On Friday, Goldman Sachs (NYSE:GS) reinstated coverage on VF Corp (NYSE:VFC), a prominent apparel company, assigning a Neutral rating and establishing a price target of $20.00. The firm's decision follows VF Corp's recent divestiture of the Supreme brand, a transaction valued at $1.5 billion. This sale has allowed VF Corp to pay down debt, alleviating some of the immediate pressures associated with debt maturity.
VF Corp's sale of Supreme has been highlighted as a strategic move that has enhanced the company's financial flexibility. This development is seen as a crucial step in the company's efforts to revitalize its core brands. Goldman Sachs anticipates that investor attention will now shift towards the potential resurgence of the Vans brand, which has experienced a period of decline.
The analyst from Goldman Sachs noted early indications of recovery for the Vans brand, citing improved Google (NASDAQ:GOOGL) Trends data. This positive change has been attributed to the brand's innovative efforts, including the introduction of new products like the Knu Skool.
Furthermore, the appointment of Ms. Sun Choe as the new brand president is expected to bring fresh perspectives to the brand's marketing and product strategies, with her impact likely to be felt starting in 2025.
Looking ahead, VF Corp has scheduled an Investor Day for October 30th. During this event, the company is anticipated to provide insights into its portfolio strategy and discuss key initiatives for reclaiming profitability. Goldman Sachs expects that this will also be an occasion for VF Corp to issue financial guidance, which will be closely watched by investors and market analysts alike.
In other recent news, VF Corporation (NYSE:VFC)'s financial position post-transaction reflects adjustments related to the Supreme sale as of June 29, 2024. This strategic move aligns with VF Corporation's continuous adaptation to the ever-evolving fashion and retail landscape and is expected to impact future revenue streams and investment focus.
Analysts have provided mixed views on VF Corporation's recent developments.
Jefferies initiated coverage on VF Corporation with a hold rating and a $20 target price, while Barclays (LON:BARC) upgraded the company to Overweight from Equal-weight and increased its price target to $22. However, BMO Capital maintained its Market Perform rating with a steady price target of $14, and Williams Trading reiterated its sell rating with a steady price target of $10.
Despite the sale of the Supreme brand, VF Corporation has maintained its Q2 outlook, forecasting a modest revenue decline, a slight increase in gross margin, and a minor rise in SG&A expenses. The company has also announced additional cost savings of $50 million in Q1 of fiscal year 2025.
InvestingPro Insights
Recent InvestingPro data provides additional context to VF Corp's financial situation and market performance. The company's market capitalization stands at $7.88 billion, reflecting its significant presence in the apparel industry. Despite recent challenges, VF Corp has shown resilience, with a strong 51.67% price total return over the past three months and a 56.05% return over six months, aligning with Goldman Sachs' observations of potential recovery.
InvestingPro Tips highlight that VF Corp has maintained dividend payments for 54 consecutive years, demonstrating a commitment to shareholder returns even during challenging periods. This could be particularly appealing to income-focused investors. However, it's worth noting that 7 analysts have revised their earnings downwards for the upcoming period, suggesting some caution in near-term expectations.
The company's Price to Book ratio of 5.68 indicates that the stock is trading at a premium to its book value, which investors should consider in light of the recent strategic moves and potential brand revivals discussed in the article. For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide deeper insights into VF Corp's financial health and market position.
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