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VF Corp. slumped after the owner of Vans sneakers and the Supreme streetwear brand reported earnings that fell short of Wall Street’s expectations, citing port congestion and ongoing coronavirus outbreaks that have constrained suppliers.
Adjusted earnings from continuing operations climbed to $1.11 a share in the second quarter, the company said Friday, missing the $1.14 average of analysts’ estimates. Sales were $3.2 billion, compared with an estimate of $3.5 billion. Revenue in the active segment, which includes the Vans footwear line, also fell short of estimates.
The shares fell as much as 6.2 percent in New York trading on Friday before paring some of the decline. VF Corp. stock dropped 13 percent this year through Thursday’s close.
“Expectations overall have been relatively low over the past couple of months, with many expecting Vans to be weak,” Citi analyst Paul Lejuez said in a note. “And while most recently there had been some more optimism about Vans, we believe today’s report is likely to squash those hopes.”
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VF, which also owns brands such as the North Face and Timberland, is the latest apparel company to blame operational woes on a snarled global supply chain, with clogged ports and factory shutdowns in countries such as Vietnam. The company said a “resurgence of Covid-19 lockdowns in key sourcing countries has resulted in additional manufacturing capacity constraints.” The Vans brand also experienced lower-than-expected sales during the back-to-school season.
Executives on a call with analysts reiterated that supply-chain bottlenecks have affected the company’s ability to source and move products to the U.S. Virtually all of its brands are experiencing delays in shipping merchandise, while consumer demand remains high.
VF gets about 10 percent of its products from factories in Vietnam. For its Supreme brand, that percentage rises to 25 percent. The nation, which has become a hub for the global apparel industry, has struggled to contain the Covid-19 pandemic, with workers there fleeing cities amid harsh prevention measures.
The company raised its full-year earnings forecast to $3.20 a share from a prior expectation of $3.05. Analysts expected $3.16.
By Richard Clough
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