VF Profits Miss Estimates — But Vans and The North Face Continue to Power Sales

VF Corp. shares are falling this morning after earnings missed expectations.

The Denver-based firm posted profits that were up nearly 28% to $649 million, or adjusted earnings per share of $1.26, but below consensus bets of $1.31.

Revenues, however, rose 5% to $3.4 billion — roughly in line with expectations — driven by top performers Vans and The North Face as well as VF’s direct-to-consumer and international businesses, particularly in China.

“The quality and fundamentals of our business remain solid as a result of the focus and strategic execution of our business teams around the globe,” said chairman, president and CEO Steve Rendle.

Getting a boost from the back-to-school season, revenues for Vans were up 14% for the quarter. However, the figure was down from the prior year’s 26% growth, indicating sluggish demand for the skate shoe label that time and again serves as VF’s star banner.

The North Face, on the other hand, saw sales rise 8%, with balance strength across regions and channels. In a conference call with investors, Rendle called out the launch of the brand’s Futurelight waterproof outerwear and gear as a key driver of revenues in the quarter.

“The momentum we have in our two largest brands is strong,” he said, “and as a reminder, 80% of our growth in the next five years is expected to come from Vans and The North Face.”

For the full year, VF still expects sales of around $11.8 billion and adjusted earnings per share in the range of $3.32 to $3.37. Wall Street, however, was predicting revenues of $11.9 billion and EPS of $3.39.

“Despite an increasingly uncertain geopolitical and macroeconomic environment, we are confident in the trajectory of our business as we move into the second half of our fiscal year, as reaffirmed by our outlook,” Rendle added. “We remain deeply committed to transforming VF into a more consumer-minded and retail-centric organization while delivering superior returns to shareholders.”

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