FILE PHOTO: Shoes and backpack of Vans are seen in a shop window in Sao Paulo, Brazil August 29, 2019. REUTERS/Rahel Patrasso
October 22, 2021
(Reuters) -VF Corp missed Wall Street estimates for quarterly revenue and profit on Friday, as the Vans owner grappled with product delays during the period due to global supply chain disruptions and production shortfalls in Vietnam.
The Denver-based company’s shares fell 8.1% to $68.05 in premarket trading.
A resurgence in COVID-19 infections due to the Delta variant has shut factories in Vietnam since mid-July, forcing apparel makers to halt production or operate with drastically fewer workers.
With the country serving as a key manufacturing hub for several brands including VF, Nike Inc and Adidas AG, the factory closures have threatened to hit businesses over the busy shopping period during the holiday season.
Margins at clothing labels have been under pressure as companies deal with soaring freight costs and higher prices for raw materials such as cotton and oil.
Last month, Nike flagged product delays for the holiday season due to the supply chain crunch and said it would take several months to get production back to full capacity in Vietnam, where around 50% of its shoes are made.
Crocs Inc said on Thursday it plans to shift some of its production from Vietnam to China, Indonesia and Bosnia. The casual footwear maker had earlier planned on sourcing 70% of its production from Vietnam this year.
VF, which owns Timberland and The North Face brands, sources about a quarter of its products from Vietnam, with the exposure likely higher for its flagship Vans brand, Cowen analysts said earlier this month.
The company’s total revenue rose 23% to $3.20 billion in the second quarter, compared with estimates of $3.50 billion, according to Refinitiv IBES.
On an adjusted basis, VF earned $1.11 per share, missing estimates of $1.15 per share.
(Reporting by Deborah Sophia in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta)