North Face Parent Company Has Sad Valentine's Day

Let's pretend you're training for a marathon coming up in a month. No matter how fast or slow you're training, your friends will probably be moderately impressed that you even got out there and ran in the rain. Now, suppose you tell them that you're shooting for five minute miles and you're currently hitting the nine minute mark. Less impressed; more worried. That's the risk of putting a target out there for the world to see, and it's the risk that's coming back to bite VF Corp (NYSE: VFC  ) .

In 2013, VF said that that it was going to hit $17 billion in annual revenue in fiscal 2017. Now the market has a bar to measure success against. Today, VF released its fourth-quarter and full-year results, missing revenue and earnings estimates. So is the business still on track for 2017, or is this a sign of things to come?

Let's pretend we're married
What?  It's Valentine's Day... get in the spirit. Anyway, VF's biggest win this past quarter was a 30% increase in direct-to-customer sales of its North Face brand, driving total North Face sales more than $2 billion for the year. The laggard was in the company's denim brands, including Lee and Wrangler. North American denim sales were flat and fell in Central and South America. Overall denim revenue was flat, holding the business back just enough.

Competing denim retailers have also been weak recently. Buckle (NYSE: BKE  ) , for instance, dropped comparable sales on a year-over-year basis in December and January. As part of a broader apparel trend, new pairs of jeans are being overlooked as shoppers focus on larger investments and purchases that they've held off on. Slow income growth is taking its toll on the retail market, as reflected in the fall of American retail sales in January this year. 

This is what it sounds like when doves cry
That VF got hit by some weak sales should in no way deter the long-term investor. North Face is still running strong, and the Vans brand also showed strength in 2013, hitting more than $1.7 billion in revenue. North Face continues to be one of the few consumer apparel brands that show growing interest each quarter. VF's marketing and pricing is clearly attracting the right kind of customer.

Today's 5% hit to the stock price is merely a readjustment, not a sign of a systemic problem. VF's portfolio continues to perform well, and there's nothing coming down the pipe from competitors that's likely to change that performance this year. In a world of bad news, here's something to love.

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