VF Corp (VFC, Financial) released the results for its fourth quarter and full year of fiscal 2021 on May 21 before the market opened.
The company's bottom line missed expectations. A goodwill impairment charge and the Covid-19 pandemic took a toll on the company's results. Revenue, however, surpassed projections.
Earnings results
The U.S. global apparel and footwear company reported adjusted earnings per share of 27 cents in the fourth quarter, up a mammoth 169% year-over-year. However, analysts had predicted EPS of 30 cents. Revenue of $2.58 billion was up 23% over the past year. This was above analysts' expectations of $2.51 billion.
For full-year fiscal 2021, revenue amounted to $9.2 billion compared to $10.5 billion in fiscal 2020. GAAP earnings (from both continuing and discontinuing operations) were $407.9 million, translating to $1.04 per diluted share. That compares with $679.5 million, or $1.70 per share, recorded in 2020.
The CEO of the company, Steve Rendle, commented the following:
"I could not be more pleased with how our organization navigated fiscal 2021. Early in the year we took important actions to protect our people and the enterprise, while maintaining investments to drive our transformation and accelerate organic growth. At the same time, we took bold, forward-looking actions to spark additional growth and value creation. As a result, we are exiting this year in a position of strength with broad based momentum across the portfolio."
Segment performance
The Active segment, which consists of activity-based lifestyle brands, saw revenue grow 22% in the fourth quarter to $1.26 billion.
The Work segment's revenue was up 23% on a year-over-year basis to $259.5 million. 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 growth in revenue of 25% to $1.06 billion.
As far as revenue growth by channel is concerned, DTC revenue soared 36%, while wholesale revenue climbed 14%. Digital revenue skyrocketed 106% during the quarter.
Liquidity
The company claims to have adequate liquidity to meet its near term obligations and operational needs. 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 and short-term investments of a combined $1.45 million. 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. Currently, the company is authorized to buy back shares worth $2.8 billion. To enhance its cash position, the company has divested its Occupational Workwear business.
Outlook
VF Corp has provided a full-year fiscal 2022 outlook. The company estimates revenue growth of 28% to roughly $11.8 billion. The company further broke down the numbers into a projected 23% to 25% revenue growth in the Outdoor segment, 34% to 36% for the Active segment and 10% to 12% for the Work segment. Adjusted earnings is anticipated to be approximately $3.05 per share. The effective tax rate is predicted to be 15%, while capital spending guidance is $350 million.
Disclosure: I do not hold any positions in the stocks mentioned.
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