VF Returns to Profitability, Ventures Projections

VF Corp’s crystal ball has cleared enough for the fashion giant to peer a little further into the future — with some big caveats. 

While the company, home to The North Face, Vans, Timberland and Dickies, posted a return to profitability in the second-quarter and smaller sales declines, it also made some projections for the full year. 

Assuming “no material deterioration to the company’s current business operations as a result of COVID-19, governmental actions and regulations” VF said revenues would tally at least $9 billion this fiscal year.  That would be a 14 percent drop, on an adjusted basis, with a return to growth in the fourth quarter (suggesting continued sales declines during the holiday selling season). Adjusted earnings per share would be at least $1.20, down about 55 percent from a year earlier. 

Not a banner year for sure, but even the projection still marks an accomplishment in a time when sheer survival counts as success.

VF has also had the financial wherewithal to raise its quarterly dividend 2 percent to 49 cents a share.

“Our year-to-date results have surpassed our internal expectations across all brands, driven by digital and China, two of our key growth pillars,” said Steve Rendle, VF’s chairman, president and chief executive officer. “We are beginning to see signs of stabilization and strength across all aspects of our business, supporting our decision to raise the dividend and provide a financial outlook for the balance of the year. Although uncertainties remain, investments in our digital transformation are resulting in near-term momentum and improved capabilities to emerge in an even stronger position.”

To get there, the company is still wading through an extremely tough market, but is back making money again after first-quarter losses. 

VF’s second-quarter net earnings fell to $256.7 million, or 66 cents a share, from $649 million, or $1.63, a year earlier. 

Revenues for the three months ended September 26 decreased 18 percent to $2.6 billion from $3.2 billion. By brand, the results were mixed, with The North Face sales down 25 percent, Timberland off 24 percent, Vans down 10 percent and Dickies running countertrend and gaining 19 percent.

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