For the third quarter, VF Corporation revenues were down 3 percent on current exchange and up 3 percent in constant dollars to 3.5 billion dollars.
The company’s earnings per share (EPS) were down 1 percent to 1.31 dollars, while adjusted EPS declined 17 percent to 1.12 dollars.
Commenting on the third quarter trading, Benno Dorer, VF’s interim president and CEO, said: “We are pleased to reaffirm the recently communicated full year 2023 EPS outlook with revenue growth at approximately 3 percent, after navigating an increasingly challenging fiscal Q3.”
Operating highlights of VF’s Q3 results
VF said, sales in the EMEA region were down 2 percent and up 10 percent in constant dollars, the seventh consecutive quarter of double-digit growth in constant dollars.
The Asia Pacific region was down 7 percent and up 4 percent in constant dollars, reflecting a sequential improvement across the region and in Greater China, where sales were down 11 percent and down 1 percent in constant dollars, and continued strong growth in the rest of Asia.
The company’s outdoor brands, led by The North Face were up 7 percent and up 13 percent in constant dollars, with Timberland flat and up 6 percent in constant dollars. Vans was down 13 percent and down 9 percent in constant dollars, reflecting positive performances in Europe and Asia outside of Greater China, while the Americas remained negative.
VF reaffirms FY23 outlook
For the fiscal year 2023, the company expects total VF revenue up approximately 3 percent in constant dollars, within the previous outlook range.
Vans revenue is expected to decline by high single digits percent in constant dollars, compared to the previous outlook of down mid-single digits percent. The North Face is expected to be up by at least 14 percent in constant dollars, compared to the previous outlook of up at least 12 percent.
Adjusted gross margin is expected to be down approximately 200 basis points, compared to the previous outlook of down 100 to 150 basis points. Adjusted operating margin of approximately 9.5 percent, compared to the previous outlook of approximately 11 percent.
The company forecasts adjusted EPS in the range of 2.05 dollars to 2.15 dollars, within the previous outlook of 2 dollars to 2.20 dollars. For FY24, total VF revenue is expected to be up by at least low-single digit percent in constant dollars, gross and operating margin expansion and operating earnings to grow by double-digits.
VF initiates measures to accelerate growth
VF added that the company's capital deployment priorities in the near to medium term are focused on optimising and driving the performance of the portfolio, reducing leverage and returning capital to shareholders. VF is also evaluating and deploying a series of strategic actions to strengthen the company's financial position and sharpen focus on its greatest value creation opportunities.
The action plan includes rightsizing the dividend payout to accelerate the return to the company's target leverage ratio and provide additional financial flexibility, positioning VF to navigate the current macro-economic challenges while continuing to make investments to advance its strategy. As a result, VF's next quarterly per share payment will reduce to 30 cents from 51 cents per share.
The company is commencing a review of strategic alternatives for its Global Packs business, consisting of the Kipling, Eastpak, and JanSport brands. The company plans to conclude a number of asset sales during the second half of FY23, including the sale and leaseback of VF's European headquarters in Stabio, Switzerland.
“I am confident the actions we are taking will lead to improved operating performance and will strengthen the company's financial position, enabling VF to deliver long-term, sustainable and profitable growth,” added Matt Puckett, VF CFO.