VF Corporation Delivers a Flat Top Line 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.

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.