Yahoo Finance V.F. Corp (VFC) Dips on Soft Preliminary FY20 Revenue Estimates
Shares of V.F. Corp. VFC fell 4.5% yesterday after the company reported disappointing preliminary expectations for fiscal 2020. Additionally, the company prices a debt offering to repay borrowings under its revolving credit facility.
Its preliminary revenues, on a reported basis, are expected to be $11.3-$11.4 billion, including the contributions from the Occupational Workwear business that was put up for divestiture on Jan 21, 2020. The company’s preliminary estimate is lower than the Zacks Consensus Estimate for fiscal 2020 revenues of $11.5 billion.
Further, it expects to report operating income from continuing operations of $1-$1.1 billion, on a reported basis, including the Occupational Workwear business. Adjusted operating income for fiscal 2020 is expected to be $1.4-$1.5 billion.
The results of the Occupational Workwear business are included in the aforementioned preliminary results. However, the company expects to report the business as discontinued operations in conjunction with its fourth quarter and fiscal 2020, likely to release in May 2020. It is currently in the process of the finalization of financial closing procedures related to reporting Occupational Workwear business in the discontinued operations presentation.
The adjusted amounts for fiscal 2020 exclude total transaction and deal-related expenses of nearly $24 million and total costs of $72 million. It also excludes total impairment charges of $331 million.
Concurrently, the company also priced a previously announced $3-billion debt offering, which will be issued in four tranches. It plans to use the proceeds from the offering to pay down borrowings under its revolving credit facility.
Given the devastating effects of the coronavirus pandemic, with extended store closures, V.F. Corp on Mar 23 withdrew its guidance for fiscal 2020. Further, the company drew $1 billion on its revolving credit facility, which then had $2.25 billion, with an expiry of December 2023. On Apr 7, it drew the remaining balance of its revolving credit facility to maintain financial liquidity and flexibility.
Moreover, management has been exploring its capital structure in order to cash in on opportunities. It has temporarily put share repurchases on hold, having $2.8 billion available under its current buyback authorization. However, V.F. Corp will continue to pay its regular dividend, subject to its board’s approval.
The Zacks Rank #5 (Strong Sell) company’s shares have plummeted 46.5% compared with the industry’s 37.9% decline year to date.
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