VF Corp.’s Stock Dips On Disappointing Q4 Results

Timberland's football leather boot
Timberland's football-leather boot.
Courtesy of brand.

A changing consumer landscape and currency pressures took a toll on VF Corp.’s earnings in the fourth quarter, the company said Friday. After dipping more than 9 percent in early morning trading, the firm’s stock remained in the red at press time.

In Q4, ended Jan. 2, 2016, Timberland and Vans’ parent company said its revenue declined 5 percent, to $3.41 billion, missing Wall Street’s forecast for sales of $3.64 billion. Excluding currency impacts, the company said its fourth quarter revenue improved 3 percent.

Reported net income gained 156 percent year-over-year to $312.2 million, the company said. Reported diluted earnings per share (EPS) increased 157 percent to 72 cents. On an adjusted basis, EPS totaled 95 cents, a decline from the prior year’s EPS of 98 cents and a miss on Wall Street’s estimate for EPS of $1.01.

“The final quarter of 2015 challenged many companies to leverage core strengths and adapt quickly to a changing landscape,” VF Corp. Chairman and CEO Eric Wiseman said in a release. “Our focus, discipline and agility amid a softer consumer environment, record warm weather and a strengthening U.S. dollar have us well positioned to navigate what we believe to be a relatively short-term challenge.

Wiseman added, “Our full year 2015 was also affected by many of the same challenges we saw in the fourth quarter, including a tough comparison against 2014’s 53rd week. … When normalized over 2014 and 2015, currency neutral revenue grew 7 percent and earnings grew 13 percent annually over this period, in line with our long-term earnings growth target.

For the full year, total revenue grew 1 percent to $12.4 billion (up 6 percent currency neutral); EPS was up 20 percent to $2.85; adjusted EPS was flat at $3.08 (up 12 percent currency neutral).

Looking ahead, the company expects 2016 revenue to increase at a mid single-digit percentage rate; 2016 gross margin to approximate 48.8 percent, net of an anticipated 70 basis points of negative impact from changes in foreign currency; currency neutral EPS to increase 11 percent (up 5 percent reported); and to return $1.5 billion to shareholders in 2016 through share repurchases and dividends.

We expect the retail and currency environments to remain challenging mostly in the first half as last year’s overhang works through the system before conditions normalize in our most meaningful quarters of the year,” Wiseman said during the firm’s conference call. “Throughout 2016, we will seize the opportunity to stay on the offense and we will remain focused on the things that keep us healthy in 2016 and beyond. We’re making outsized investments in product innovation to drive newness and excitement into the marketplace, we’re building even stronger relationships with our consumers, we’re strengthening our operational capabilities, and delivering appropriate financial performance while positioning VF for sustainable profitable growth over the long-term.”