Timberland's third-quarter sales fell 21% to $473 million. (Photo: TDM Space)
VF Corp. reported a disappointing third quarter as it swung to a loss and saw its revenue drop 16%.
On its earnings call, the retailer, whose brands include The North Face, Timberland, Vans and others, said that CFO Matt Puckett, a 24-year company veteran, will step down later this year.
"He and I have agreed that it's time to make a change as part of the overall transformation efforts we're introducing across the company," Bracken Darrel, who was appointed president and CEO of VF in July, told analysts. "Matt will stay on until we appoint his successor to help ensure a smooth transition."
The company posted a loss of $0.11 per share for the quarter ended Dec. 30, compared to earnings per share of $1.31 for the year-ago period. Adjusted earnings per share came in at $0.57 versus adjusted earnings per share $1.12 for last year.
Revenue fell 16% (down 17% in constant dollars) to $3.0 billion. The quarter was negatively impacted by a shift in timing of wholesale deliveries, which was most pronounced for North Face and the EMEA region, the company said.
By brand, sales at The North Face declined 10% to $1.2 billion. Timberland’s sales were down 21% to $473 million, and Vans sales plunged 28% to $668.2 million. Dickies’ revenue declined 16% to $147.9 million. The “other brands” category, which includes Supreme, were down 6% to $479.1 million.
The company said during the quarter it continued to execute its “Reinvent” transformation program, which aims to enhance its focus on brand-building and to improve operating performance. The initial four priorities of the program are to improve North America results, deliver the Vans turnaround, reduce costs and strengthen the balance sheet. VF said it will continue to “pursue opportunities to simplify and streamline its processes and invest in the business to drive brand heat and accelerate a return to growth.”
In line with the goals of its Reinvent program, VF said it has initiated an in-depth strategic review of its portfolio “to ensure the company owns the brands that it believes create the greatest long-term value.” According to a report by WWD, the review could potentially put brands such as Timberland, Dickies and Supreme in play. VF has already been working to sell its Kipling, Eastpak and JanSport businesses, the report said.
"Our third quarter top-line performance was disappointing,” said Bracken Darrel, who was appointed president and CEO in July. “However, we are confident the actions we are implementing as part of Reinvent will enable VF to stabilize and then grow revenue and improve operational performance across brands and regions.” We have already begun to see the impact of our efforts to right-size the company’s cost structure and improve its inventory position, resulting in stronger than expected cash flow and expanded gross margin in the quarter.”
“This quarter marked the beginning of the next phase of our transformation plan: resetting the marketplace for Vans, reviewing our brand portfolio and continuing to build the organization of the future,” Darrel continued. “As we approach the end of this fiscal year, my confidence in VF’s future is rising."
On the company’s earnings call, Darrel noted that he spends more than half his time working with the Vans team. He said a “package” to fix the brand was in place.