Vans parent VF Corp (NYSE:VFC) stock gained in the premarket session on Wednesday after the company reported first-quarter results, which surpassed analyst expectations.
The company reported quarterly adjusted earnings per share of 24 cents loss, beating the street view of a 33 cents loss. Quarterly sales of $1.77 billion (flat year-over-year) beat the analyst consensus estimate of $1.70 billion.
The company, whose extensive portfolio includes 11 brands such as Vans, The North Face, Timberland, Altra, and Dickies, demonstrated improved financial metrics despite ongoing strategic adjustments.
Also Read: VF Corp CEO Defends Vans Decline As Strategic: ‘High-Quality Earnings’ Are Coming
The adjusted gross margin expanded by 290 basis points year-over-year, reaching 54.1%. At the end of the quarter, the company held cash and cash equivalents totaling $642.4 million. Inventories stood at $2.14 billion. Additionally, VF Corp declared a quarterly dividend of 9 cents per share, which is payable on September 18.
CEO Bracken Darrell, marking his two-year tenure at the helm, emphasized that VF Corp’s performance exceeded both internal expectations and guidance for the quarter.
While revenue trends improved to flat year-over-year (a 2% decline in constant currency), the company delivered a significantly stronger bottom line.
Darrell highlighted the continued positive momentum of The North Face and Timberland, alongside robust growth from Altra. Conversely, the Vans unit experienced a 14% year-over-year sales decline, primarily attributed to ongoing channel rationalization efforts aimed at restoring the brand to healthy, sustainable growth.
Darrell is prioritizing a turnaround at Vans, where sales have been declining. This aligns with recent reports, including one by Bloomberg, indicating that the company is closing underperforming Vans stores and scaling back on discounting to strengthen brand strength. Darrell had previously defended the Vans decline as a strategic move toward “high-quality earnings.”
New product sales, particularly from lines like Super Lowpro, Curren Caples Skate, and OTW, are showing growth, effectively offsetting declines in some of the brand’s iconic product lines.
Darrell reiterated that VF Corp remains on track with its comprehensive transformation strategy, which focuses on cost reduction, margin improvement, debt reduction, and organizational reshaping.
He affirmed that the foundational reset is complete, and the company is now poised to enter its next phase, centered on reigniting growth. The entire organization is reportedly aligned around restoring long-term growth in both revenue and profitability.
Outlook
VF Corp expects a second-quarter revenue decline of 4% to 2% year-over-year, with an adjusted operating income projected to be between $260 million and $290 million.
Despite the recent premarket gains, the stock has experienced a significant decline of over 42% year-to-date, reflecting investor concerns amid the ongoing turnaround efforts.
Price Action: VFC shares are trading higher by 15.5% to $14.32 premarket at last check on Wednesday.
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