What happened

Shareholders of VF Corp (NYSE:VFC) stock are having a very bad day.

The apparel company behind such iconic brands as Vans shoes, Timberland boots, and North Face jackets announced its fiscal third-quarter 2020 earnings this morning. Sales of $3.4 billion narrowly missed analyst expectations of $3.43 billion in sales, while "adjusted" earnings of $1.23 per share edged out analyst predictions of only $1.21. Now, VF stock is down an even 10% as of 1:30 p.m. EST.

Why?

Cartoon characters seem upset by a falling stock chart.

Image source: Getty Images.

So what

Despite "missing estimates," VF Corp's sales were still up 5% year over year, led by Vans sales up 12% and, especially, revenue coming out of China up 30%. On the other hand, its "outdoor" segment sales rose only 3% year over year.  

Improvements in operating profit margins helped lift operating profits 11%. Rising expenses, however, dragged the company's net profit back down, with the result that GAAP net income did not rise at all for VF -- it earned $1.16 per diluted share a year ago, and $1.16 per share again in Q3 2020.

Now what

That lack of earnings growth, however, doesn't appear to be the primary factor spooking investors today. Rather, investor fears are focusing on guidance for the remainder of fiscal year 2020.

To wit, management warned that although its sales are expected to continue rising at a 5% rate for the full year, and earnings from continuing operations are still expected to grow even more strongly (up 15%), the end result will be only $3.30 per share in profit. That sounds good at first, but because VF had previously predicted that its earnings would range from $3.32 per share to $3.37 per share (16% to 18% growth), investors are interpreting the new guidance as a warning of an impending earnings "miss" in the fourth quarter. Taken in conjunction with today's miss, that would be back-to-back disappointments -- pretty bad news.

It looks like today, investors aren't interested in sticking around to see if the news ends up being as bad as that sounds.