VF Corp. has downgraded its outlook for fiscal year 2023, but is outlining a long-term plan to grow its business by 2027.
The maker of brands such as Vans, The North Face and Timberland said on Wednesday in advance of its investor day that it expects to see a compounded annual growth rate for revenue over the next five years up in the mid to high single digits. By fiscal year 2027, the company expects to see an operating margin of about 15% and earnings per share growth of high single to low double-digits.
Between fiscal years 2023 and 2027, VF plans to return about $7 billion in cash to shareholders through dividends and share repurchases.
However, for the fiscal year 2023, VF lowered its outlook and expects revenue to be up between 5% and 6%, down from its previous outlook of at least 7%. Adjusted EPS is expected to be between $2.60 and $2.70, down from a previous outlook of between $3.05 and $3.15.
According to a release, the downgraded full-year outlook comes after lower-than-expected results for the second quarter of fiscal year 2023, general uncertainty and a weaker than expected back to school season for Vans, which led to more promotional environment in North America.
VF Corp. shares slid less than 1% after markets opened on Wednesday, following the announcement
VF chairman, president and CEO Steve Rendle said in a statement that the economic environment has shifted since the company’s last investor day in 2019. However, he said that VF has managed to overcome “significant disruptions” over the last three years “to become a more agile and focused enterprise that is advancing a clear vision to be the world’s most dynamic portfolio of iconic, deeply loved, active-lifestyle brands.”
The long-term growth plan hinges on innovating within an existing brand portfolio, building and developing new brands, leveraging a DTC focused supply chain, and becoming a more agile organization.
“Our new five-year growth plan demonstrates how we will leverage VF’s proven strengths and distinct model to deliver superior returns to shareholders over the long term,” said Rendle.
VF Corp. reported a net loss of $56 million in the first quarter of 2023 in July amid a softer consumer environment and inflationary pressures. The company posted revenue of $2.3 billion in the period, marking a 3% increase and said it was impacted by a decline in the APAC region primarily due to COVID lockdowns in China. The North Face was the company’s top performing label in the quarter, increasing 31% in the quarter to $481.1 million. Timberland was up 8% to $269.5 million in the quarter.
Rendle said Q1’s results were due to the softer consumer environment and inflationary pressures.