The future of VF Corp. looks good, very good.
The apparel giant on Wednesday report first quarter results, and vice chairman and chief executive officer Steve Rendle told Wall Street analysts at a conference call that growth in the quarter driven by the firm’s two largest brands, Vans and The North Face.
In fact, Rendle said of Vans, “The brand is well on its way to achieving its $5 billion target by 2023.” That target was set nearly a year ago last September when VF held its Investor Day meeting. During Wednesday’s call, Rendle said, “The Vans team remains intensely focused and disciplined as they continue to deliver consistent performance that is driven by not just one thing. When coupled with the investments we are making to drive and fuel the brand’s explosive growth, we are confident in Van’s ability to sustain its trajectory above our long-term target, including 11 percent to 13 percent growth this year.”
And Rendle said The North Face “continues to exceed expectations, with double digit growth across all regions and strength in all channels and product territories.” The vice chairman also noted that the brand was close to launching its FutureLight fabrication. Using nano spinning technology, FutureLight is a waterproof, breathable fabric meant for wear under challenging weather conditions, but also avoids the “crunchy, muggy” feeling of most waterproof fabrications.
“Given the opportunity FutureLight has to significantly disrupt the outdoor industry, we have decided to invest even more aggressively behind the breakthrough technology,” Rendle said. VF will invest an additional $20 million in the technology.
VF plans to hold its next Investor Day on Sept. 25 in Beaver Creek, Colo.
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Equity analyst John Kernan at Cowen & Company on Wednesday reiterated his $100 price target on shares of VF stock. According to Kernan, Vans was up 23 percent in the first quarter, excluding foreign exchange. Direct-to-consumer grew 25 percent, driven by a 43 percent jump in digital. Wholesale sales were up 20 percent and footwear volume rose 22 percent. According to Kernan “custom footwear remains popular,” rising 60 percent in the Americas region.
As for The North Face, revenue grew 12 percent, also excluding foreign exchange, and showed sequential acceleration from up 11 percent in the fourth quarter of fiscal 2019. DTC grew 9 percent, with digital up 20 percent, while wholesale rose 14 percent.
Wells Fargo’s Ike Boruchow upped his price target for VF shares from $85 to $90. The first quarter results, he said, were “rock solid,” with broad strength across the portfolio. The upcoming unveiling of the FutureLight line this Fall “has the potential to be one of the most innovative outwear products to hit the market in quite some time,” he said.
According to Boruchow, “Investors continue to look for companies that are executing against their plan, carry above average top-line momentum and have visibility into future growth/upside to plan, and [VF] fits that criteria.”