For the third quarter (Q3) ended 30 December, 2023, VF Corp's net revenue was down 16% (17% on constant dollars) from last year's $3.53bn to $2.96bn
Revenue across VF brands fell. Q3 revenues for Americas declined 24% to $1.59bn and EMEA saw a 7% fall to $0.91bn. While, APAC region saw 2% increase in revenues to $0.46bn.
VF Corp highlighted that the quarter was negatively impacted by a shift in timing of wholesale deliveries, which was most pronounced for The North Face brand and the EMEA region.
GlobalData retail analyst, Alice Price, warns things have gone from " bad to worse" at VF Corp, adding that the heart of the problem is the "waning appeal of its core brands."
Price noted: "The group attributes this bleak performance to a shift in wholesale delivery timings causing stock levels to fall short of demand, with the group losing out on heightened consumer demand during the golden quarter. However, VF Corp’s troubles predominantly lie with the waning appeal of its core brands, especially Vans, as discerning consumers choose to invest in more desirable products that are reflective of the latest fashion trends."
She believes a brand cull would enable VF Corp to focus its attention on core brands and help steer them back to relevance.
VF Corp reported a Q3 operating loss of $32.23m as opposed to last year's operating income of $516m.
The company also incurred a net loss of $42.45m in comparison to a net income of $507.9m in the same quarter last year.
Despite a "disappointing" performance, Bracken Darrell, president and CEO of VF Corporation, is confident that the actions being implemented as part of 'Reinvent transformation programme' will enable VF to stabilise, grow revenue and improve operational performance across brands and regions.
Darrell said: "Our third quarter top-line performance was disappointing. We have already begun to see the impact of our efforts to right-size the company’s cost structure and improve its inventory position, resulting in stronger than expected cash flow and expanded gross margin in the quarter. This quarter marked the beginning of the next phase of our transformation plan: resetting the marketplace for Vans, reviewing our brand portfolio and continuing to build the organisation of the future."
Transformation programme and strategic review of brand portfolio
VF Corp explained that during the quarter, the company continued to execute the Reinvent transformation programme, which aims to enhance focus on brand-building and to improve operating performance.
The initial four priorities of Reinvent are to improve North America results, deliver the Vans turnaround, reduce costs and strengthen the balance sheet.
The company emphasised that it will continue to pursue opportunities to simplify and streamline its processes and invest in the business to drive brand heat and accelerate a return to growth.
In addition to this, VF has also initiated an in-depth strategic review of the brand assets within the portfolio, in alignment with the Board of Directors, to ensure the company owns the brands that it believes create the greatest long-term value.
During the recent investors call, Darrell underscored the importance of capitalising on the strengths within VF's array of brands. He said: "The ultimate outcome will be a leaner, more cohesive set of brands relentlessly focused on the consumer and will deliver industry-leading innovation in products and marketing, enabled by much more efficient operations.
"Design or perhaps a better word for it in this industry for now, innovation, will be at the centre of our transformation agenda. Our commercial operations will run efficiently and effectively across all three regions. Each brand will have powerful capabilities to build innovative products consumers are hungry for with powerful marketing to tell their story."
