VF Corp Jumps After Earnings Beat as Turnaround Takes Hold

VF Corp. shares soared after the apparel and shoe company reported fiscal first-quarter earnings that beat Wall Street expectations, signalling that turnaround efforts are beginning to show results.

The Denver-based company reported revenue of $1.8 billion, better than the $1.7 billion forecast by a Bloomberg survey of analysts. An adjusted loss of 24 cents was narrower than expectations.

Its shares rose 22 percent at 9:35 a.m. in New York on Wednesday. The stock had fallen 42 percent for the year through Tuesday’s close.

The owner of the North Face brand is in the midst of a revamp led by chief executive officer Bracken Darrell, who took the helm about two years ago. He’s focused on improving its Vans brand, where sales have been falling.

“We have reset the table and soon will move to growth,” Darrell said in a statement.

The company is closing poorly performing Vans stores and trying to pull back on discounting of the brand. Revenue at Vans fell 14 percent in the most recent quarter versus last year. That’s an improvement from the prior quarter.

The company said in a presentation that sales of new Vans items, including Super Lowpro and Curren Caples Skate shoes, are increasing. Those gains are offset by sharp declines in its core products, though.

Executives told analysts they expect a $60 million to $70 million hit to gross profit from tariffs in the current fiscal year. They said they think they’ll be able to “fully mitigate” the additional costs of tariffs the following fiscal year by raising prices, shifting sourcing and taking other measures.

“There’s a lot of discussion about ‘Why is the economy so good? Why are the tariffs not showing up?’” Darrell said on a conference call with analysts. “It’s because the tariffs really haven’t shown up in most people’s costs yet — they’re flowing through inventory and making their way into our costs and everybody else’s.”

VF Corp. said it expects a second-quarter revenue decline between 2 percent and 4 percent year-over-year. The company isn’t providing detailed full-year guidance as it works on a reset. It said adjusted operating income and operating cash flow will be up this year versus last.

By Jeannette Neumann

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The Timberland- and Vans-owner reported operating loss of as much as $125 million this quarter.