What happened
Shares of VF Corporation (VFC +2.44%) were pulling back after the apparel retailer announced yet another guidance cut and said its CEO was retiring.
As of 12:26 p.m. ET, the stock was down 9.5%.
NYSE: VFC
Key Data Points
So what
For the third time since September, VF slashed its full-year earnings guidance, indicating a rapidly deteriorating macro environment.
The diversified apparel holding company, which owns brands such as Vans, Timberland, North Face, and Dickies, now expects full-year adjusted earnings per share of just $2.00-$2.20, down from its most recent forecast of $2.40-$2.50 and last year's result of $3.18. It also sees a constant currency revenue increase of 3%-4%, down from a previous range of 5%-6%.
The company cited weaker-than-expected consumer demand, primarily in North America, and noted a more promotional environment. It also said it was seeing some cancellations in the wholesale division due to excess inventory levels at its retail partners and blamed the impact of inflation on discretionary spending in Europe, as well as headwinds from COVID-19 restrictions in China.
Separately, VF said that CEO Steve Rendle was retiring, effective immediately, and Benno Dorer, a board member since 2017, will take over as interim CEO while the company searches for a full-time replacement.
Given the unplanned nature of Rendle's "retirement," it seems like the CEO was forced out due to the company's disappointing performance lately; the stock is now down 60% year to date and VF has cut its guidance several times this year.
Now what
VF maintained its fiscal 2027 guidance, which calls for operating margin of 15% and total shareholder return (inclusive of EPS growth, dividends, and repurchases) in the low double digits to low teens.
Based on that, the company seems to think the headwinds impacting it this year are just temporary. If you believe that, the stock looks reasonably priced, and it offers a dividend yield of 6.9%.
VF Corporation is a Dividend Aristocrat with a collection of well-known brands and a long history of success. The company should be able to get through the current challenges, but it's not surprising to see the market losing faith after so many guidance cuts this year.
