How long before the vans take off? – magazine sources

Vans’ showing was another weak for VF Corp amid a mixed second quarter. The North Face owner has also revised its guidance for fiscal year 2023 to reflect adverse macroeconomic challenges.

Something small: CFO Matt Buckett told Wall Street analysts on an earnings call Wednesday to discuss the three-month period ending Oct. 1, that VF continues to “adapt to a more volatile and easing consumer environment.”

“Globally, the wholesale and direct-to-consumer business had low-single-digit growth in the second quarter,” he added. VF said revenue in the Americas fell 3 percent, but excluding Vans, its revenue increased 3 percent. VF is down 10 per cent in China as Covid impacts economic growth broadly.

Van sales fell 11 percent in the Americas in the quarter and 13 percent globally after declining 7 percent in the first quarter. Brand revenue was $1.9 billion, down 10 percent. Paquette said lower back-to-school sales and increased caution at wholesale partners led to “higher cancellations and lower traffic affecting our direct channels.” A survey published earlier this month found that while the skate shoe brand remains popular with teens, Converse is gaining a stake at its expense.

Dickies is down 17 percent in the Americas and 15 percent globally due to “inventory adjustments” made by its largest retail partner.

By contrast, Steve Rendell, Chairman, President and CEO, said The North Face “continues to deliver strong, broad-based performance and demonstrate its undisputed leadership in the outdoors category.” Revenues are up 14 percent compared to 2021, reflecting double-digit growth across all regions and channels. That resulted in “our second largest quarter ever for the brand,” with 21 percent annual growth, he said.

The North Face had a “good start to the season in outerwear,” showing strength with soft shells, fleece, and lightweight insulated jackets as consumers braced for colder conditions. The third installment of the Gucci collaboration, Rendell said, “led to the emergence of a meaningful brand”.

Timberland sales grew 3 percent from the previous year, slightly affected by shipping timing.

Although lockdowns continue to disrupt production and logistics in China, “we are open to business from a Covid perspective across the value chain,” Paquette added. He noted improved ocean transit times and port stability times, as well as reduced imports of consumer goods, with ocean and air transport rates dropping as a result.

In the last quarter, VF introduced a supply chain financing program with suppliers of finished goods, in which it takes ownership of inventory at the point of shipment and holds it for about an additional month. Because of these process changes, inventory levels are up 88 percent over the same period last year.

Net sales: VF revenue was $3.1 billion, up 2 percent in constant dollar terms, and up 4 percent excluding China. Second-quarter sales are down 8 percent, bringing year-to-date revenue down to minus 6 percent and minus one percent excluding China.

After accounting for the negative foreign exchange impact of about $195 million – nearly double the first quarter – sales fell 4 percent on a reported basis in the second quarter.

gains: Adjusted operating income was approximately $380 million, and VF returned $294 million in cash to shareholders, bringing total income to date to nearly $390 million.

The company reported an adjusted gross margin of 51.5 percent, down 240 basis points. Guidance reduced its adjusted operating margin for fiscal year 2023 to about 11 percent from 12 percent. EPS is now expected in a range of $2.40 to $2.50, compared to $3.18 last year and a previous guidance of $2.60 to $2.70. It expects adjusted gross margin to decrease by 100 to 150 basis points against the original guidance by 50 basis points. It plans to cut $10 million from its original $240 million capital spending directive. Adjusted cash flow from operations is now directed to $0.9 billion from $1.0 billion.

The reviews assume no additional impact of Covid on key revenue-producing markets or production, as well as no significant deterioration in inflation or consumer confidence.

Take the CEO: “While consumer health remains relatively healthy in most of our markets, we continue to see global trends result in more selective and cautious spending behaviour,” Rendel said. “In North America, we’ve seen mixed results around back to school across product categories, and today we’re seeing changing traffic patterns across channels and a heightened promotional environment in most markets.”

Additional reporting by Jessica Bynes.

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