VFC Posts a 2% Jump in Fiscal 2016 EPS despite Forex Headwinds

For fiscal 2016, VFC’s adjusted earnings per share rose 2% to $3.11. On a constant currency basis, the increase was ~7%.

Sonya Bells - Author

Feb. 27 2017, Updated 7:36 a.m. ET


Earnings per share in line with consensus estimates

VF Corporation (VFC) reported its fiscal 4Q16[1. quarter ended January 31, 2017] and fiscal 2016 results on February 17, 2017. The company reported a 2.1% increase in its fiscal 4Q16 earnings per share (or EPS). VFC’s EPS stood at $0.97, which was in line with Wall Street estimates.

For fiscal 2016, VFC’s adjusted earnings per share rose 2% to $3.11. On a constant currency basis, the increase was ~7%.

Article continues below advertisement
Article continues below advertisement

Gross margin improves on better pricing and lower costs

VF Corporation (VFC) reported an improvement of 40 basis points in its 2016 gross margin, which stood at 48.6% during the year. This improvement was driven by better pricing, lower costs, and a shift in the product mix toward higher-margin products. However, exchange rate adjustments had a negative impact on VFC’s gross margin of 80 basis points.

In fiscal 4Q16, VFC’s gross margin was 160 basis points higher, reaching 49.8%, which included a negative impact of 90 basis points related to foreign currency changes.

Operating margin slips on higher SG&A rate and forex headwinds

VF Corporation’s fiscal 4Q16 adjusted operating margin slipped 90 basis points to 15.3% due to the negative impact of foreign exchange (or forex) rates of 60 basis points, as well as a jump in the SG&A rate of 250 basis points.

For fiscal 2016, VFC’s adjusted operating margin fell 90 basis points to 14%. This decrease was driven by a headwind from forex rates of 50 basis points and a jump in its SG&A[2. selling, general, and administrative expenses] rate of 130 basis points.

Comparing performance to peers

VF Corporation (VFC) has above-average margins. The company’s trailing 12-month (or TTM) GAAP[3. generally accepted accounting principles] operating margin of 12.1% is better than PVH Corp (PVH), Ralph Lauren (RL), and Gap, Inc. (GPS), which reported respective margins of 10%, 3.3%, and 8%. However, Hanesbrands (HBI) has a better TTM operating margin of 12.7%.

Investors who want broad-based 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.


Latest PVH Corp News and Updates

    Opt-out of personalized ads

    © Copyright 2024 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.