VF-V.F. Corp to Report Q3 Earnings: What Surprise Awaits Investors?

VF Corporation (VFC) Q3 Fiscal 2025 Earnings Preview - VF Corporation is expected to report a year-over-year decline in both revenue and earnings for Q3 fiscal 2025, with revenue estimated at $2.8 billion, a 7.2% decline from the prior-year quarter [1] - Earnings are projected at 34 cents per share, a more than 40% decline from the year-ago quarter, though the estimate has risen by a penny in the past 30 days [2] - The company has a history of earnings surprises, with a 46.3% surprise in the last reported quarter, but has missed consensus estimates by a sharp margin in the trailing four quarters [2] Key Factors Impacting VFC's Q3 Results - Challenging operating conditions, including inflationary pressures, are expected to negatively impact results [3] - Weak performance in certain regions and channels, particularly in the wholesale business in the United States, where major partners are taking a cautious approach to forward orders [3] - Direct-to-consumer (DTC) business is also underperforming, with Americas sales expected to fall 11.3% year-over-year, wholesale revenues to decline 0.7%, and DTC revenues to drop 11.5% [3] Brand Performance and Market Challenges - VF Corp's brands, including The North Face and Vans, are experiencing softness due to shifting consumer preferences, increased competition, and declining appeal among younger customers [4] - Sales at Vans and The North Face are anticipated to decline by 8.7% and 5.9%, respectively, for the quarter [4] - Elevated promotional activity and higher costs are likely to have further dented the company's bottom-line performance [5] Management Guidance and Cost Management - Management projected Q3 revenues to be between$ 2.7- $2.75 billion, down 1-3% year-over-year, including a negative foreign exchange impact of about 100 basis points [5] - Adjusted operating income is expected to be in the range of$ 170- $200 million, down from$ 218 million in the year-earlier quarter [5] - Selling, general, and administrative costs are anticipated to increase modestly due to the reintroduction of incentive compensation [5] Transformation Program and Valuation - VF Corp's Reinvent program aims to improve brand-building, operating performance, and cost management, with a focus on North America performance, Vans' turnaround, and strengthening the balance sheet [6] - The company's stock is trading at a premium valuation, with a forward 12-month price/earnings ratio of 31.18, higher than the industry average of 14.72 and its median of 17.13 [8] - VFC shares have surged 53.9% in the past three months, outperforming the industry's 17.1% growth [9] Other Companies with Potential Earnings Beats - lululemon athletica (LULU) is expected to report Q4 fiscal 2024 revenue of $3.6 billion, an 11.3% year-over-year increase, with earnings projected at$ 5.81 per share, up 9.8% from the year-earlier quarter [10][11] - Royal Caribbean Cruises (RCL) is anticipated to report Q4 2024 revenue of $3.8 billion, a 13.2% year-over-year increase, with earnings projected at$ 1.50 per share, up 20% from the year-earlier quarter [12][13] - Fox (FOXA) is expected to report Q3 fiscal 2025 revenue of $4.9 billion, a 15.4% year-over-year increase, with earnings projected at 64 cents per share, up 88.2% from the year-earlier quarter [14][15]