VF Corp (VFC.US) , a US apparel and footwear company, is one of the worst performing US stocks today. Company is trading over 10% lower at press time and recent earnings release can be named as a reason to blame. While headline results were mixed, the company's stock is trading under pressure after guidance was removed.
VF Corp reported a 2% YoY drop in Q3 revenue, to $3.03 billion (exp. $3.0 billion), while adjusted EPS came in at $0.63 - slightly below expected $0.65. Company said that consumer spending on higher-priced apparel and footwear has been moderating, especially in the United States. Sales in the Americas dropped 11% YoY. This has been partially offset by an 8% YoY jump in sales in Greater China. Sales in Vans brands dropped 21% while North Face brand sales were up 19%.
Weaker sales came as consumers lowered spending on pricier items amid rising borrowing costs and still-high inflation. Margins took a hit as VF Corp offered discounts to attract customers. Company said that it is undertaking a cost reduction programme which is expected to result in $300 million in fixed cost savings. The most important takeaway from the release is removal of full-year sales and profit guidance, signaling that there is a lot of uncertainty over the company's performance in the near future.
Taking a look at VF Corp chart (VFC.US) at H1 interval, we can see that the stock launched today's trading with a big bearish price gap (orange circle). Stock continued to drop quickly after the cash session was launched and moved below the $15.30 support zone to reach the lowest level since mid-2009.
Source: xStation5
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