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Analyzing VF Corporation’s Q3 2019 Revenue

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Jan. 22 2019, Published 8:33 a.m. ET

Revenue beats estimates

VF Corporation (VFC) reported its fiscal 2019 third-quarter results on January 18. Its revenue of $3.94 billion topped analysts’ consensus estimate of $3.87 billion.

On a YoY (year-over-year) basis, its revenue rose 8% driven by acquisitions and higher international and direct-to-customer operations. Even after the exclusion of the impact of acquisitions, the company’s third-quarter revenue rose 7%. On a constant currency basis, its overall third-quarter revenue rose 10%.

VFC’s international revenue rose 5%, with China registering a rise of 18%. Its direct-to-consumer business generated 10% revenue growth, with its digital platform delivering 24% revenue growth.

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On a reported basis, VFC’s Activewear segment’s revenue rose 16%, while its Outdoor segment saw revenue growth of 11% YoY. Its workwear revenue rose 2%, whereas its jeans revenue was down 5% YoY in the quarter. Its Wrangler and Lee denim brands were negatively affected by higher demand for athleisure wear and private denim brands.

On a worldwide basis, the Vans brand’s revenue was up 25% YoY, while the North Face’s revenue rose 14%. Timberland reported an improved performance in the third quarter, with its revenue rising 1% YoY. Though Timberland’s sales grew in North America, its European performance was subdued mainly due to unfavorable weather trends. Together, these three brands’ combined revenue growth in the third quarter was 16%.

In fiscal 2019, Vans is expected to deliver 25% YoY revenue growth on a constant currency basis. By 2023, the Vans brand alone is expected to contribute $5 billion to VFC’s revenue.

Outlook changes

VFC’s management expects its net revenue to be at least $13.80 billion in fiscal 2019. Analysts expect the company to deliver revenue of $13.8 million, a rise of 11.5%.

The company’s management expects its international operations to deliver revenue growth of 10.0%–11.0% compared to its earlier expectation of 12.0%–13.0%. Management has added that despite political uncertainty and macroeconomic pressures, the company’s overseas operations remain sturdy.

The company’s direct-to-consumer business could deliver revenue growth of 13% in fiscal 2019 compared to its earlier projected range of 12%–14% for the year. Its digital revenue is expected to see revenue growth of over 30.0%.

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