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VF Corporation Sold Its Contemporary Brands Businesses

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Price movement

VF Corporation (VFC) has a market cap of $26.6 billion. It fell by 0.36% to close at $63.99 per share on August 26, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -1.3%, 3.8%, and 4.0%, respectively, on the same day.

VFC is trading 1.5% above its 20-day moving average, 1.7% above its 50-day moving average, and 2.8% above its 200-day moving average.

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Related ETF and peers

The iShares Edge MSCI USA Quality Factor ETF (QUAL) invests 0.33% of its holdings in VF Corporation. The ETF tracks an index of US large- and mid-cap stocks, selected and weighted by high ROE, stable earnings growth and low debt-to-equity relative to peers in each sector. The YTD price movement of QUAL was 5.4% on August 26.

The market caps of VF Corporation’s competitors are as follows:

  • Gap (GPS): $10.5 billion
  • Ralph Lauren (RL): $8.8 billion
  • Columbia Sportswear (COLM): $4.0 billion

Latest news on VF Corporation

VF Corporation completed the sale of its Contemporary Brands businesses, including 7 for All Mankind, Splendid, and Ella Moss, to Delta Galil Industries, which followed the press release on June 30, 2016, for the sale of its brands.

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Performance in fiscal 2Q16

VF Corporation reported fiscal 2Q16 total revenues of $2.45 billion—a rise of 0.75% over the total revenues of $2.43 million in fiscal 2Q15. Revenues of the Outdoor & Action Sports, Jeanswear, and Imagewear segments rose by 1.7%, 3.5%, and 2.6%, respectively, and the revenues of the Sportswear segment fell by 19.2% between fiscal 2Q15 and fiscal 2Q16. The company’s operating income fell by 3.5%. Its net income and EPS (earnings per share) fell to $51.0 million and $0.12, respectively, in fiscal 2Q16, as compared with $170.8 million and $0.40, respectively, in fiscal 2Q15.

VFC’s cash and cash equivalents fell by 28.4%, and its inventories rose by 14.2% between fiscal 4Q15 and fiscal 2Q16. In fiscal 2Q16, its current ratio fell to 1.5x, and its debt-to-equity ratio rose to 1.1x, as compared to 2.1x and 0.79x, respectively, in fiscal 4Q15.

Quarterly dividend and projections

VF Corporation has declared a quarterly dividend of $0.37 per share on its common stock. The dividend will be paid on September 19, 2016, to shareholders of record on September 9, 2016.

The company has made the following projections for fiscal 2016:

  • revenue increase of 3%–4%
  • gross margin improvement by ~0.50% to 48.7%, which includes ~0.70% of headwind from changes in foreign currency
  • operating margin of 14.5%, which includes ~0.60% from the negative impact of changes in foreign currency
  • reported earnings per share growth of 5% to $3.20
  • effective tax rate of ~21%
  • cash flow from operations of $1.3 billion

Now we’ll look at Toyota Motor (TM).

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