VF Corp.’s shares were down nearly 4 percent in pre-market trading Monday, after the company lowered guidance for the year and reported a third-quarter miss in EPS and revenues.
Net income for the three months ended Oct. 1 was up 8.4 percent to $498.5 million, or $1.19 a diluted share, from $459.9 million, or $1.07, a year ago. On an adjusted basis excluding a tax benefit, EPS for the quarter was $1.14. Total revenues slipped 1.2 percent to $3.49 billion from $3.53 billion. Included in revenues were total sales of $3.46 billion for the quarter, down 1.2 percent from a year ago. The balance was from royalty income.
Wall Street’s consensus was $1.15 a share on revenues of $3.63 billion. Shares of VF were trading at $52.50 at 7:20 a.m.
At the end of August, the company completed the sale of its Contemporary Brands businesses to Delta Galil Industries Ltd. Those operations are considered discontinued operations on the balance sheet. The net loss in the third quarter from discontinued operations was $5 million.
For the nine months, net income slipped 11.9 percent to $809.8 million on essentially flat revenues at $8.70 billion.
Eric Wiseman, VF chairman and chief executive officer, said, “We continue to operate in an uneven global economic environment including especially sluggish retail conditions in the Americas, our largest market.”
Wiseman added, “With a strong balance sheet, powerful brands and a growing global presence, we have great confidence in our ability to maintain near-term profitability, yet we’re not satisfied with our third-quarter results. We remain sharply focused on operational improvements and taking advantage of this environment to accelerate strategies to create sustainable, long-term growth opportunities for our brands.”
The company said gross margin was up 70 basis points to 48.4 percent, with benefits from pricing, mix and lower product costs partially offset by changes in foreign currency and inventory management efforts.
In its Outdoor & Action Sports coalition, revenue rose 2 percent to $2.3 billion. Brands include The North Face, Vans and Timberland. In Jeanswear, which includes the Wrangler and Lee brands, revenue fell 6 percent to $701 million, in part due to softer consumer demand and shifts in the delivery of orders. For Imagewear, which includes the licensed sports and workwear businesses, revenue slipped 3 percent to $282 million. In Sportswear, revenue was down 13 percent to $141 million. The declines were in the Nautical brand and in the Kipling brand’s North American business.
The company said international revenues were up 5 percent, while direct-to-consumer revenues rose 6 percent.
The company adjusted its outlook for 2016, now expecting revenue to be up 2 percent to $12.2 billion, compared with prior forecasts of 3 to 4 percent growth. VF said EPS is now expected to rise 3 percent to $3.13, compared with prior guidance of a 5 percent increase to $3.20.