Vans owner VFC rockets 22% on earnings beat, improved outlook

VF Corporation (NYSE:VFC ), the parent company of The North Face and Vans, saw its stock soar 22% after reporting better-than-expected second-quarter earnings and providing an improved outlook for the third quarter.

The apparel and footwear maker posted adjusted earnings per share of $0.60 for the second quarter, significantly beating the analyst estimate of $0.38. Revenue came in at $2.76 billion, slightly above the consensus estimate of $2.73 billion, though down 6% YoY.

VF Corp's performance showed broad-based sequential improvement compared to the first quarter. The North Face brand saw a 3% decline in sales, while Vans experienced an 11% drop, both marking improvements from the previous quarter's results.

Bracken Darrell, President and CEO, stated, "Our results in the quarter met our expectations and reflect a sequential and broad-based improvement in year-on-year trends. At the same time, we made further progress on our four Reinvent priorities and we are on track to reach our previously announced $300 million savings target by the end of FY25."

The company's gross margin improved by 120 basis points to 52.2% compared to the same period last year. However, the operating margin decreased by 210 basis points to 9.9%.

Looking ahead, VF Corp provided guidance for the third quarter, projecting revenue between $2.7 billion and $2.75 billion, representing a 1% to 3% YoY decline. This outlook is slightly below the analyst consensus of $2.77 billion.

Jefferies analysts said in a note that third-quarter guidance indicates revenue could reach breakeven in constant currency terms, while operating margins appear weaker quarter-over-quarter, which they view as "potentially conservative."

"Work still to be done, but evidence of execution and conservatism (in addition to easing comps & deleveraging) bolsters the turnaround narrative," they added.

Separately, UBS analysts noted that the positive market reaction to VF Corp's print marks "a good example of what could happen when fundamentals of unpopular stocks stop getting worse."

The company also announced a quarterly dividend of $0.09 per share, payable on December 18, 2024, to shareholders of record as of December 10, 2024.

Senad Karaahmetovic contributed to this report. 

Source: Investing.com