VF Corporation, the Denver-based lifestyle company, has reported a significant drop in net income for the third quarter of 2020. The decline in earnings is attributed to lower consumer demand and temporary store closures caused by the ongoing Covid-19 pandemic. Net income for the quarter was $347.2 million, down from $465.0 million in the same period last year. Diluted earnings per share also declined from $1.16 to $0.88.

The decrease in net income is due to a 6% drop in quarterly revenue, which fell from $3.2 billion to $3.0 billion. In constant currencies, the decline was 8%. The company’s owned retail stores in North America were mostly open at the beginning of the quarter, but some had to close again by the end of December due to the resurgence of the coronavirus. In Europe, the Middle East, and Africa (EMEA), around 50% of VF’s stores were closed by the end of the quarter. However, the company’s stores in the Asia-Pacific (APAC) region remained open throughout the quarter.

Internationally, VF saw flat revenue growth, with a decline in non-U.S. American sales being offset by increases in the EMEA and APAC regions. Greater China alone saw an 18% increase in revenue, including significant growth in Mainland China. U.S. revenues, on the other hand, declined by 11%.

VF’s direct-to-consumer revenue decreased by 2%, despite a significant rise in digital sales. Wholesale revenues also declined by 10%. Among VF’s brands, the retailer’s active segment saw a decline in quarterly revenues, with a decrease at the Vans brand. The outdoor segment also posted a decrease, but sales at The North Face remained flat. However, the work segment saw an increase in revenues, driven by growth at the Dickies brand.

Despite the declining revenues, VF’s chairman, president, and CEO expressed optimism about the retailer’s progress. The company has raised its full-year financial guidance and expects revenues to be in the range of $9.1 billion to $9.2 billion, including revenue from the newly acquired Supreme brand. Adjusted annual earnings per share are predicted to be around $1.30, including a contribution from Supreme.

In conclusion, VF Corporation experienced a drop in net income and revenue due to the impact of the ongoing Covid-19 pandemic. However, the company remains optimistic about its future growth and plans to accelerate its transformation in the coming fiscal year.

Useful links:
1. VF Corporation Official Website
2. VF Corporation Acquires Supreme for $2.1 Billion