Analyst Note| David Swartz |
Narrow-moat VF beat our sales and profit expectations in its September-ending fiscal 2021 second quarter as sales growth in global e-commerce and greater China partially offset weakness in physical stores in most regions. Although nearly all stores in North America and Europe, the Middle East, and Africa (EMEA) operated by VF and its wholesale partners are open, customer traffic is slow and COVID-19 remains a concern. VF guided to fiscal 2021 sales of at least $9 billion and adjusted EPS of at least $1.20, above our prior estimates of $8.8 billion and $1.04, respectively. We expect to increase our per share fair value estimate of $54 by a mid-single-digit percentage but view shares as overvalued. While VF is navigating the crisis as well as can be expected, we do anticipate lower year-over-year sales in this year’s holiday quarter.