Yahoo Finance Why Is VF Corp (VFC) Stock Rocketing Higher Today
What Happened:
Shares of lifestyle clothing conglomerate VF Corp (NYSE:VFC) jumped 9.5% in the morning session after the company announced the sale of the Supreme business to EssilorLuxottica for $1.5 billion in cash.
Commenting on the rationale behind the deal, CEO Bracken Darrell added that "Supreme expanded its presence in the key markets of China and South Korea and has returned to delivering strong growth. However, given the brand's distinct business model and V.F.'s integrated model, the company's strategic portfolio review concluded there are limited synergies between Supreme and V.F., which made a sale the natural next step."
In addition, the deal is also expected to improve VFC's financial position, as it provides "increased balance sheet flexibility and supports the company's drive towards achieving "long-term growth and more normalized debt levels."
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What is the market telling us:
VF Corp's shares are quite volatile and over the last year have had 29 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago, when the stock dropped 15.8% on the news that the company reported first-quarter earnings results with revenue, operating margin, and EPS falling short of Wall Street's estimates. The topline miss was driven by weaknesses in the US wholesale market, which affected The North Face® (revenue down 5% y/y) brand. The Vans® brand also recorded a 26% sales decline, in line with the weaknesses observed in recent quarters and also partly due to efforts to right-size its inventories. Its full-year free cash flow guidance also missed analysts' expectations. Guidance wasn't encouraging as the company expects revenue to remain challenged in the near term. Overall, this was a bad quarter for VF Corp.
VF Corp is down 18% since the beginning of the year, and at $15.30 per share it is trading 25.8% below its 52-week high of $20.61 from August 2023. Investors who bought $1,000 worth of VF Corp's shares 5 years ago would now be looking at an investment worth $176.89.
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