Despite positive Q3, VF's Q4 outlook and dividend cut raise concerns

VF Corporation’s third quarter revenue was 2.8 billion dollars, up 2 percent driven by contributions from growth across regions with global strength at The North Face and Timberland brands, while Vans showcased a sequential improvement. The financial results for its third quarter fiscal 2025 ended December 28, 2024, were published today.

VF’s board of directors declared a quarterly dividend of 9 cents per share payable on March 20, 2025, to shareholders of record at the close of business on March 10, 2025.

According to a Stock Titan report, VF's strategy of opting to present the third quarter results through investor presentation instead of highlighting key metrics in a press release and the reduced dividend (down from 50 cent in 2022) indicate that the company is still struggling.

The report added that the approach may not only raise questions about transparency and indicate sensitivity around financial performance metrics but represents a significant change for income-focused investors who historically viewed VF as a reliable source of dividend growth.

Commenting on the third quarter trading, Bracken Darrell, VF’s president and CEO said: “We made strong progress in Q3'25, improving profitability and further strengthening the balance sheet.”

VF reports third quarter results

Operating income for the quarter was 226 million dollars, while adjusted operating income was 324 million dollars. Operating margin of 8 percent, improved 1,130 basis points and adjusted operating margin 11.4 percent, was up 360 basis points versus the same quarter last year.

The company said in an investor presentation that gross margins for the quarter expanded and VF returned to earnings per share (EPS) of 43 cents versus loss per share of 24 cents; while adjusted EPS increased to 62 cents. VF expects its transformation program to reduce debt and drive profitability

VF projects revenue decline for Q4

For the fourth quarter ahead, the company projects revenue to decline in the range to 4 to 6 percent or 2 to 4 on a constant dollar basis implying second half revenue drop between 1 to 2 percent or flat to negative 1 percent on a constant currency basis, showing progress relative to the first and second quarters.

Adjusted operating loss is expected to be negative 30 million dollars, while free free cash flow guidance for FY25 is being raised to 440 million dollars versus prior guidance of 425 million dollars, reflecting higher than planned proceeds on sale of non-core physical assets and improved core fundamentals.

“Although there is work to do to consistently deliver double-digit operating margins and sustainable top-line growth, we are making great strides in transforming VF into a truly differentiated, multi-brand operator," Darrell added.