Wall Street is in wait-and-see mode on VF Corp.
Shares of the company slipped 8 cents to $28.44 on Wednesday as investors weighed a flurry of updates and tweaks from Benno Dorer, interim chief executive officer, in a generally down market.
The former Clorox Co. CEO and veteran VF board member has moved quickly since taking over the top spot from Steve Rendle, who abruptly left VF in December. Late Tuesday, Dorer laid out a cut to the firm’s once-sacred dividend, put its backpack business up for sale and moved to eliminate “non-strategic” spending.
“I do plan to use my time to make a positive difference to VF’s business and organization,” Dorer told analysts on a conference call. It’s still not clear just how long he will be at the post.
Analysts, for their part, seem to think there’s an awful lot of work ahead, including the Vans turnaround, which isn’t expected to bear fruit until later in the year.
Ike Boruchow, an analyst at Wells Fargo, noted that the company’s business model remains “under heavy pressure” with inventory up more than 100 percent over the past year.
“Initial comments suggest we are in for a hockey stick fiscal year,” said Boruchow, referring to a growth chart next fiscal year that would start off flat and then climb steadily.
“U.S. wholesale partners reduced first-half orders given greater caution and reduced VF service levels; Vans likely doesn’t inflect until back-to-school and inventory will enter heavy at Vans, as well as The North Face and Dickies,” Boruchow noted in a research note to clients.
VF is still wrapping up fiscal 2023, which ends in April, but gave investors a preview of what’s ahead, saying fiscal 2024 revenues would rise by “at least” low-single digits, in constant dollars. That comes on top of projected growth this fiscal year of about 3 percent.
Tom Nikic, an analyst at Wedbush, also pointed to the upcoming fiscal 2024 projections and described them as “surprisingly optimistic given ongoing challenges.”
“Though visibility is fairly low right now — given how many times they’ve cut guidance this fiscal year and the fact that they don’t have a permanent CEO — VF stated that they expect [fiscal year 2024] sales to be up at least low-single digits, [in] constant currencies, with expansion in both gross and operating margins due to lower freight rates, margin initiatives at Vans and the cost-savings program,” Nikic said.
Clearly, Dorer has plenty to get done.