VF Corp (NYSE:VFC) Misses Q1 Revenue Estimates, Stock Drops

Adam Hejl /
2024/05/22 4:14 pm EDT

Lifestyle clothing conglomerate VF Corp (NYSE:VFC) missed analysts' expectations in Q1 CY2024, with revenue down 13.4% year on year to $2.37 billion. It made a non-GAAP loss of $0.32 per share, down from its profit of $0.17 per share in the same quarter last year.

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VF Corp (VFC) Q1 CY2024 Highlights:

  • Revenue: $2.37 billion vs analyst estimates of $2.41 billion (1.5% miss)
  • EPS (non-GAAP): -$0.32 vs analyst estimates of $0.01 (-$0.33 miss)
  • Gross Margin (GAAP): 48.4%, down from 49.6% in the same quarter last year
  • Free Cash Flow was -$117.3 million, down from $1.10 billion in the previous quarter
  • Market Capitalization: $4.84 billion

Owner of The North Face, Vans, and Supreme, VF Corp (NYSE:VFC) is a clothing conglomerate specializing in branded lifestyle apparel, footwear, and accessories.

Apparel, Accessories and Luxury Goods

Within apparel and accessories, not only do styles change more frequently today than decades past as fads travel through social media and the internet but consumers are also shifting the way they buy their goods, favoring omnichannel and e-commerce experiences. Some apparel, accessories, and luxury goods companies have made concerted efforts to adapt while those who are slower to move may fall behind.

Sales Growth

A company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. VF Corp's revenue was flat over the last five years.

VF Corp Total Revenue

Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. VF Corp's recent history shows a reversal from its five-year trend as its revenue has shown annualized declines of 6% over the last two years. 

VF Corp also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales averaged 3.6% year-on-year declines. Because this number is higher than its revenue growth during the same period, we can see that foreign exchange rates have been a headwind for VF Corp.

VF Corp Year-On-Year Constant Currency Revenue Growth

This quarter, VF Corp missed Wall Street's estimates and reported a rather uninspiring 13.4% year-on-year revenue decline, generating $2.37 billion of revenue. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, VF Corp broke even from a free cash flow perspective, subpar for a consumer discretionary business.

VF Corp Free Cash Flow Margin

VF Corp burned through $117.3 million of cash in Q1, equivalent to a negative 4.9% margin. This caught our eye as the company shifted from cash flow positive in the same quarter last year to cash flow negative this quarter.

Key Takeaways from VF Corp's Q1 Results

We struggled to find many strong positives in these results. Its revenue, operating margin, and EPS fell short of Wall Street's estimates. Its full-year free cash flow guidance also missed analysts' expectations. Overall, this was a bad quarter for VF Corp. The company is down 9.3% on the results and currently trades at $11.2 per share.

VF Corp may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.