VF Corp. raised its adjusted earnings and revenue guidance for the full year as it looks to recover from the impact of COVID-19 disruptions on its business and capitalize on its acquisition of popular streetwear brand Supreme.
For the weeks ended Dec. 26, the apparel and footwear company posted adjusted earnings per share of 93 cents, compared with analysts’ forecasts of 90 cents per share. Revenues decreased 6% to $3 billion, meeting Wall Street’s expectations.
“Our third-quarter results were largely ahead of expectations despite the impact of additional COVID-19-related disruption to our business,” chairman, president and CEO Steve Rendle said in a statement.
Despite the earnings beat, however, as of 8:30 a.m. ET, its stock was down 7.95% to $78.36. (At 2:30 p.m. ET, VFC shares tumbled 4.8% to $80.98.)
According to the company, more than 95% of its stores in North America were open at the beginning of the third quarter, with all locations reopened by mid-October. Since then, however, additional stores were shuttered once again amid a surge in the coronavirus outbreak, and roughly 15% of outposts remained closed by the end of the quarter. (The majority of the closures were Vans stores, predominantly based in California.)
In the Europe-Middle East-Africa region, more than 60% of stores are still closed, while nearly its entire brick-and-mortar fleet in the Asia Pacific region, including Mainland China, are open.
By brand, sales at Vans fell 6%, while The North Face revenues were flat and Dickies rose 9%.
Notably, within the three-month period, VF signed a definitive agreement to acquire New York-based Supreme in a reported $2.1 billion deal. Analysts were upbeat on the move, citing the revenue potential on both sides.
For the full year, VF now expects revenues to be in the range of $9.1 billion to $9.2 billion, reflecting a 12% to 13% drop on an adjusted basis. (The updated outlook, it added, includes approximately $125 million of revenues from Supreme.) Previously, the company anticipated revenues of at least $9 billion.
It also predicted adjusted earnings per share of $1.30, or a 51% decline, versus the previous expectation of at least $1.20.
“Our portfolio remains on track to return to growth in the fiscal fourth quarter, and we are confident in VF’s plans to accelerate growth into fiscal 2022 and to continue advancing our business model transformation,” Rendle added. “We remain optimistic about the year ahead and look forward to improvements in our geopolitical, macroeconomic and pandemic-related situations.”
This story was updated to add VF Corp.’s stock movement in midday trading.