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Narrow-Moat VF Dealing With Supply Chain Woes and Weakness in China, but Brands Remain Healthy

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Narrow-moat VF missed our sales forecast in its fiscal 2022 second quarter, ended September, as it could not overcome the production and transportation delays (especially in Asia) that have plagued the apparel and footwear industry over the past few months. Revenue of $3.2 billion fell about 10% short of our estimate as sales in the active coalition (primarily composed of Vans and Supreme) increased just 16% versus our 35% forecast. However, management's fiscal 2022 sales guidance of $12 billion matches our estimate, suggesting that VF can make up for some of the lost sales in the second half of the year. The shares fell about 4% on the report but remain slightly above our $66 fair value estimate, which we do not expect to change.

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Company Profile

Business Description

VF designs, produces, and distributes branded apparel and accessories. Its largest apparel categories include action sports, outdoor, and workwear. Its portfolio of about 15 brands includes Vans, The North Face, Timberland, Supreme, and Dickies. VF markets its products in the Americas, Europe, and Asia-Pacific through wholesale sales to retailers, e-commerce, and branded stores owned by the company and partners. The company has grown through multiple acquisitions and traces its roots to 1899.

1551 Wewatta Street
Denver, CO, 80202
T +1 720 778-4000
Sector Consumer Cyclical
Industry Apparel Manufacturing
Most Recent Earnings Jun 30, 2021
Fiscal Year End Apr 2, 2022
Stock Type Cyclical
Employees 40,000