
VF Corporation Delivers a Flat Top Line in Fiscal 4Q16
By Sonya BellsUpdated
VFC’s top line remains flat in fiscal 4Q16
VF Corporation’s (VFC) top line from continuing operations remained almost flat during fiscal 4Q16.[1. quarter ended January 31, 2017] Its total revenues stood at ~$3.29 billion, missing Wall Street estimates by $120 million. The company also missed its own guidance of $3.25 billion.
VFC’s top line miss was driven by poor performance from the company’s Jeanswear business—Lee in particular—and below performance expectations from the Outdoor and Action Sports business.
On a currency-neutral basis, VFC’s revenues increased 1%. During the company’s fiscal 4Q16 earnings call, Scott A. Roe, vice president and CFO of VF Corporation, noted, “Revenue was up 1% on a currency-neutral basis to $3.3 billion. While this was a little below expectations, the quality of the business has improved dramatically as compared to a year ago.
“We are acutely focused on the fundamentals. Gross margin is up. Cash flow is strong. Inventory is under control, up less than 1% versus last year.”
VFC completed the sale of its Contemporary Brands businesses—including Splendid, 7 For All Mankind, and Ella Moss brands—to Delta Galil Industries in August 2016. For VFC’s fourth quarter results, this business is reported as a discontinued operation.
How did VFC perform versus its competitors?
Many apparel companies that have reported results recently have missed Wall Street expectations. Kate Spade & Co. (KATE), which reported its 4Q16 results on February 16, reported a 10% jump in revenues. However, the company missed its consensus forecasts.
Hanesbrands (HBI) reported its 4Q16 results on February 2. Its total revenues increased 12% YoY to ~$1.6 billion. HBI failed to meet Wall Street revenue expectations.
Investors who want exposure to VFC could consider the Morningstar Wide Moat ETF (MOAT), which invests 2% of its portfolio in VFC.
Please continue to the next article to learn about VF Corporation’s key revenue drivers in 4Q16.