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Morningstar’s Analysis

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E-Commerce Allows VF to Meet Expectations in Q3 Despite COVID-19 Disruption; Shares Overvalued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

The resurgence of the coronavirus in parts of Europe and the United States negatively affected narrow-moat VF in the third quarter of fiscal 2021, but the firm’s results were mostly in line with our estimates anyway. Nearly all of VF’s stores in these regions were open at the beginning of the quarter, but many were forced to close temporarily soon after. Vans, especially, was affected by temporary closures of its many stores in California and Europe. Revenue for the active coalition (38% of quarterly sales) fell 9%, missing our estimate of a 1% drop. Still, VF’s total revenue decline of 5.8% in the quarter was just 130 basis points worse than our forecast, thanks primarily to strong results from The North Face, which posted flat sales on double-digit growth in Asia-Pacific as well as Europe, the Middle East, and Africa.

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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 20 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.

Contact
8505 E. Orchard Road
Greenwood Village, CO, 80111
T +1 720 778-4000
Sector Consumer Cyclical
Industry Apparel Manufacturing
Most Recent Earnings Dec 31, 2020
Fiscal Year End Mar 28, 2021
Stock Type Cyclical
Employees 48,000

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