International Sales and Digital Platform To Drive VFC’s Q4 Earnings

VF Corporation (NYSE: VFC), a global leader in branded lifestyle apparel, footwear, and accessories is scheduled to announce its fourth quarter earnings on February 16. The company reported a strong financial performance for its fiscal third quarter where its top-line grew at 5% y-o-y to $3.5 billion. We anticipate the company to continue to post strong growth in the fourth quarter driven by growth from VFC’s international business and the direct-to-consumer platform. Outdoor & Action Sports segment and fast paced growth from Vans brand and the Workwear business is also likely to support growth momentum in the upcoming earnings announcement.

With solid performance in the first three quarters of 2017, management anticipates full year 2017 revenue to grow by 6% to nearly $12.1 billion. ^[1] The previously announced Williamson-Dickie acquisition is expected to support this growth in full year revenue. Full year 2017 adjusted earnings of the company are forecast to grow at a more modest rate of 1% y-o-y to $3.01 per share as the company made additional investments to drive growth in 2018 and beyond.

Take a look at our interactive model to see how VFC can grow in Q4

Below are key factors that will likely drive growth in VFC’s fourth quarter earning results.

Growth in International sales will drive top line – Growth prospects in China and Europe appear bright for VFC. In the previous quarter, International sales of the company rose by 9% from China and by 18% from Europe. The company’s operations in these geographies have been benefiting from rising demand from millennials as well as rising disposable income in the emerging markets. Consequently, the company management plans to continue investing in these regions.

Outdoor and action sports coalitions will fuel strong returns – The recent coalition of Williamson-Dickie with VFC has benefitted the Outdoor and action sports segment, adding to VFC’s kitty strong brands such as Dickies, Workrite, Kodiak, Terra and Walls. Combined with VFC’s popular workwear brands such as Wrangler, this acquisition has further strengthened VFC’s position. In addition, the company’s fastest growing brand ‘Vans’ is growing stronger with its popularity among Millennial consumers and is likely to fuel growth momentum in the fourth quarter results.

Growth in direct-to-consumer channel including sales from digital platform will steer organic growth – Driven by the growing trend of online shopping, VFC will likely continue to see strong growth in its direct-to-consumer revenue and digital revenue in the coming years. Sales from the direct-to-consumer channel increased by 18% y-o-y and from digital channel increased by 38% y-o-y in the last quarter. For its part, the company is focusing on expanding its e-commerce presence and we anticipate this trend to continue to drive earnings growth in the Q4 results.

Driven by these key trends, we anticipate VFC to post healthy growth in the coming Q4 earnings and beyond in 2018.

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1. VFC3Q 2017 earnings, October 23, 2017, www.vfc.cm [↩]