VF Corp. today logged another earnings win, thanks in no small part to an ongoing hot streak at Vans.
The Greensboro, N.C.-based firm — which announced this summer its plans to move its headquarters to Denver — said its third-quarter sales advanced 15 percent to $3.9 billion, driven by a 27 percent gain at the California skate lifestyle brand. (Those results were roughly in line with market watchers’ forecasts.)
Profits, meanwhile, increased 31 percent to $507 million, or $1.26 per diluted share. On an adjusted basis, earnings were $1.43 per share, a gain of 19 percent over the comparable period and well above Wall Street’s bets of $1.33.
“Our results for the second quarter were strong, and our confidence is high as we enter the fall holiday season,” said VP and CFO Scott Roe. “We are executing well against our strategic growth plan. Momentum continues to build across our core growth engines and platforms, and our portfolio is well-positioned to deliver a sustainable long-term growth and top-quartile value creation.”
VF’s other hero brand, The North Face, also stayed steady — putting up a 5 percent sales gain during the period.
Overall, international revenue increased 13 percent, direct-to-consumer sales rose 19 percent, and digital revenues were up 48 percent.
The firm improved its outlook for the fiscal year and now expects revenue to increase “at least” 11 percent to “at least” $13.7 billion and adjusted earnings per share to gain 16 percent to $3.65.
During a call with investors today, president and CEO Steve Rendle addressed how recent geopolitical and macroeconomic events that “have caused increased volatility in the marketplace” could impact the firm in the coming months.
“As it relates to the current trade climate between the U.S. and China, we are closely monitoring the situation and are actively involved in scenario planning,” he said, adding that about 11 percent of VF’s total cost of goods sold come directly to the U.S. from China. “By leveraging our global supply chain, we have positioned ourselves to address any additional changes in the overall trade environment with China. And we have the ability to reposition our global sourcing footprint in the near to midterm to mitigate the potential negative impact of additional tariffs should they materialize.”
Rendle further noted that he anticipates minimal impact from the recently renegotiated NAFTA agreement — and the firm was “pleased with the outcome.” Similarly, VF’s chief suggested the Sears bankruptcy this week was baked into its financial targets.
“As a reminder, the 2021 financial targets we laid out at our Investor Day in Boston contemplated ongoing industry consolidation and customer bankruptcies in the U.S. market,” he explained. “So while the customer bankruptcies pressure our results in the short term, there is no impact to the long-term growth outlook for any of our brands.
At market open, VF shares had reversed pre-market gains, falling into the red 3.3 percent to $84.23.