VF cuts full-year forecasts on poor sales and demand for Timberland and Vans
The weak performance comes as the company has been spending heavily on marketing, launching new products and improving its online presence
Bengaluru — VF Corporation cut its full-year revenue and profit forecasts on Thursday after missing quarterly sales estimates, hit by waning demand for its Timberland clothing and slowing growth at footwear manufacturer Vans, sending its shares down about 8%.
The weak performance comes as the 120-year-old company has been spending heavily on marketing, launching new products and improving its online presence to fend off larger rivals Nike and Under Armour.
Vans, the company’s biggest brand, posted its slowest revenue growth in two years at 12% in the third quarter, amid new launches that included a sneaker line inspired by skateboarder Anthony van Engelen.
The outdoor segment, which includes Timberland and The North Face brands, reported revenue of $1.66bn, missing the average analyst estimate of $1.7bn.
Timberland, a brand VF calls one of its “top four”, was particularly hit, falling 5% globally due to weakness in online sales, leading the company to cut its full-year revenue forecast for the business. Sales fell in the Americas, and Europe and Middle East, while they were flat in the Asia-Pacific region.
VF now expects full-revenue at the brand to decline 1% to 2%, compared with a 1% to 2% rise expected earlier. Revenue growth in The North Face brand nearly halved from a year earlier.
An uptick in promotional activity, starting pretty early and specifically with our cold-weather brands, hit North Face and Timberland, CFO Scott Roe said on a post-earnings call.
The company estimated annual revenue of $11.75bn, compared with its prior forecast of $11.8bn. It projected adjusted profit per share to be about $3.30, lower than its prior range of $3.32 to $3.37.
Wedbush analyst Christopher Svezia called the lowered outlook a rarity for the company over the past several years.
VF, which spun off its jeans business as Kontoor Brands in May, is pushing ahead with divesting its non-core brands. On Tuesday, the company announced a review for nine workwear brands, including Red Kap and Bulwark.
Net revenue rose 4.6% to $3.38bn in the three months ended December 28, but fell short of the average analyst estimate of $3.43bn, according to IBES data from Refinitiv.
Excluding items, the company earned $1.23 per share, beating estimates of $1.21.