VF Corporation (NYSE: NYSE:), a global leader in branded lifestyle apparel, footwear, and accessories, has reported significant developments in its first quarter fiscal year 2025 earnings call.
The company announced a further $50 million in cost savings and plans to divest its Supreme brand for $1.5 billion, aiming to concentrate on its core business and enhance leverage.
Despite facing challenges with declines in its Americas platform and key brands like Vans and The North Face, VF Corporation expects modest revenue improvements in the second quarter and is focusing on cost reduction and profitability enhancement.
Key Takeaways
- VF Corporation reported $50 million in cost savings during the quarter.
- Announced the divestiture of Supreme for $1.5 billion to focus on core business.
- Americas platform decline improved to 12% in Q1 from 23% in the previous quarter.
- Vans brand decline slowed to 21% in Q1 from 27% in Q4, while The North Face was down 2%.
- Direct-to-consumer (DTC) sales for The North Face grew by 8% globally.
- Gross margin and operating margin decreased due to Vans clear out activities.
- Q2 is expected to see a modest revenue improvement and slightly higher gross margin.
- Plans for a 2-part investor event in October to discuss long-term strategy.
Company Outlook
- The company is on track to meet its $300 million cost savings target.
- VF Corporation is actively reviewing its portfolio for potential additional asset sales.
- Management expressed confidence in returning to top-line growth.
- Detailed strategy and brand plans to be shared in an investor event in October.
Bearish Highlights
- Gross and operating margins decreased due to clear out activities.
- Loss per share in Q1 was as expected, with no specific timeline for top-line growth return.
Bullish Highlights
- Continued cost reduction and balance sheet strengthening are priorities.
- Free cash flow and noncore physical asset sales guidance of about $600 million for FY25.
- Management’s strong confidence in the company’s progress and future plans.
Misses
- Declines in revenue for key brands like Vans and The North Face.
- Some production disruption in Bangladesh affecting approximately 15% of production.
Q&A Highlights
- CEO Bracken Darrell discussed cost savings, China market performance, and Vans brand improvement.
- Apparel identified as a significant but not the most critical near-term opportunity.
- Plans for segmentation and tiering products, with no current focus on lead time improvement.
VF Corporation’s CEO Bracken Darrell highlighted…
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