Vans-parent VF Corp posts smaller Q1 revenue drop than expected, on better China demand

(Reuters) – VF Corp (NYSE:VFC) reported a smaller-than-expected drop in first-quarter revenue on Tuesday, helped by improvement in its China business as well as leaner inventory levels, sending its shares up 5% in extended trading.

Sales in its Greater China business were up 4% on a constant currency basis, as the company benefited from a better product assortment and newer styles.

From the time he took the helm in June 2023, VF CEO Bracken Darrell has made big changes to the leadership team and sold streetwear brand Supreme, as he works on a plan to turn the business around.

The company reported a 21% fall in sales for its Vans brands, while The North Face brand saw a 2% decline in the quarter ended June 29.

As noted by Guggenheim analysts, the addition of executives such as Sun Choe as global brand president for Vans and Caroline Brown as global brand president of The North Face is seen to have boosted VF Corp’s strategic and business transformation.

Its revenue fell 8.6%, to $1.91 billion from a year ago, compared with analysts’ estimate of an 11.5% drop to $1.85 billion, according to LSEG data.

VF Corp posted an adjusted loss of 33 cents per share, compared with analysts’ estimated loss of 37 cents per share.

The company’s quarterly gross margins were down 80 basis points to 52%, after declining 52.8% a year ago.

Its inventories in the first quarter were down 24%, compared with the previous year.