Dive Brief:
- VF Corp. reported $2.4 billion in revenue for its fourth quarter, a 13% year-over-year decrease, according to a news release Wednesday.
- The North Face brand, which had been a bright spot for the company throughout its latest fiscal year, fell by 5%, which VF attributed to ongoing weakness in U.S. wholesale. Vans brand revenue fell by 26%, which the company said included the impact of “deliberate actions to further right-size inventories in the wholesale channel.” Turning around the Vans brand is part of VF’s previously announced transformation strategy, which also involves bolstering its brand-building, execution, and sales in North America.
- Also Wednesday, the apparel and footwear conglomerate named Paul Vogel its next CFO, effective July 8. He succeeds Matt Puckett, who is stepping down as the company is initiating a “strategic review of the brand assets within its portfolio.”
Dive Insight:
VF, which also owns Dickies, Timberland and Supreme, ended its fiscal year with a total revenue of $10.5 billion, down 10% year over year.
The company’s overall results were below expectations, sending shares down 12% in post market trading Wednesday, David Swartz, senior equity analyst at Morningstar Research Services, said in an analyst note.
VF didn’t set revenue expectations for the coming year. It hasn’t set revenue expectations since it withdrew its outlook in October 2023 while announcing the transformation program.
The company also didn’t announce whether it was selling one of its brands, and the lack of such an announcement was “disappointing given the pending debt maturities,” Tom Nikic of Webush said in emailed commentary.
“Overall, we see very few silver linings right now,” Nikic said.
However, in an earnings call with investors, CEO Bracken Darrell said the portfolio review was complete, and VF would provide an update “when we have more views to share.”
“The portfolio review is complete, and so we're acting,” Darrell said. “We made a decision not to share what we're acting on or what we might be doing publicly, but you can believe completely that we are acting and we have optionality there. I can't give you the timeframe when you’ll see those actions come out, but we will. Obviously, we’re going to announce them when they do. But I feel very good about where we are and very good about the review.”
Swartz said that VF’s backpack brands, including Jansport and Kipling, may be shopped around, as well as possibly Timberland and Dickies.
He noted that while media reports have speculated the Supreme brand “unexpectedly” may be on the selling block, “it remains a popular streetwear brand,” though sales growth has stalled.
“While investor confidence is low, CEO Bracken Darrell inherited a troubled company and is making changes that we regard as necessary in VF’s products, marketing, distribution, and management,” Swartz said.
By region, the Americas experienced the biggest decline in the quarter, at 22%. The EMEA and APAC regions each fell by 3%.
The company’s DTC sales fell 5%, and its wholesale revenue was down 20%.
VF closed its fiscal year with inventory down 23% year over year, which Swartz called a bright spot.
New CFO Vogel was most recently CFO of Spotify. During his tenure with the streaming giant, he “dramatically improved the financial health of the company,” per the release. While Vogel was CFO, the company’s revenue nearly doubled and its user base more than doubled, according to the release.
“We’re excited to welcome Paul to VF and look forward to his contributions to our leadership team as we reset the VF business and ignite growth across our brand portfolio,” Darrell said in the release about Vogel’s hire. “Paul’s extensive operational and financial expertise at a global, consumer-oriented company, and his deep knowledge of finance and the capital markets, will be valuable as we continue to strengthen VF’s financial positioning and drive the Company’s return to profitable growth.”
