VF Corp revises outlook as Q2 revenues fall 4%

VF Corp, the owner of brands such as Vans and North face, has revised its FY outlooks after it revealed its revenues declined 4% to $3.1bn (£2.6bn). In its trading update for the second quarter ended October 1, 2022 it confirmed its big four brands saw revenues fall 5%, despite its North Face brand posted revenues of $1bn (£867m), up 8% YOY. Its other popular brand Vans also posted revenues of $1bn, however this is down 13% YoY. During the period it also reported gross margin of 51.4%, down 230 basis points and an earnings (loss) per share (EPS) $(0.31), down 126%; Looking ahead it said it is maintaining its constant dollar revenue outlook but revising its earnings outlook to reflect “increased negative impacts from foreign currency fluctuations as well as heightened inventory levels and increased promotional activity in the marketplace”. It expects total VF revenue up 5% to 6% in constant dollars, unchanged from the previous outlook. The group said it now expects adjusted operating margin 11.0%, compared to the previous outlook of approximately 12% and Adjusted EPS now expected to be in the range of $2.40 to $2.50, versus $3.18 in the prior year and compared to the previous outlook of $2.60 to $2.70. Steve Rendle, chairman, president and CEO of VF, said: "VF’s balanced performance in Q2 demonstrates the resiliency of our brand portfolio against a more disrupted global marketplace. “Our purpose built portfolio of iconic, deeply-loved brands continues to benefit from tailwinds in the outdoor, active, streetwear and workwear spaces while we also actively address the near-term challenges at Vans, the ongoing COVID-related disruption in China, and the broader macro-economic and geopolitical headwinds, which have created tremendous uncertainty for all businesses and consumers.” He added: “In the near term, in light of the challenging environment, we are acting proactively to generate increased revenue through the balance of the year while protecting profitability by tightly controlling all non-strategic spend. “I am confident in our ability to deliver on our targets and to maximise the potential of all our brands when the environment improves. We will remain focused on the things we can control and will continue leveraging VF’s unique business model and competitive strengths to drive consistent, sustainable and profitable growth."