Post Earnings Coverage as VF Corporation Q3 Bottomline Improve 13%

Upcoming AWS Coverage on Michael Kors Holdings Ltd Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 1, 2016 / Active Wall St. announces its post-earnings coverage on V.F. Corp. (NYSE: VFC). The company reported its financial results for the third quarter fiscal 2016 (Q3 FY16) on October 24, 2016. The Greensboro, North Carolina-based company’s gross margin improved 70 basis points and earnings per share were up 13% y-o-y. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of V.F. Corp.’s competitors within the Apparel space, Michael Kors Holdings Ltd. (NYSE: KORS), will report its second quarter fiscal year 2017 financial results on Thursday, November 10, 2016, after the market closes. AWS will be initiating a research report on Michael Kors Holdings following the release of the company’s financial results.

Today, AWS is promoting its earnings coverage on VFC; touching on KORS. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=VFC

http://www.activewallst.com/registration-3/?symbol=KORS

Earnings Reviewed

During the three months ended in September 2016, V.F. Corp. reported total revenues of $3.49 billion compared to $3.53 billion recorded at the end of Q3 FY15. The company’s net sales fell short of the market expectations of $3.66 billion. V.F. Corp.’s net sales during Q3 FY16 dropped 1% y-o-y to $3.46 billion. The company attributed this decline in net sales to lower revenues at the company’s Jeanswear, Sportswear, and Imagewear segments, and was partially adjusted by improved sales at its Outdoor & Action Sports segment. Furthermore, royalty income climbed 6% y-o-y to $30.66 million in the reported quarter.

The manufacture of lifestyle apparel reported net income of $498.49 million, or $1.19 per diluted share, in Q3 FY16 compared to $459.86 million, or $1.07 per diluted share. Adjusted net income increased 6.5% y-o-y to $1.14 per diluted share in Q3 FY16. The company’s adjusted net income for Q3 FY16 also fell short of market expectations of $1.15 per diluted share.

Operating Metrics

In the reported quarter, V.F. Corp.’s gross margin improved to 70 basis points, 48.4% of net sales, primarily due to benefits from pricing, mix and lower product costs, yet partially offset by foreign currency translation loss. The company’s operating income came in at $635.43 million, or 18.2% of net sales, in Q3 FY16 compared to $639.56 million, or 18.1% of net sales, in the prior year’s comparable quarter. During the quarter, foreign exchange translation negatively impacted operating margin by 40 basis points.

Segment-Performance

The company’s Outdoor & Action Sports segment’s net sales grew 2% y-o-y to $2.34 billion in the reported quarter. The segment’s operating profit was up 1% y-o-y to $490.47 million in Q3 FY16. Additionally, operating margin came in at 21.0% in Q3 FY16 compared to 21.2% in the same period last year.

In Q3 FY16, Jeanswear sales fell 6% y-o-y to $701.43 million which was attributable to unseasonably warm weather in September along with reduced consumer demand and shifts in the delivery of orders. The segment’s operating income also declined 10% y-o-y to $142.43 million; whereas and operating margin was down 190 basis points to 20.3% in the reported period.

V.F. Corp.’s Imagewear segment’s Q3 FY16 revenues were down by 3% y-o-y to $281.54 million. However, the segment’s Q3 FY16 operating margin improved to $46.63 million, or 16.6% of segment sales, from $41.83 million, or 14.3% of segment revenues, in the year ago quarter.

Sportswear segment reported a 13% y-o-y decline in quarterly revenue and stood at $140.71 million in Q3 FY16. For the reported quarter, operating income came in at $15.08 million, down 35% y-o-y. Furthermore, operating margin was 10.7% in Q3 FY16 compared to 14.3% in the prior year’s comparable quarter.

Cash Flow & Balance

During the first nine months of FY16, V.F. Corp.’s net cash flow provided by operating activities came in at $43.37 million compared to net cash used by operating activities amounting to $280.21 million in the year ago period. At the close of books in September 2016, V.F. Corp. had cash and equivalents balance of $737.83 million versus $567.64 million at the close of books in September 2015.

Share Buyback

On October 20, 2016, V.F. Corp.’s Board of Directors raised quarterly cash dividend by 14% to $0.42 per share. The dividend is payable on December 19, 2016, to shareholders of record on December 09, 2016. It is the company’s 44th consecutive yearly hike in quarterly dividend payments.

During Q3 FY16, the company repurchased 2.7 million shares of its own stock for $166 million under its previously approved share repurchase program. In FY16, the company has repurchased nearly 16 million shares for $1 billion and is authorized to buyback approximately 15 million remaining shares.

Earnings Guidance

V.F. Corp. cut its earnings guidance for FY16 and now expects net sales to grow at 2% to about $12.2 billion, lower than the previously provided net sales growth range of 3% to 4%. The company’s management forecasts gross margin and operating margin for FY16 to be 48.6% and 14.3%. Furthermore, earnings are now expected to grow by 3% y-o-y to $3.13 per share compared to previous expectations of a 5% y-o-y growth to $3.20 per share.

Stock Performance

V.F. Corp.’s stock is trading slightly down 0.20% from its previous closing price of $54.32, closing Monday’s session at $54.21 on volume of 2.95 million shares, which was higher than the 3 months average volume of 2.86 million shares. The company’s shares are trading a PE ratio of 18.82 and have a dividend yield of 3.10%.

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