On Tuesday, Williams Trading reiterated a Sell rating on shares of VF Corp (NYSE:VFC) with a price target of $10.00, as the company prepares to report its second quarter fiscal year 2025 earnings after market close on October 28. The analyst noted that consensus estimates might not fully account for the recent sale of VF Corp's Supreme brand to EssilorLuxotica (EL:FP-NR).
VF Corp, which received $1.5 billion from the Supreme transaction, is also scheduled to host the first of two investor days on October 30 in New York City. Despite positive trends in certain markets, such as the Vans Knu-Skool and the Timberland 6-inch boot, the analyst expressed concern over VF Corp's debt, which exceeds $3.5 billion.
The company's strategy to prioritize sales to reduce debt could lead to aggressive sell-in strategies at the expense of long-term brand health. The analyst pointed out that while the black/true white Knu-Skool is selling well, other colors are underperforming and are being promoted at retailers and on the Vans website.
VF Corp's management had previously expressed confidence in The North Face brand leading a turnaround, despite not providing guidance in the first quarter fiscal year 2025 earnings call. However, the analyst believes that VF Corp may rely too heavily on wholesale sell-in of The North Face to offset weaknesses in other brands, potentially overburdening the brand.
With sales in the Americas having declined over 12% in the first quarter of fiscal year 2025, the analyst remains cautious about VF Corp's performance in the region.
In other recent news, VF Corp has been the focus of various analysts. Citi maintains a Buy rating on VF Corp, despite projections of second-quarter sales and earnings per share falling below market consensus. The firm also anticipates a revenue decline of 7.6%.
Meanwhile, JPMorgan maintains a Neutral stance, anticipating that VF Corp's earnings per share for fiscal years 2025 through 2027 will fall short of consensus estimates. The firm also expects VF Corp to experience a revenue growth of +3% in FY26 and FY27, slightly less than the Street's forecast of +4%.
Stifel has raised its stock price target for VF Corp to $25, reinstating a Buy rating due to anticipated upside potential. However, Wells Fargo downgraded VF Corp from Equal Weight to Underweight, citing concerns about the company's current valuation. Barclays upgraded VF Corp to Overweight from Equal-weight, increasing its price target to $22, while Jefferies initiated coverage with a hold rating and a $20 target price.
Despite these analyst ratings, VF Corp recently completed the sale of its Supreme brand for $1.5 billion, a strategic move that enabled the company to pay down debt and focus on revitalizing its core brands.
The company also announced additional cost savings of $50 million in Q1 of fiscal year 2025 and maintained its Q2 outlook, forecasting a modest revenue decline, a slight increase in gross margin, and a minor rise in SG&A expenses. These are the recent developments shaping VF Corp's trajectory.
InvestingPro Insights
As VF Corp (NYSE:VFC) approaches its Q2 FY2025 earnings report, InvestingPro data provides additional context to the challenges and opportunities facing the company. Despite a market capitalization of $7.08 billion, VF Corp's financials reflect recent struggles. The company's revenue for the last twelve months as of Q1 2025 stood at $10.28 billion, marking a 10.16% decline. This aligns with the analyst's concerns about declining sales in the Americas.
InvestingPro Tips highlight that VF Corp has maintained dividend payments for an impressive 54 consecutive years, demonstrating a commitment to shareholder returns even in challenging times. However, the company was not profitable over the last twelve months, which could explain the analyst's cautious stance.
Interestingly, VF Corp's stock has seen a large price uptick over the last six months, with InvestingPro data showing a 43.83% total return. This contrasts with the Sell rating from Williams Trading, suggesting that market sentiment may be more optimistic than some analyst projections.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for VF Corp, providing a deeper understanding of the company's financial health and market position.
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