V.F. Corporation (NYSE:VFC) rose 3.6% on Friday as its profit forecast beat estimates even as its Vans brand struggles to turn around.
For the fiscal first quarter, the maker of North Face apparel reported non-GAAP EPS of -$0.15, which missed the average analyst estimate by $0.03. Revenue of $2.08B beat by $10M.
For the full year, VFC expects EPS between $2.05 and $2.25 versus the consensus of $2.10.
Revenue is expected to be modestly down to flat for the year, reflecting ongoing weakness in the wholesale business and a longer-than-anticipated turnaround for Vans. Free cash flow is expected to be in line with previous guidance of $900M.
“While our Q1 performance is not reflective of our standards, we achieved our earnings target in the quarter,” Chief Financial Officer Matt Puckett said in a statement. “We remain focused on improving our operational execution, although it will take time for our revenue performance to benefit from actions that are underway.”
“We are well positioned to advance our key priorities this year with an emphasis on increasing operating earnings through improved gross margins, generating healthy cash flow and reducing debt, all of which lead to a strengthened financial position.”
For the quarter, The North Face delivered its 10th consecutive quarter of double-digit constant dollar revenue growth, up 12%, while Vans dropped 22%, impacted by wholesale in the Americas as the company continues its efforts to turn the brand around.
In July, Bracken Darrell joined the company as chief executive officer from Logitech International S.A. (LOGI).
On the earnings call, Puckett said that the second quarter “will be less negative than where we were in Q1.”
The CFO said he is “increasingly confident in our ability to drive higher gross margins this year and as we look at where we sit from an inventory standpoint, we’re making really good progress a little bit ahead of schedule and reducing our inventories and I look at the overall health of our inventory, I feel good about where we’re positioned, relative to where we’ve been certainly. And so we’ll see a moderating promotional environment is our view moving forward.”
The stock has six Strong Buys, three Buys, 12 Hold and 12 Sell ratings from Wall Street analysts.
Shares are down 25% year-to-date.