VF Corp (VFC, Financial) released its second quarter fiscal 2024 results on October 30, 2023, reporting a 2% decrease in revenue to $3.0 billion. The company also announced a comprehensive transformation program, Reinvent, and declared a quarterly dividend of $0.09 per share, marking a 70% decrease from the previous quarter's dividend.
Financial Highlights
The company's loss per share for Q2'FY24 was $(1.16), compared to a loss per share of $(0.31) in Q2'FY23. This was impacted by the additional tax expense booked as a result of the Timberland tax case ruling. Adjusted earnings per share were $0.63, down from $0.73 in Q2'FY23.
Operating Highlights
The North Face® brand delivered another quarter of double-digit revenue growth, up 19% (up 17% in constant dollars), benefiting from on-time deliveries. However, Vans® saw a decrease of 21% (down 23% in constant dollars). The company's Direct-to-Consumer (DTC) segment was down 3% (down 5% in constant dollars) but up 10% excluding Vans® (up 9% in constant dollars).
Reinvent Transformation Program
VF Corp (VFC, Financial) introduced Reinvent, a transformation program aimed at enhancing focus on brand-building and improving operating performance. The program's first steps cover four key priorities: improving North America results, delivering the Vans turnaround, reducing costs, and strengthening the balance sheet.
FY24 Outlook
The company withdrew its previous FY24 revenue and earnings guidance and updated its free cash flow projection to approximately $600 million, down from the previous guidance of approximately $900 million. Factors such as Vans' performance and a more difficult US wholesale environment are expected to significantly impact revenue and profit negatively in 2H'FY24.
Balance Sheet and Shareholder Returns
Inventories decreased by $269 million during Q2’FY24, down 10% relative to last year. The company returned $117 million to shareholders through cash dividends in Q2'FY24. The declared quarterly dividend of $0.09 per share will be payable on December 20, 2023, to shareholders of record at the close of business on December 11, 2023.
Income Statement Review
Revenue for Q2'FY24 was $3.0 billion, down 2% (down 4% in constant currency) with the big four brands down 3% (down 5% in constant currency) and the balance of the portfolio up 6% (up 4% in constant currency). Gross margin was 51.3%, down 10 basis points, and operating margin was 12.0%, up 1,490 basis points.
Explore the complete 8-K earnings release (here) from VF Corp for further details.
