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Vans parent VF Corp turned a profit after two consecutive quarterly losses and beat second-quarter sales estimates on Monday, benefiting from sequential improvement in its direct-to-consumer business and leaner inventory, sending its shares up about 16 percent after the bell.
CEO Bracken Darrell’s turnaround strategy including appointment of executives like Sun Choe as global brand president for Vans, sale of its streetwear brand Supreme has started to show stronger growth in China followed by Americas and EMEA.
VF Corp’s quarterly revenue rose 9 percent in China, on a constant currency basis, compared with a 4 percent increase in the year ago period.
The company’s revenue fell 6 percent to $2.76 billion from a year ago, beating analysts’ estimates of $2.71 billion, according to data compiled by LSEG.
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The company’s margins continued to improve due to inventory clearance initiatives — such as increased promotions and discounts — implemented in the previous quarters, even in the face of rising business reinvestment.
VF Corp’s quarterly gross margin expanded 120 basis points to 52.2 percent.
On an adjusted basis, VF Corp posted a profit of 60 cents per share, compared with analysts’ estimates of 37 cents per share.
Peers Deckers Outdoor, Gap and Abercrombie & Fitch also saw a boost in demand for their trendier apparel and footwear.
Analysts from Guggenheim Securities noted earlier this month that VF Corp could see sequential improvement in wholesale throughout FY25, as retailers are expected to increase orders for both The North Face and Vans during the Spring season.
Learn more:
What Is VF Corp.’s Plan for Vans and Its Other Struggling Brands?
Activist investors are demanding big changes at the fashion conglomerate, which also owns The North Face, Supreme, Timberland and other brands. The company will have a chance to lay out its own vision when it releases earnings this week.