VF Corp (VFC, Financial) released its fiscal fourth-quarter 2020 results on May 15 before the market opened.
Snapshot of the quarter
The company’s top and bottom line missed expectations. A goodwill impairment charge and the Covid-19 pandemic took a toll on company’s results.
The U.S. global apparel and footwear company reported adjusted earnings per share of 10 cents in the fourth quarter, down 83.3% year-over-year. Analysts had predicted EPS of 13 cents. Revenue of $2.1 billion was down 34.6% over the past year. This was also below analysts’ expectations of $2.31 billion.
The CEO of the company, Steve Rendle, commented the following:
“Through the first ten months of fiscal 2020 our business delivered results above our stated long-term growth objectives. Then the world changed for all of us as a result of COVID-19. From the early days of the outbreak VF has taken a people-first approach in our COVID-19 response, prioritizing the health and safety of our people, while also protecting their financial well-being.”
Segment performance
The Active segment, which consists of activity-based lifestyle brands, saw revenue decline 9% in the fourth-quarter.
The Work segment’s revenue plunged 1% on a year-over-year basis. This segment provides work-inspired lifestyle clothing and footwear as well as occupational apparel, which are sold through direct-to-consumer (DTC), wholesale and business-to-business channels.
The Outdoor segment, which offers outdoor-based lifestyle brands including footwear, equipment, backpacks, luggage and luxuries, witnessed a decline in revenue of 15%.
As far as revenue growth by channel is concerned, DTC revenue and wholesale revenue fell 11% each, while digital revenue climbed 8%.
Liquidity
The company claims to have adequate liquidity to meet its near term obligations and operational needs amid the disruption arising from the novel coronavirus. The company is confident that it will be able to navigate through the foreseeable future until the prevailing circumstances improve and recover.
Currently, the company has cash on hand of $3 billion. In addition to this, it has borrowed roughly $2.2 billion under its revolving credit facility.
The CEO has taken a reduction of 50% in his base salary, while entire Executive Leadership Team reduced their base salaries by 25%. Moreover, the company has temporarily suspended its stock buyback program. To enhance its cash position, the company plans to divest its Occupational Workwear business.
Guidance
VF Corp did not provide a full-year fiscal 2021 financial outlook, but it did estimate that free cash flow will surpass $600 million.
For the first-quarter of 2021, company projects revenue decline marginally higher than 50%.
Disclosure: I do not hold any positions in the stocks mentioned.
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