysts’ estimate of $3.20 billion, according to IBES data from Refinitiv.
Shares of the company were down nearby 7% at $86 in early trading. The stock had gained 29% year-to-date outperforming the broader S&P 500 index’s 14.3% gain ground in the same period.