On Monday, shares of VF Corp (NYSE:VFC) were added to JPMorgan’s Negative Catalyst Watch List. The company revised its expectations for the company’s future earnings, citing several unfavorable factors affecting its brands.
JPMorgan adjusted its earnings per share (EPS) forecast for VF Corp for fiscal 2025 to $1.02, significantly lower than the consensus estimate of $1.34. The company also expects revenue to decline 4.8% for the same period, in contrast to the Street’s projection of stable revenue.
Additionally, JPMorgan expects operating margins of 7.0%, lower than the consensus of 7.8%. For fiscal 2026, the EPS estimate was set at $1.61, compared to Street expectations of $1.78, with expected revenue growth of 4%, slightly below the 5% forecast of Street.
The firm expects VF Corp to face a negative earnings revision for the fourth quarter of fiscal 2024, ahead of the company’s earnings report. JPMorgan’s modeling suggests that incentive compensation will completely negate the benefits of any cost savings.
Adjusted EPS for the fourth quarter is expected to be a loss of $0.07, in contrast to the Street’s forecast of a profit of $0.02. This is based on an estimated 15% decline in revenue, which is higher than the Street forecast of an 11% decline, and gross margin expansion of 160 basis points to 51.2%, which is higher than the 50.4% expected by Street.
The company’s analysis highlights persistent wholesale revenue challenges in both North America and Europe, particularly in the Outdoor channel, impacting The North Face’s performance in the Americas. Additionally, a similar revenue impact is expected in the fourth quarter for Vans, as seen in the third quarter, due to efforts to reset the brand.
Timberland continues to face challenges in the wholesale industry as it focuses on diversifying its product lineup beyond just boot silhouettes. Dickies’ business in the Americas also shows no signs of improvement, due to value-conscious consumers’ discretionary challenges and assortment challenges after excessive rotation into lifestyle offerings.
Insights on InvestingPro
In light of JPMorgan’s recent analysis and projections for VF Corp, InvestingPro’s data and recommendations provide additional context for investors. VF Corp’s market capitalization stands at $5.35 billion, reflecting the scale of the business in market conditions. Despite the recent negative outlook, analysts expect net income growth and sales growth this year, which could signal a potential turnaround. However, the stock has seen significant volatility, with price movements indicating a bearish trend as it trades near its 52-week low.
Tips from InvestingPro suggest that while the stock has suffered in the short term, it is expected to be profitable in the next year. Additionally, VF Corp has a long history of maintaining dividend payments, with 54 consecutive years of dividends, with a current yield of 2.62%. The valuation implies a strong free cash flow yield, which could be a positive sign for value investors. For deeper analysis and additional insights, investors can explore additional tips on InvestingPro, where 19 more analyst earnings reviews and other metrics are available. Make sure you use the coupon code PRONEWS24 to get an additional 10% discount on the annual or biennial Pro and Pro+ subscription.
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