VF Corp Q3 revenues down as Vans underperforms

Vans owner VF Corporation has announced a 3% drop in revenue driven by a 13% fall in sales from the footwear brand, for the three months ended 31 December 2022.

Vans revenue fell to $927m (£768m) in the quarter and is expected to drop by a high-single-digit percentage rate for the full year, compared with the previous forecast of a mid-single-digit reduction.

Meanwhile, revenues for its The North Face brand were up by 7% to $1.3bn (£1.1bn) in the three months, while Timberland sales remained flat at $596m (£494m).

Operating income for the company dropped 24% to $516m (£428m) in the quarter and gross margin dropped by 120 basis points to 54.9%, primarily driven by increased promotional activity.

The company is forecasting revenues for FY23 to be up 3% on a constant-currency basis, within the previous outlook range. However, its adjusted gross margin is expected to be down by 200 basis points.

Benno Dorer, interim president and CEO, said: “We are pleased to reaffirm the recently communicated full year 2023 EPS outlook with revenue growth at approximately 3%, after navigating an increasingly challenging fiscal Q3.

“Spending the last few weeks with VF’s dedicated and talented teams around the world has reinforced my belief in the tremendous opportunity ahead for our company. We are committed to improving execution through a sharpened focus on the biggest consumer opportunities and enhanced operational performance.”

He added: “Consistent with this objective, we are shifting resource priorities across the company, including by reducing the dividend, exploring the sale of non-core assets, cutting costs and eliminating non-strategic spend, while enhancing the focus on the consumer through targeted investments.

“We are confident these actions will enable a return to profitable and sustainable growth and, with that, strong shareholder value creation.”