Vans sneaker maker falls short of quarterly expectations; CFO to depart

VF Corp, the maker of Vans sneakers, fell short of quarterly expectations on Tuesday, coupled with the announcement of its CFO Matt Puckett's forthcoming departure later this year, leading to a 7 per cent decline in the company's shares during extended trading.

The company, which had previously withdrawn its annual forecasts and initiated a cost reduction plan in October, revealed that it has commenced an extensive strategic review of its Global Packs business, encompassing brands such as Kipling and JanSport.

"We're conducting a thorough evaluation of all our brands," stated Bracken Darrell, who assumed the CEO role in June 2023 amidst VFC's efforts to address declining demand for its sneakers. 

VFC's shares experienced a nearly 32 per cent decline in 2023.

Apparel and footwear manufacturers have grappled with sluggish wholesale volumes as retailers trim their inventories amid soft discretionary spending in the US.

VFC reported a 16 per cent decline in third-quarter revenue, attributed to subdued demand during the critical holiday shopping season, despite increased promotional activities. 

Its North Face business also witnessed a decline in US volumes.

"We are observing a slowdown in consumer confidence and continued caution in the wholesale channel," remarked Puckett during a post-earnings call. He will continue to serve as CFO until his successor is appointed.

To address the waning popularity of its Vans sneakers, VFC has intensified promotional efforts, as revenues for the brand have dwindled over several quarters. 

In the reported quarter, revenue from the Vans brand plummeted by 28 per cent, with a 24 per cent decline in the Americas region overall.

The parent company of Timberland reported an adjusted profit of 57 cents per share, falling short of LSEG estimates of 77 cents, as per LSEG data. Revenue stood at $2.96 billion, missing Street expectations of $3.24 billion.

VF Corp cited a cyber security incident in December, which disrupted order fulfilment on its e-commerce website, as a factor impacting earnings per share by approximately 4-5 cents.

(With Reuters Inputs)