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What To Expect When VF Corp. Reports Q1

Greensboro, N.C.-based brand management firm VF Corp. is scheduled to report first-quarter earnings Friday.

Q1 consensus estimates peg the company’s earnings per share at 58 cents and its revenues at $2.83 billion, with earnings expected to decline and revenues expected to remain flat year-over-year.

By and large, analysts who remain upbeat on the firm, with popular brands such as Timberland, Vans and The North Face on its roster, say VF Corp. is a true 2016 back-half story.

For now, UBS Investment Bank analyst Michael Binetti said he sees limited upside for the company’s Q1 figures as sluggishness across the industry combined with brand-specific hurdles weigh on revenues.

“First-half seasonal revenue drivers like Vans slowed in Q1 … amid tough compares lapping a 1Q15 Disney tie-in and accelerating share gains from large casual athletic competitors like Adidas,” Binetti wrote today. “Further, early reporters [Nike, Under Armour, Hanes Brands] are all pointing to inventory clearing extending into Q2 — we expect the same for VF Corp.”

Binetti predicts Q1 earnings a penny higher than consensus, at 59 cents, and a sales decline of 0.6 percent. The analyst noted that he is looking for stronger trends for the company in the back half.

“We believe news that VF Corp. is seeking strategic options for Licensed Sports Group [announced in March] is likely the first move in a larger portfolio transformation — with the goal of establishing a multi-faceted toolkit to help reiterate VF Corp’s prior algorithm for 8 percent organic revenue growth and 13 percent EPS growth,” UBS Investment Bank analyst Michael Binetti wrote today.

Similarly, maintaining a buy rating on the stock, Canaccord Genuity Inc. analyst Camilo Lyon said tough compares and weather woes may be a drag on Q1’s figures, but the firm is positioning for a solid second half.

“We see Q1 as an in-line quarter with the potential for a modest beat (we are modeling EPS of 59 cents versus consensus at 58 cents),” Lyon wrote on April 27. “Once past Q1, we expect sales to turn positive in Q2 and accelerate thereafter as the key brands/coalitions remain strong and well positioned for growth in 2016.”

Citi Research analyst Kate McShane, who said she will be looking for an update on the company’s M&A strategy on Friday, expects Q1 EPS of 57 cents and year-over-year revenue declines of 0.8 percent.

When VF Corp. last reported, in February, 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.

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