VF Corp Reports Smaller-than-Expected Drop in Q1 Revenue

VF Corp reported a smaller-than-expected drop in first-quarter revenue on Tuesday, helped by improvement in its China business and leaner inventory levels. This sent its stakes up about 7% in extended trading.

Impact of Political Unrest:

Along with several global apparel retailers such as H&M and Zara, VF Corp has been facing some disruptions due to political unrest in Bangladesh. About 15% of its production comes out of the country, a company executive said in an earnings call.

Sales in the company’s Greater China business were up 4% on a constant currency basis, as the company benefited from a better product assortment and newer styles.

Leadership Changes and Strategic Moves:

Since he took the helm in June 2023, VF CEO Bracken Darrell has made big changes to the leadership team and sold the streetwear brand Supreme as he works on a plan to turn the business around.

The company reported a 21% fall in sales for its Vans brands, while The North Face saw a 2% decline in the quarter ended June 29.

As noted by Guggenheim analysts, the addition of executives such as Sun Choe as global brand president for Vans and Caroline Brown as global brand president of The North Face is seen to have boosted VF Corp’s strategic and business transformation.

Gross Margins and Inventory Levels:

According to LSEG data, VF Corp’s revenue fell 8.6% to $1.91 billion from a year ago, compared with analysts’ estimate of an 11.5% drop to $1.85 billion. VF Corp posted an adjusted loss of 33 cents per share, compared with analysts’ estimated loss of 37 cents per share.

The company’s quarterly gross margins were down 80 basis points to 52% after declining 52.8% a year ago. Its inventories in the first quarter were down 24% compared with the previous year.