Shares of VF Corp (VFC -1.58%) were pulling back as the parent of apparel brands like Vans and The North Face posted another disappointing earnings report in its fiscal third quarter. The company badly missed estimates on the top and bottom lines and said its CFO was stepping down, which is often interpreted as a negative sign. It also announced a strategic portfolio review, implying it may try to sell some of its brands.
As of 12:36 p.m. ET, the stock was down 13.1% on the news.
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VF goes from bad to worse
VF has been struggling as a combination of weak demand in the apparel sector and brand fatigue for brands like The North Face and Vans continues to weigh on the business.
Revenue in the quarter fell 16% to $2.96 billion, which was well below the consensus at $3.24 billion. Revenue was down by double digits in its four core brands, Vans, The North Face, Timberland, and Dickies, with Vans down 28% to $668.2 million and The North Face's revenue off 10% to $1.19 billion.
Not surprisingly, the slide in revenue led to a woeful performance on the bottom line, with its operating margin down from 14.6% to -1.1%. On an adjusted basis, the company reported a per-share profit of $0.57, compared to $1.12 in the quarter a year ago and the consensus at $0.77.
CEO Bracken Darrell acknowledged that the quarter was "disappointing" but expressed optimism for its Reinvent transformation program, its turnaround plan. The company also announced a strategic portfolio review "to ensure the company owns the brands that it believes create the greatest long-term value.
Finally, management said that CFO Matt Pattuck would be departing the company, though he will stay until a successor is chosen. His departure seems to be due to the company's weak performance.
What's next for VF?
The only guidance the company offered was to reaffirm its free cash flow guidance for the year at $600 million.
VF is clearly struggling, and a recovery doesn't seem in sight, even as Darrell said, "We have already begun to see the impact of our efforts to right-size the company's cost structure and improve its inventory position."
Still, with sales falling at all four of its brands, any turnaround is going to take time, if it comes at all.
