VF Corp. (ticker: VC) reported disappointing earnings for the second quarter and has withdrawn its guidance for fiscal 2024. As a result, the company’s stock experienced a decline during after-hours trading.
The company revealed that it is no longer providing an outlook for earnings and revenue for the fiscal year due to challenges in improving the sales of its Vans brand. The initial guidance had projected earnings per share to range between $2.05 and $2.25, with sales either remaining flat or experiencing a slight decrease.
In a news release, Matt Puckett, VF’s Chief Financial Officer, acknowledged that although there were some areas of strength and solid profit margins in the second quarter, the company’s performance in both Vans and the U.S. market was insufficient. The company emphasized that there is no expectation of an improvement in Vans’ performance during the second half of the fiscal year.
During the second quarter, Vans sales dropped by 21% compared to the previous year. Total revenue declined by 2% year-over-year to reach $3 billion, which was on par with expectations. However, adjusted earnings of 63 cents per share fell slightly short of the consensus estimate of 65 cents per share according to FactSet data.
As a consequence of these results, VF’s stock experienced a 10.3% decline to $15.35 in after-hours trading.
To address these challenges, VF Corp. introduced a new plan called Project Reinvent. The initiative includes objectives such as improving business operations in North America, expediting the revitalization of the Vans brand, cost reduction efforts, and strengthening the company’s balance sheet. As part of Project Reinvent, Kevin Bailey, Vans’ Global Brand President, will step down from his position to lead the initiative. While the search for a new brand president is underway, CEO Bracken Darrell will assume a more active role in overseeing the brand’s operations. Additionally, VF plans to reduce costs by $300 million.
VF has been grappling with Vans’ performance for multiple quarters, and even the strong sales results from The North Face—showing a 19% increase this quarter—have been unable to boost the company’s stock. As a result, the company has become a prominent target for activist investors advocating for significant changes within the organization.