Here's How V.F. Corp is Poised Ahead of Q2 Earnings: Factors to Note

Core Viewpoint - V.F. Corporation (VFC) is expected to report declines in both revenue and earnings for the second quarter of fiscal 2025, with revenues estimated at $2.8 billion, reflecting a 7.3% decrease year-over-year, and earnings projected at 42 cents per share, indicating a 33.3% decline from the previous year [1] Group 1: Financial Performance Expectations - The Zacks Consensus Estimate for VFC's quarterly revenues is $2.8 billion, down 7.3% from the prior-year quarter [1] - The consensus estimate for earnings is 42 cents per share, a decrease of 33.3% from the year-ago quarter [1] - V.F. Corp has experienced earnings surprises in the past, but has missed the Zacks Consensus Estimate in the trailing four quarters [1][5] Group 2: Operational Challenges - V.F. Corp is facing a tough operating environment characterized by inflationary pressures and soft performance across various regions and channels [2] - The wholesale business in the United States is particularly challenged, with major partners adopting a cautious approach to forward orders [2] - Brands like The North Face and Vans are experiencing weak sales, struggling to connect with core customer bases due to shifting consumer preferences and increased competition [3] Group 3: Brand-Specific Issues - The North Face is facing challenges in maintaining its premium positioning while appealing to a broader audience, leading to weak sales [3] - Vans is dealing with a saturated sneaker market and declining appeal among younger customers, contributing to its sales decline [3] - Elevated promotional activity and higher costs are further impacting VFC's bottom-line performance [3] Group 4: Management Insights and Future Outlook - Management anticipates a slight year-over-year increase in SG&A expenses due to holiday season spending and reinvestments, offset by cost-saving measures [4] - Sales for Vans and The North Face are expected to decline by 17.7% and 4.7%, respectively, with overall sales in the Americas projected to fall by 6.5% year-over-year [4] - The company's transformation program, Reinvent, aims to enhance brand focus and improve operating performance, with four key objectives including improving North America performance and reducing costs [4] Group 5: Valuation and Market Performance - V.F. Corp stock is trading at a premium valuation with a forward price/earnings ratio of 20.52, compared to the industry average of 12.84 [6] - Over the past three months, VFC's shares have decreased by 1.6%, while the industry has seen a growth of 9.9% [6]