Shares for VF Corp. rose 4.3% in after market trading on Tuesday after posting third quarter earnings that decreased from the same period last year but beat estimates.
In the quarter, the Denver-based company reported that its net revenue decreased by 3% to $3.5 billion, down from $3.6 billion the same period last year.
The company’s bottom line totaled $507.87 million, or $1.31 per share. This compares with $517.80 million, or $1.32 per share, in last year’s third quarter. Analysts on average had expected the company to earn $0.98 per share, according to figures compiled by Thomson Reuters, which sent the stock higher Tuesday afternoon.
By brand, Vans and Dickies led the losses this quarter, with the footwear brand down 13% to $926.9 million in sales for Q3. Dickies was down 16% to $177 million.
Standout performance came at VF’s outdoor brands, led by The North Face. The brand’s sales were up 7% to $1.2 billion in sales this quarter, while Timberland’s sales were flat at $595.5 million in the third quarter.
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In the company’s third quarter earnings statement on Tuesday, interim president and CEO role at VF Corp. Benno Dorer noted that VF was “evaluating and deploying a series of strategic actions” to strengthen the company’s financial position.
These actions include a review of “strategic alternatives” of the company’s Global Packs business, consisting of the Kipling, Eastpak and JanSport brands. “While these iconic and profitable businesses are strong contributors of value, VF is committed to ensuring they are optimally positioned to achieve their full potential while enhancing management focus on the company’s greatest strategic priorities,” the company noted in the earnings release.
This move would be in line with a December report by Bloomberg, which cited people close to the talks who said a deal could value the backpack and apparel brand at close to $500 million.
What’s more, the company also said on Tuesday it will conclude a number of asset sales during the second half of this fiscal year, including the sale and leaseback of VF’s European headquarters in Stabio, Switzerland – which the company just announced in December would be expanding.
“We are committed to improving execution through a sharpened focus on the biggest consumer opportunities and enhanced operational performance,” Dorer said in a statement. “Consistent with this objective, we are shifting resource priorities across the company, including by reducing the dividend, exploring the sale of non-core assets, cutting costs and eliminating non-strategic spend, while enhancing the focus on the consumer through targeted investments.”
Looking ahead, the company is sticking to its previous guidance, with total revenues for fiscal 2023 expected to be up approximately 3% in constant dollars. For Vans, VF is expecting revenue to decline by high single digits, and the North Face is expected to be up at least 14% in constant dollars for the year.
“We are confident these actions will enable a return to profitable and sustainable growth and, with that, strong shareholder value creation,” Dorer added.
