The shoemaker of the popular brand, Vans -- VF Corp. VFC, highlighted that a dip in the segment sales was part of the company's turnaround plan, and investors would likely see the "high quality" earnings in the future.
What Happened: The Vans unit of VF Corp reported a 20% drop in sales as compared to the previous year and an 8% decline sequentially.
VF Corp's President and CEO, Bracken Darrell, underscored that if you exclude Vans, the company's total revenue growth would be up 4%.
"We told you last quarter that turnarounds are often nonlinear. To be clear, turnarounds can look nonlinear from a numerical standpoint, and this quarter is an illustration of that," he said.
Darrell highlighted that 60% of the decline in the segment this quarter was a direct effect of deliberately reducing revenue to eliminate unprofitable or unproductive business. Additionally, 25% of it was driven by reduced storefronts and reduced channel inventory in China.
"Another 35% of the total decline was driven by additional set of deliberate actions, which were also in place last quarter that had a lower impact. These include the closure of value doors mainly in the U.S. that were margin eroding," he said.
Underscoring the reasons for these declines, Darrell said, "And the results of these actions and others are that Vans gross margin is up significantly year-over-year."
However, concerning the revenue, he said, "You don't see the results just yet numerically, but you will. And when you do, they'll be high quality. "
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Why It Matters: VF Corp reported a revenue of $2.14 billion, down 5% year over year, missing the analyst consensus estimate of $2.18 billion. Whereas it posted a quarterly loss of adjusted earnings per share of 13 cents, beating the street view of a 14 cents loss.
The company anticipates a 3% to 5% drop in revenue for the first quarter of the fiscal year 2026, alongside an adjusted operating loss ranging from $110 million to $125 million.
VFC shares ended 15.80% lower on Wednesday and rose 0.41% in after-hours. The company has declined 43.59% on a year-to-date basis and 1.46% over a year.
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, ended lower on Wednesday. The SPY was down 1.69% to $582.86, while the QQQ dropped 1.39% to $513.04, according to Benzinga Pro data.
Benzinga Edge Stock Rankings shows that VFC had a weaker price trend over the short, medium, and long term. Its value ranking was poor at the 17.46th percentile; the details of other metrics are available here.
The futures of the S&P 500, Nasdaq 100, and Dow Jones were trading higher on Thursday.
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