V.F. Corp Posts Q2 Earnings & Revenue Beat, Stock Gains More Than 23%

V.F. Corporation VFC reported second-quarter fiscal 2025 results, wherein the bottom and top lines beat the Zacks Consensus Estimate. Although the company’s sales and earnings declined year over year, the results reflected sequential revenue improvements across its brands. Moreover, VFC is on track with its Reinvent program and expects to deliver on its cost-saving target.Quarterly results met management’s expectations, reflecting a sequential and broad-based improvement year over year. Driven by the better-than-expected results, shares of VFC rose about 23.2% in the after-hours trading session on Tuesday. Investors seem to be optimistic about sequential growth witnessed in the quarter and the forward guidance. The Zacks Rank #3 (Hold) company's shares have gained 38.2% in the past six months against the industry’s 0.7% decline.An Insight Into VFC’s Q2 PerformanceThe company reported adjusted earnings per share of 60 cents, down from 63 cents in the prior-year level. However, the bottom line surpassed the Zacks Consensus Estimate of 41 cents.Net revenues of $2.8 billion declined 6% year over year on both a reported and constant currency basis. However, revenues surpassed the consensus estimate of $2.7 billion.V.F. Corporation Price, Consensus and EPS Surprise V.F. Corporation price-consensus-eps-surprise-chart | V.F. Corporation QuoteThe gross margin expanded 120 basis points (bps) to 52.2% owing to lower product costs. However, adjusted operating margin fell 60 bps from the year-ago period to 11.4%. Selling, general and administrative costs, as a rate of sales, deleveraged 180 bps year over year to 40.8%.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.V.F. Corp.’s Revenue DetailsOn a regional basis, revenues in the Americas declined 10% year over year on a reported basis and 9% on a constant-currency (cc) basis. In the EMEA region, revenues fell 3% on a reported basis and 5% at cc. Revenues in the APAC region increased 6% on a reported basis and 5% at cc. The company’s international revenues were down 6% year over year on both a reported and cc basis.Channel-wise, wholesale and direct-to-consumer revenues were down 4% and 8%, respectively, year over year on a reported basis. At cc, revenues dipped 5% for the wholesale business and 8% for the direct-to-consumer channel. Our model estimated the wholesale and direct-to-consumer revenues to fall 7.3% and 6.1%, respectively,  year over year.Based on reporting segments, revenues in the Outdoor segment dipped 3% year over year on a reported basis and 4% on a constant-currency basis to $1.7 billion. In the Active segment, revenues of $879.8 million declined 9% year over year on both a reported a and constant-currency basis. Revenues in the Work segment dropped 8% year over year on both a reported and constant-currency basis to $219.5 million.Our model predicted fiscal second-quarter revenues to decline 4%, 11% and 8% year over year, respectively, for the Outdoor, Active and Work segments. In constant-currency, revenues were expected to be down 5%, 12% and 9%, respectively, for the Outdoor, Active and Work segments.Financial Details of VFCV.F. Corp. ended the fiscal second quarter with cash and cash equivalents of $492.2 million, long-term debt of $4 billion and shareholders’ equity of $1.4 billion. Inventories declined 12.5% year over year .Net debt was further lowered by nearly $450 million year over year. The company is on track to pay the $750-million of next term loan of by the end of the year. It has been benefiting from inventory-cleanup efforts in the past few quarters, mainly due to rightsizing the brand's cost structure.The company’s board declared a quarterly dividend of 9 cents a share, payable Dec. 18, 2024, to shareholders of record as on Dec. 10, 2024.V.F. Corp.’s Other UpdatesV.F. Corp.’s Reinvent transformation program focuses on brand-building and improved operating performance. The company continues to advance transformation, thereby reducing costs, strengthening the balance sheet, fixing the Americas and turning around Vans.The company is on track to lower its cost base. It generated an additional cost savings of $65 million in the reported quarter, bringing the cumulative overall to roughly $200 million since the initiation of the program. It has completely executed the nescessary actions to deliver $300 million of cost savings by the end of the current fiscal year. VFC continues to reinvest some savings back into the business, mainly in key areas of product and brand building.  It also concentrates on strengthening its balance sheet. It has concluded the Supreme divestiture.VFC looks forward to fix the U.S. business. Its Americas business showed improved performance on a sequential basis, with revenues declining 9% in the fiscal second quarter. The company’s brand elevation is also resonating well. It is making smooth progress on the brand’s turnaround. Through the OTW premium label and Influencer program, Vans is focused on targeting influencers and early adopters using cities and product collaborations. V.F. Corp. has been investing in its stores. Its recently introduced North Face store on 6th Street in Williamsburg, Brooklyn, comprises the first ever shop-and shop for the North Face renewed, a program made to refurbish, recycle and resell the North Face product.What to Expect From VFC in Fiscal 2025?For the fiscal third quarter , management expects revenues to be in the bracket of $2.7-$2.75 billion, down 1-3% year over year. This is inclusive of an estimated negative foreign exchange impact of about 100 bps. Adjusted operating income is likely to be in the band of $170-$200 million, down from $218 million delivered in the year-earlier quarter. The gross margin is likely to be up year over year, gaining from lower product costs and fewer reserves. SG&A costs are anticipated to be modestly up year over year, on the reintroduction of incentive compensation. It expects to witness sequential improvement across the business. The tax rate is projected to be in the low-20s. VFC expects to record sequential improvement for the year-over-year revenue trend during the fourth quarter. It forecasts the gross margin and SG&A to grow at a similar rate to the third quarter.For fiscal 2025, management anticipates free cash flow from continuing operations plus proceeds from non-core physical asset sales of nearly $425 million, with core fundamentals remaining flat with the prior guidance. In relation to the original full-year outlook of $600 million, the change indicates the sale of Supreme and other reinvestment initiatives for the second half of fiscal 2025. This was partly offset by the stronger-than-expected proceeds for non-core physical asset sales. With respect to the Reinvent efforts, the company will fund an additional $50 million of cost savings.Key PicksSome better-ranked companies are G-III Apparel Group GIII, Crocs CROX and lululemon athletica LULU.G-III Apparel sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. GIII Apparel has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII’s fiscal 2024 sales indicates an increase of 3.3% from the year-ago period’s  level.Crocs carries a Zacks Rank #2 (Buy) at present. CROX has a trailing four-quarter earnings surprise of 14.9%, on average. The consensus estimate for Crocs’ current financial-year sales and earnings per share (EPS) indicates growth of 4.4% and 7.3%, respectively, from the year-ago levels.lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank of 2 at present.The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS indicates growth of 9.2% and 9.8%, respectively, from the year-ago figures. LULU has a trailing four-quarter earnings surprise of 7.9%, on average.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report V.F. Corporation (VFC): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Crocs, Inc. (CROX): Free Stock Analysis Report G-III Apparel Group, LTD. (GIII): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks