VF Corp Q3 2024 Results & Strategic Portfolio Review

VF Corporation (NYSE: VFC) released its financial results for the third quarter of fiscal year 2024 (Q3’FY24) ending on December 30, 2023. Despite a disappointing performance in top-line revenue, the company announced a quarterly per share dividend of $0.09 and reiterated its guidance for free cash flow in FY24.

President and CEO Bracken Darrell acknowledged the challenges in the third quarter but expressed confidence in the ongoing Reinvent transformation initiative. The company is implementing strategic measures to stabilize and eventually grow revenue while enhancing operational performance across brands and regions. Early signs of success include improvements in cost structure and inventory positions, leading to stronger-than-expected cash flow and expanded gross margin in the quarter.

Key Financial and Operational Highlights for Q3’FY24:

  • Revenue decreased by 16% (17% in constant dollars) to $3.0 billion.
  • Loss per share was $(0.11) compared to Q3’FY23 earnings per share of $1.31; adjusted earnings per share were $0.57 compared to Q3’FY23 adjusted earnings per share of $1.12.
  • The North Face® experienced a 10% decline (11% in constant dollars) in the quarter, while Vans® saw a deliberate 28% decrease (29% in constant dollars) due to inventory right-sizing in the Wholesale channel.
  • Positive performance in the APAC region, with a 26% increase (28% in constant dollars), including a 31% rise (32% in constant dollars) in Greater China.
  • The Americas region and the EMEA region faced declines of 24% (25% in constant dollars) and 7% (12% in constant dollars), respectively.
  • Inventories at the end of Q3’FY24 decreased by 17% compared to the previous year.
  • Net debt at the end of Q3’FY24 was reduced by approximately $640 million compared to the prior year.

Reinvent Transformation Program:

VF Corporation is actively executing its Reinvent transformation program, focusing on brand-building and operational improvements. The initial priorities include enhancing North America results, executing the Vans turnaround, reducing costs, and strengthening the balance sheet. The company will continue simplifying processes, investing in the business, and working towards brand revitalization and growth.

Strategic Portfolio Review:

Aligned with the Reinvent goals, VF has initiated a comprehensive strategic review of its brand assets to ensure long-term value creation. The review aims to assess and optimize the brand portfolio for sustained success.

FY24 Outlook:

The company reaffirmed its free cash flow guidance for FY24, expecting approximately $600 million.

Financial Metrics for Q3’FY24:

  • Revenue: $3.0 billion (down 16%, 17% in constant dollars).
  • Gross margin: 55.1%, up 20 basis points; adjusted gross margin: 55.3%, up 40 basis points.
  • Operating margin: (1.1)%, down 1,570 basis points; adjusted operating margin: 9.3%, down 560 basis points.
  • Loss per share: $(0.11) compared to Q3’FY23 earnings per share of $1.31; adjusted earnings per share: $0.57 compared to Q3’FY23 adjusted earnings per share of $1.12.

Balance Sheet Highlights:

Inventories decreased by $333 million during Q3’FY24, down 17% compared to the previous year. Net debt at the end of Q3’FY24 reduced by approximately $640 million compared to the prior year.

Shareholder Returns:

VF returned $35 million to shareholders through cash dividends in Q3’FY24. The Board of Directors declared a quarterly dividend of $0.09 per share, payable on March 20, 2024.

Webcast Information:

VF will host its Q3’FY24 conference call at 4:30 p.m. Eastern Time today, accessible via ir.vfc.com. An archived version will be available for those unable to participate in the live broadcast.

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