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On Wednesday, an analyst at Williams Trading increased the stock price target on VF Corp (NYSE:VFC) to $10.00, up from the previous $6.00, while maintaining a Buy rating on the stock. The adjustment follows the announcement made today of VF Corp's agreement to sell its Supreme brand to EssilorLuxottica (LUX-NR) for $1.5 billion in cash. The transaction is anticipated to conclude by the end of 2024.
The sale of Supreme is seen as a strategic move for VF Corp, which had acquired the brand for $2.1 billion in November 2020. Supreme's sales were projected to be around $600 million in fiscal year 2024. The divestiture is expected to have a positive effect on VF Corp's financials, reducing the company's debt burden and associated interest expenses. However, the analyst noted that VF Corp's net debt is likely to remain above $3.5 billion at the end of fiscal year 2025, compared to approximately $5.3 billion at the end of fiscal year 2024.
Despite the sale of Supreme, the analyst pointed out that this does not directly improve the performance of VF Corp's other brands, such as Vans, The North Face, Timberland, and Dickies. Additionally, the company's leverage with suppliers and factories is not expected to be negatively affected by the transaction.
VF Corp is scheduled to announce its first-quarter earnings for fiscal year 2025 on Tuesday, August 6th, after the market closes. Following the news of the Supreme sale, Williams Trading has raised its earnings estimates for VF Corp for fiscal years 2025 and 2026 from $0.17 and $0.50 to $0.27 and $0.74, respectively.
The report also highlighted concerns about the overall sales performance in the Americas, which may continue to pose challenges throughout fiscal year 2025. Furthermore, the analyst expressed worries that VF Corp might push wholesale sell-in for brands that are performing well in specific markets, such as The North Face and Timberland in China, where they experienced strong performance in the fourth quarter of 2024.
In other recent news, VF Corp has seen significant developments in its strategic moves and leadership changes. Stifel has maintained a Buy rating on VF Corp, keeping a steady price target of $19. This follows the company's decision to sell the Supreme brand for $1.5 billion, which is expected to enhance VF Corp's capital structure and improve leverage ratios. However, Stifel's analysis suggests that VF Corp's equity value will now largely depend on the success of a turnaround for the Vans brand.
In leadership changes, VF Corporation (NYSE:VFC) has appointed Caroline Brown as the Global Brand President of The North Face. Brown's extensive background in the fashion and apparel industry is expected to bolster The North Face's global branding and innovation efforts. In addition, VF Corporation has welcomed Mindy Grossman and Kirk Tanner as independent directors to its Board.
Furthermore, VF Corp has announced a significant change in leadership at the Vans brand with the appointment of Michelle (Sun) Choe as the Global Brand President. This move is seen as a positive development by analysts, with Choe's successful track record and fresh perspective expected to reinvigorate the brand.
These recent developments highlight VF Corp's ongoing efforts in strategic adjustments and leadership refreshment to foster growth and value creation.
InvestingPro Insights
In light of the recent strategic moves by VF Corp (NYSE:VFC), including the sale of its Supreme brand, investors may find the real-time data and insights from InvestingPro particularly pertinent. With a current market capitalization of $6.26 billion and a notable return over the last three months of 16.86%, VF Corp's stock price movements have indeed been quite volatile. This volatility is reflected in a negative P/E ratio of -6.53, indicating that VFC has not been profitable over the last twelve months. However, analysts predict that the company will turn profitable this year, which aligns with the InvestingPro Tip that net income is expected to grow.
Another key InvestingPro Tip for VF Corp is the high shareholder yield, which is supported by the company's impressive record of maintaining dividend payments for 54 consecutive years, despite a recent dividend growth rate of -70.0%. The revenue data shows a decline, with a -9.97% change over the last twelve months as of Q4 2024, which may be a concern for investors looking at the company's sales performance.
For those interested in deeper analysis and more comprehensive insights, InvestingPro offers additional tips on VF Corp, which can be accessed at: https://www.investing.com/pro/VFC. To enhance your investment strategy, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. Currently, there are 8 additional InvestingPro Tips available for VF Corp, providing investors with a wide array of data to inform their investment decisions.
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