A look at expected fiscal 2017 bottom line
In this article, we’ll discuss the bottom line and margin guidance provided by the management of VF Corporation (VFC). Despite a low single-digit increase in the company’s top line, VFC’s management expects fiscal 2017 earnings per share (or EPS) to decline at a low single-digit rate, primarily due to ongoing currency headwinds. However, on a currency neutral basis, there could be a mid-single-digit percentage rate increase in the company’s EPS.
Wall Street estimates differ slightly from the management’s estimates. Analysts expect flat EPS growth in fiscal 2017.
Peers also suffer on forex headwinds
Most branded apparel companies are predicted to record a decline in earnings as they grapple with currency and other headwinds. Gap, Inc. (GPS), which expects to post its fiscal year results on February 23, is expected to report a 17% decline in yearly earnings.
Ralph Lauren (RL) is also expected to report a worsening bottom line. Its earning per share are forecast to fall 13% for the fiscal year.
A look at expected margins
VFC’s gross margin is likely to remain flat at 48.6% and would include 70 basis points of negative impact from currency adjustments.
The company’s operating margin is also expected to remain at 2016 levels and stay at 14% of sales.
Investors who want exposure to VFC can consider the Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (RCD), which invests 1.1% of its portfolio in VFC.
In the next article, we’ll look at VFC’s performance in the stock market, as well as the company’s dividend policy.