Analyst Note| David Swartz |
At its first analyst day in three years, VF presented strategies for its key brands and fiscal 2027 financial targets. Its medium-term goals, including five-year sales and EPS percentage growth ranges of mid- to high-single-digits and high-single to low-double-digits, respectively, align with our 6% and 9% estimates. However, VF lowered its guidance for the remainder of fiscal 2023 (ending March) due to a weak back-to-school season for Vans, a slow recovery in China, and the likelihood of a promotional holiday season due to elevated inventories and soft consumer spending. Moreover, like many others, VF’s reported results are adversely affected by the appreciation of the U.S. dollar. VF’s new fiscal 2023 guidance suggests roughly flat sales, a 12% adjusted operating margin, and $2.60-$2.70 in adjusted EPS, versus our estimates of 3%, 13%, and $3.11, respectively.