North Face parent VF reports losses due to incorrect sales estimates due to weak demand

Key takeaways

VF Corp. announced worse-than-expected fourth-quarter results, explaining it by weak demand and too high inventories.
The parent company of clothing brands North Face and Vans reported a surprising loss per share in the quarter and its revenue beat forecasts.
VF has also appointed a new chief financial officer (CFO).
VF shares fell in Thursday’s session after earnings were released after the bell on Wednesday.

VF Corp. Shares (VFC) fell to its lowest level in more than 15 years on Thursday after the apparel company reported a surprise per-share loss in its fiscal fourth quarter and missed sales estimates due to weak demand. The company also appointed a new chief financial officer (CFO).

The parent of North Face, Vans and other fashion brands reported an adjusted fiscal 2024 fourth-quarter loss of 32 cents, while analysts expected a slight increase. Revenue fell 13% to $2.37 billion, also below forecasts.

Sales of all brands declined in the quarter

Sales at North Face, its largest revenue generator, fell 5% year-over-year to $814.3 million amid a weak U.S. wholesale market. Vans sales fell 26% to $631.2 million, which the company said was in line with the prior quarter’s level and included “the additional impact of deliberate actions to continue to maintain the right size of inventory in the wholesale channel.” Sales at Timberland and Dickies dropped 14% and 15% respectively.

Gross margin declined 120 basis points (bps) to 48.4%, driven by “reset actions” and ongoing promotions.

The new CFO comes from Spotify

Chief Executive Officer (CEO) Bracken Darrell said VF made progress on turnaround efforts last quarter, noting that it continued to reduce inventory and “rebuild the leadership team.” This included Wednesday’s appointment of former Spotify Technology (SPOT) CFO Paul Vogel as VF’s CFO, starting in July. He replaces Matt Puckett, who announced in February that he would step down.

VF shares have lost more than a third of their value this year. They are down 4.6% at $11.76 at 3:45 p.m. ET on Thursday.

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