VF Corporation saw its revenue drop 8% to $2.1bn for the first quarter ending 1 July 2023 suggesting a slowdown in demand for its apparel and sneakers as consumers look to save money with rising cost pressures, particularly in North America.
According to apparel analyst at Global Data, Louise Deglise-Favre, the Americas was hit the hardest with sales falling 15% because of a decrease in consumer spending due to “prolonged high inflation rates.”
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The group witnessed a 3% rise in revenues in international markets. But revenue in EMEA declined by 3%, reflected by the ongoing expansion in direct-to-consumer sales, but a decrease in wholesale revenue.
Deglise- Favre added: “The APAC region was the winner of the quarter with sales rising 18%, driven by Greater China where revenue rose 31%, although this can be explained by soft comparatives due to COVID-19 lockdowns in the period last year.”
Highlights from VF Corp Q1 results:
- Revenues at VF Corp fell from $2.3bn to $2.1bn
- VF Corp fell into an operating loss of $8.9m from a $63.4m profit a year earlier.
- Net loss widened to £57.4m from 55.9m a year earlier.
In terms of brands:
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By GlobalData- The North Face revenue increased 12% to $538.2bn
- Vans revenue down 22.1% to $737.5bn
- Timberland revenue down 6 to $253.8bn
- Dickies revenue down 19% to $136.6bn
- Other brand revenue up 7% to $420.2bn
Although VF Corp expects its revenue to be “modestly down to flat” recognising Vans will be the result of a poor performance, president and CEO of VF Corp, Bracken Darrell holds confidence in the company’s brands to return and deliver strong, sustainable and “profitable growth which will translate to elevated shareholder returns.”
However, Deglise-Favre argues that VF Corp is losing its relevance by not catering to the new trends and aesthetics of the trainer market, “leaving its offering feeling stale and outdated.”
“Despite initiatives to regain its (Vans) relevance, such as the launch of its ‘Off the Wall’ campaign featuring streetwear ambassadors such as rapper Little Simz in April 2023, these have yet to translate into improved sales. Vans needs to urgently modernise its image and reinvent itself outside of the skateboarding niche if it wants to recover the widespread appeal it once had.”
The company reiterates the full-year EPS guidance range of $2.05 to $2.25.
“While the brand’s overall performance was largely anticipated, it’s not where we should be,” admitted Matt Puckett, VF Corp’s chief financial officer. “We remain intensely focused on the actions to turn around the brand.”
