VF Shares Tank As Q4 Results Miss the Mark; Company Announces Plans to Sell Nautica

VF Corp. shares are in the red today — down more than 8 percent to $76.82 as of 10:45 a.m. ET — after the firm released fourth-quarter earnings results that slightly missed expectations.

The parent company of Timberland, Vans, The North Face and other popular labels also announced today plans to divest the Nautica brand, which it has held in its stable since 2003.

“While we do not yet have a definitive agreement, we are actively engaged with several parties, and we’ll update you as conditions warrant,” VF chairman and CEO Steve Rendle told investors during a conference call this morning. “I’d like to thank the Nautica employees for their hard work and dedication as we proceed through this process, and I’m eager for the Nautica organization to move into its next phase of growth and success.”

Overall, the company posted Q4 revenues of $3.6 billion, including a $247 million contribution from the Williamson-Dickie acquisition in October 2017. While it was a 20 percent gain over the comparable period, VF’s revenues missed forecasts calling for sales of $3.7 billion.

The firm saw a loss from continuing operations of $73 million, or 18 cents per share, during the quarter. On an adjusted basis, net income increased 13 percent year-over-year to $1.01 per diluted share but was just below Wall Street’s bet of $1.02 per diluted share.

“VF’s fourth-quarter results were stronger than we expected as growth continues to accelerate across core dimensions of our portfolio,” Rendle said. “We delivered a top-quartile total return for shareholders in 2017, and our strong performance provided us with the capacity to reinvest about $100 million back into our business.”

By brand, Rendle told investors that 2017 was “a remarkable year for our largest and fastest-growing brand.”

“Revenue for the fourth quarter increased 35 percent, with strength across all regions, channels and product franchises,” he added, noting that the largest growth came in the Americas, where sales gained 38 percent.

Global revenues at The North Face and Timberland were up 6 percent and 8 percent, respectively.

Overall, VF’s 2017 revenues increased 7 percent to $11.8 billion. Earnings per share on a reported basis declined 30 percent to $1.79, including a $1.15 negative impact from recent U.S. tax legislation. Adjusted earnings per share increased 4 percent to $2.98, including a 4-cent contribution from the Williamson-Dickie acquisition.

As previously disclosed, VF’s board of directors authorized a change in the company’s fiscal year-end to the Saturday closest to March 31, from the Saturday closest to Dec. 31. This change will be effective March 31. VF will report results for the transition quarter ending March 31. The first 12-month fiscal year (fiscal 2019) will run from April 1, 2018, through March 30, 2019.

For the transition quarter, VF predicts revenue of $2.9 billion, up 16 percent, including about a $200 million contribution from the Williamson-Dickie acquisition.

Adjusted earnings per share are expected at 65 cents per share, up 27 percent, including about 2 cents from the Williamson-Dickie acquisition.

As it seeks to clean up its portfolio and drive growth at its better-performing divisions, VF Corp. last year also shed its Licensed Sports Group business, including the Majestic brand, and in August 2016, the company dropped its Contemporary Brands businesses, which included the 7 for All Mankind, Splendid and Ella Moss brands.

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