Please ensure Javascript is enabled for purposes of website accessibility

Why VF Corporation Stock Lost 17% Last Month

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.