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Why VF Corporation Stock Lost 17% Last Month

By Jeremy Bowman – Updated Feb 6, 2020 at 11:20AM

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Shares of the apparel brand owner fell on a disappointing earnings report.

What happened

Shares of VF Corporation (VFC -5.35%) were slipping last month after the diversified apparel company posted disappointing results in its third-quarter earnings report and offered weak guidance. According to data from S&P Global Market Intelligence, the stock fell 17%.

As you can see from the chart below, nearly all of those losses came after the company reported earnings on Jan. 23.

VFC Chart

VFC data by YCharts.

So what

VF, which owns a number of popular brands including Vans, Timberland, and The North Face, said that total revenue in the quarter rose 5% to $3.38 billion, or 7% in constant currency and excluding the Occupational Work business, which VF announced two days earlier it plans to sell. That result missed analyst estimates at $3.43 billion. 

A Vans ad with three pairs of black Vans shoes

An ad for Vans shoes. Image source: Getty Images.

Performance was particularly weak at Timberland, where sales fell 5% globally. Vans, on the other hand, continued to deliver strong results with revenue up 12% in the quarter, though that was its slowest growth rate in two years. 

On the bottom line, adjusted earnings per share rose from $1.09 to $1.23, beating expectations at $1.21.

CEO Steve Rendle said: "Our third-quarter performance was strong, and our year-to-date results are at the high end of our long-term growth objectives. Despite a mixed holiday season in the U.S., we're on track to deliver solid performance and are well positioned for continued growth and value creation in fiscal year 2021."

Now what

What seemed to throw investors off most was the company's guidance. Management trimmed its full-year revenue forecast from $11.8 billion to $11.75 billion, representing 5% growth, or 7% excluding currency, divestitures, and acquisitions. It also lowered its adjusted EPS guidance to $3.30, from a range of $3.32 to $3.37.

A warm winter may be hurting its outdoor segment, which includes North Face and Timberland, so some of those headwinds will be temporary. VF Corporation has long been one of the best operators among apparel stocks, and it's clear that some of its brands, like Vans, are still gaining market share. Keep an eye on the prospective sale of its noncore Occupational Work brands, since that could help free up cash to invest in areas like Timberland.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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V.F. Corporation Stock Quote
V.F. Corporation
VFC
$33.20 (-5.35%) $-1.88

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