VF (VFC) shares fell sharply Wednesday after the apparel and footwear company reported a wider-than-expected fiscal first-quarter loss despite topping Wall Street's revenue estimates.
VF shares were down 17% in recent Wednesday trading and have fallen about 16% this year.
The company's adjusted loss widened to $0.27 per share in the quarter ended June 27 from $0.24 a year earlier. The FactSet-polled consensus was for a non-GAAP loss of $0.22 per share.
Revenue fell 5.1% to $1.67 billion but still topped the Street's view of $1.64 billion. Sales for The North Face and Timberland increased 6% and 4%, respectively, year over year, while Vans' revenue fell 8% as a drop in wholesale volumes offset growth in direct-to-consumer business in America.
"We began signaling a few quarters ago that the (Vans) business would turn around first in DTC, then wholesale. And that's exactly what continues to happen," Chief Executive Bracken Darrell said in prepared remarks. "We expected to be a little bit better in (first quarter) than we were, but this quarter doesn't at all change our indication of what we will see for the full year."
The company raised its fiscal 2027 revenue guidance, now expecting constant-currency growth of 2% or better from fiscal 2026 revenue of $9.61 billion. It previously expected a 1% to 2% gain. Analysts estimate fiscal 2027 revenue of $9.48 billion.
"For The North Face and Timberland, we expect the full year to be in line with their respective growth rates from last year, plus or minus a point or two on either side. For Vans, we continue to expect revenue trends to improve relative to last fiscal year, down mid-single digits," Chief Operating Officer Abhishek Dalmia said.
Truist Securities noted that despite growing momentum on TikTok for Vans' Pearlized and Souvenir Old Skool styles along with its Knu Skool collaboration with BAPE, "we still haven't seen a positive inflection for the broader assortment overall."
"(We) believe that investors may be overly optimistic on (long-term) profitability improvements due to (near-term) tariff-refund related benefits," Truist said. The brokerage added that VF's fiscal 2027 margin guidance includes an estimated $41 million net boost from one-time tariff refunds, and many investors have misinterpreted the disclosures, viewing the outlook as sustainable run-rate profitability.
The company named Dalmia as its and chief financial officer, effective Aug. 1. He succeeds Paul Vogel, who will step down to serve in an advisory role to assist with the transition.
Elsewhere in the apparel sector, Nike (NKE) reported a fiscal fourth-quarter revenue beat on June 30, while Levi Strauss (LEVI) raised its full-year outlook earlier in the month as second-quarter results topped analysts' estimates.
Price: $15.14, Change: $-3.12, Percent Change: -17.07%
