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North Face Parent VF Drops After Earnings Miss Estimates

VF traded lower Friday after the parent of North Face and Timberland reported fourth-quarter earnings that missed analysts' estimates.

Shares of VF  (VFC)  fell Friday after the parent of North Face and Timberland reported fiscal-fourth-quarter earnings that missed analysts' estimates.

Shares of the Denver company at last check dropped 7.4% to $78.54.

For the quarter ended April 3 VF reported GAAP earnings of 16 cents a share, missing the consensus estimate of 31 cents a share in a survey of analysts by FactSet. 

The latest adjusted earnings of 27 cents a share came in lower than the FactSet consensus 29 cents. 

Revenue rose 23% to $2.58 billion, up from $2.1 billion in the year-earlier quarter and ahead of the FactSet estimate of $2.51 billion..

"We are exiting this year in a position of strength with broad-based momentum across the portfolio," Chairman, President and Chief Executive Steve Rendle said in a statement.

He added that during the pandemic the company invested to transform the business and speed up growth that didn't require acquisitions.

The apparel company sells apparel, accessories and footwear internationally through direct-to-consumer channels, particularly digital. 

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Nearly all VF-owned retail stores in the Asia-Pacific region, including China, were open during the quarter and remain open, the company said.

Analysts were divided in their reactions to the earnings.

Stifel analyst Jim Duffy said earnings per share, gross margin and operating margin all missed estimates, while the fiscal 2022 revenue forecast “narrowly exceeds” his projection and earnings are in line with his view.

Given the “underwhelming relative momentum,” he remains comfortable with
a hold rating and $82 price target on the stock.

Piper Sandler said VF's revenue was “solidly better despite a slight [earnings per share] miss as VF cleaned through inventory.”

Telsey Advisory's Dana Telsey said that a tax rate higher than the consensus estimate and narrower-than-expected gross margin resulted in earnings per share coming up short.

Telsey maintains an outperform rating on VF due to its favorable view of the company's position in the outdoor and active segments and its increased streetwear profile.

VF expects revenue to rise 28% to $11.8 billion for fiscal 2022. That's stronger than the FactSet analyst call of $11.48 billion.