The Greensboro, North Carolina-based company said that revenue declined 1 percent to $3.5 billion in the three months ended Oct. 1. Analysts had estimated $3.63 billion. According to VF, weak consumer demand and ongoing challenges in the U.S. department store and outlet channels hurt business for several of its brands.
“We continue to operate in an uneven, global economic environment including especially sluggish retail conditions in the Americas, our largest market,” Eric Wiseman, VF chairman and chief executive officer, explained in a press release.
In the outdoor and action sports segments, revenue rose 2 percent to $2.34 billion, a slight improvement from $2.3 billion a year ago. That increase was attributed to growth in the Vans brand offsetting sales declines experienced by The North Face and Timberland.
Meanwhile, VF blamed an unseasonably warm September as well as soft demand and shifts in deliveries for poor sales of Wrangler and Lee. Jeanswear’s Q3 revenue dropped 6 percent from $748 million to $701 million.
Sportswear suffered a 13 percent decrease in revenue to $141 million, as the decision to license the women’s sleepwear and men’s underwear businesses hurt Nautica brand revenue. Elsewhere, challenges in the oil and gas exploration sector and employment trends in industrial manufacturing caused revenue in the imagewear business to decline 3 percent to $282 million.
It wasn’t all bad, however. Earnings per share were up 13 percent to $1.20 in Q3, compared with $1.06 during the year-ago period, and VF’s e-commerce sales surged 18 percent. In addition, direct-to-consumer revenue gained 6 percent and the company now operates 1,475 retail stores worldwide, compared with 1,363 a year ago.
That being said, VF doesn’t expect business to pick up in the fourth quarter and the company has cut its full-year outlook as a result. Revenue is now expected to increase 2 percent to about $12.2 billion, compared to previous guidance touting growth between 3 percent and 4 percent, while reported earnings per share are projected to rise 3 percent to $3.13. Previous estimates had predicted a 5 percent increase to $3.20 per share.
In particular, VF expects revenue for the outdoor and actions sports segment to increase at a low single-digit percentage rate versus previous projections of mid-single-digit growth, due primarily to “proactive inventory reductions” by both The North Face and Timberland brands related to wholesale orders in Q4. Similarly, jeanswear revenue is now expected to increase at a low single-digit percentage rate compared with previous expectations of mid-single-digit growth.
VF’s share price had fallen 1.63% by midday on Monday. The company’s stock is down 13.61% year-to-date.