VF Corp., the company known for selling popular brands such as North Face and Vans, is undergoing a thorough evaluation of its brand portfolio in light of disappointing quarterly results. The company's stock experienced a significant drop following this announcement.
VF Corp. is initiating what it refers to as a "strategic review" of its brand lineup as part of its efforts to turn the business around. In addition, Chief Financial Officer Matt Puckett will be stepping down later this year.
During the company's recent earnings call, CEO Bracken Darrell expressed the need to objectively assess which brands align with their goals and which ones do not. The aim is to reshape the business to maximize opportunities for both short-term and long-term profitability and value creation.
Earlier this year, activist investor Engaged Capital suggested that VF Corp. seek the assistance of advisors to conduct a comprehensive review of its noncore assets.
As a result of these developments, VF Corp.'s stock dropped by 10% to $15.32. This decline made it the worst performer in the S&P 500 on Wednesday, despite the index experiencing a slight gain of 0.4%.
For the fiscal third quarter, which encompasses the crucial holiday season, VF Corp. reported earnings of 57 cents per share. This fell short of analyst expectations of 77 cents per share and marked a significant decrease from last year's $1.12 per share. Quarterly revenue also declined by 16% to $2.96 billion, missing the consensus estimate of $3.24 billion.
All of VF Corp.'s brands experienced sales declines during the quarter, including Vans, The North Face, Timberland, and Dickies. The unseasonably warm weather negatively impacted sales for The North Face and Timberland in particular.
In response to these developments, Goldman Sachs Analyst Brooke Roach downgraded VF Corp.'s shares from Buy to Neutral, while also lowering the price target from $19 to $14. Roach predicted lower margins and net profit delivery due to an anticipated slower path to stabilization and recovery.
Wedbush Analyst Tom Nikic maintained a Neutral rating on the stock but reduced the price target to $15.50 from $16.50. He described VF Corp. as a highly challenged business in his research note.