VF Corp falls short of expectations coinciding with CFO departure

VF Corporation, owner of Vans and The North Face, has published "disappointing" financial results for the third quarter. The company also announced that Matthew Pucket, its Executive Vice President and Chief Financial Officer, is set to exit.

For the third quarter of FY24, ending 30 December 2023, the company's revenue was below expectations, down by 16% to £2.3 billion ($3 billion). This was due to weakened demand for Vans in the US as well as delayed wholesale deliveries for The North Face.

Gross margin sat at 55.1%, up 20 basis points and adjusted gross margin was 55.3%, up 40 basis points. Despite the company’s "favourable mix", margins were partially offset by unfavourable foreign exchange rates. The operating margin was down by 1.1%.

In terms of brands, The North Face’s revenues dipped by 10% (down 11% in constant dollars). Vans was down 28% (down 29% in constant dollars), inclusive of deliberate actions taken to right-size inventories in the wholesale channel.

Geographically, America took the biggest hit, down by 24%, whereas the EMEA was down by 7%.

Bracken Darrell, President and CEO, said: "Our third quarter top-line performance was disappointing. However, we are confident the actions we are implementing as part of Reinvent will enable VF to stabilize and then grow revenue and improve operational performance across brands and regions.

"We have already begun to see the impact of our efforts to right-size the company’s cost structure and improve its inventory position, resulting in stronger0than-expected cash flow and expanded gross margin in the quarter.

"This quarter marked the beginning of the next phase of our transformation plan: resetting the marketplace for Vans, reviewing our brand portfolio and continuing to build the organization of the future. As we approach the end of this fiscal year, my confidence in VF’s future is rising."

Looking ahead, the company reaffirmed its free cash flow guidance for FY24 of approximately £475 million ($600 million).