VFC - VF Corp slips after hours as co launches Vans-focused turnaround plan following dismal Q2
2023-10-30 17:11:56 ET
Shares of VF Corp ( NYSE: VFC ) on Monday slumped as much as 17.6% to $14.11 in extended trading, after the company said it would undertake a restructuring plan centered around driving a turnaround in Vans sneakers, following a more than 20% plunge in quarterly sales in the flagship sneakers brand.
The Denver, Colo.-based footwear and apparel maker reported a narrower profit for FQ2 2024, with adjusted earnings per share coming in at 63 cents versus 73 cents a year ago. Revenue fell about 2% Y/Y to $3.03B, primarily driven by a 21% Y/Y decline in Vans sales.
VFC said it would implement initiatives under a plan called "Project Invent," which would target four key areas: improving North America results, delivering a turnaround at Vans, reducing costs and strengthening the balance sheet. The company also withdrew its FY 2024 revenue and earnings outlook, while slashing its free cash flow guidance to about $600M from around $900M previously.
"Despite pockets of continued strong performance throughout the first half and solid profit margins in the second quarter, it's not enough and we are not making sufficient progress at Vans or in the US. Our transformation plan, Reinvent, directly addresses these areas in particular and importantly, commits to lowering our cost structure by $300M," VFC CFO Matt Puckett said in a statement.
As part of Project Reinvent, VFC said it would change its operating model by creating an Americas regional platform. The company also promoted Martino Scabbia Guerrini to the newly created role of chief commercial officer.
VF Corp's ( VFC ) current global brand president for Vans, Kevin Bailey, will step down, and the company has an external search for his replacement underway. Moreover, VFC does not anticipate Vans' performance to improve in H2 of fiscal 2024, while also seeing a more difficult U.S. wholesale environment.
Furthermore, to reduce debt, VFC slashed its quarterly dividend by 70% to $0.09.
"Our transformation plan, Reinvent, will improve our brand-building and execution while addressing with urgency our top priorities of improving North America, accelerating the Vans turnaround, significantly reducing our fixed costs and reducing leverage," VF Corp ( VFC ) top boss Bracken Darrell said.
Looking at some of the other key metrics in VFC's results, outdoor apparel and equipment provider North Face was a bright spot, delivering another quarter of double-digit revenue growth of 19%. Meanwhile, adjusted gross margin was down 20 basis points to 51.3% in the quarter. Finally, quarter-end inventories decreased by $269M, down 10% relative to last year.
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VF Corp slips after hours as co launches Vans-focused turnaround plan following dismal Q2