VF Corporation (NYSE:VFC) is considering selling its backpack brand JanSport, Bloomberg reported citing people familiar with the matter. The report highlighted that a potential deal might value JanSport at about $500 million.
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This comes when the apparel, footwear, and accessories company is struggling to lift sales. In Q2, VFC’s top line fell by 4% (up 2% in constant currency), with its big four brands (including Vans, The North Face, Timberland, and Dickies) reporting a decline of 5% (up 1% in constant dollars).
While the company increased prices to offset higher costs, weak sales and increased promotional activity to boost the top line took a toll on its margins.
In the first half of Fiscal 2023, VFC’s revenue marked a decline of 1%. Moreover, its adjusted gross and operating margins fell by 250 and 420 basis points, respectively. Further, its adjusted EPS decreased by 41%. (Learn more about VFC’s financials here.)
Adding to its shareholders’ pain, the company recently lowered its full-year revenue and earnings outlook. VFC expects its total revenue to increase by 3% to 4% in constant dollars in Fiscal 2023, down from its previous growth guidance of 5% to 6%. Furthermore, it expects adjusted EPS to be in the range of $2.00 to $2.20, versus its previous forecast of $2.40 to $2.50.
Given the weak financial performance, VFC stock has underperformed in 2022. The stock is down about 62% year-to-date and has significantly underperformed the S&P 500 Index (SPX), which is down approximately 20%.
Is VFC a Buy or Sell?
On TipRanks, VFC stock commands a Hold consensus rating based on five Buy, 11 Hold, and three Sell recommendations. These analysts’ average price target of $31.94 implies 21.12% upside potential.
Our data shows that insiders are buying VFC stock on this weakness. In the last three months, insiders added VFC stock worth $1M. However, hedge funds sold 1.2M VFC stock during the same period. Overall, VFC stock carries a Neutral Smart Score of six on TipRanks.
