Losing All One'S Eggs On Vans, The Stock Price Of Weifu Plummeted By More Than 10%

Popular brands Vans' desperate attempt at Vans finally swallowed the bitter fruit, Fashion industry Research and investment institution No Agency North American apparel giant VF Corp (NYSE: VFC) Warning of Weifu Group , finally proved to be completely correct warning.

As of the end of September, Vans Sales recorded an increase of 26% and fixed exchange rate calculation increased by 27%. Looking at the data alone, the best-selling brand seems impeccable, but looking back at the growth and fixed exchange rate growth data of 35% and 32% in the first quarter, the data in the second quarter was quite weak, showing a sharp slowdown, especially due to the decline of emerging market currencies, Actual sales in dollar terms have been hit hard.

stay cowboy The business continues to decline and needs to be separated from independent IPO, and the outdoor business grows at a low speed. From the beginning of the 2019 fiscal year, we will lead JanSport, Kipling and Eastpak The second quarter data of Vans, a brand that established its own extreme sports department, made analysts extremely dissatisfied.

Although the Group has set a sales target of 5 billion dollars for Vans in 2023, and no longer meets the surfing/skateboarding brands, it hopes to benchmark Nike Nike and Adidas The brand positioning of sports and leisure giants like Adidas has released diversity and all-round growth. However, on Friday, after opening 3.56% lower at US $83.99, the stock price of Weifu Group plummeted, falling 10.71% throughout the day, almost closing at a new low of US $77.73, at US $77.76.

The fixed exchange rate sales of the extreme sector led by Vans increased by 20% in the second quarter, and the actual growth rate also reached 19% to US $1.300 billion. Scott Roe, Chief Financial Officer of Weifu, said that considering Nike The scale is 10 times larger than Vans, and Vans' growth is just beginning. However, Scott Roe ignored that Vans' growth was not several times that of Nike, on the contrary, its stability was far less than that of Nike 。

"No doubt, Vans Promoted by the millennial generation, it has become the first brand of Weifu. However, for the generation of consumers who have no loyalty, too much emphasis on resources will make TNF and Timberland with more brand accumulation and value Losing the opportunity to spin off the cowboy business is more urgent, so we have reservations about the current brand strategy of Weifu. " Fashion industry Christina Ng, analyst of No Agency, a research, consulting and investment institution In the report on Friday, it was pointed out that if Vans loses the momentum of growth and struggles like Tian Bolan and the north, Weifu will be hit hard if he only looks at the short-term benefits.

In the second quarter, the month on month performance of the north and Timberland was also weak, with fixed exchange rate consumption growth of 7% and - 1% respectively, compared with 12% and - 1% in the first quarter. In terms of actual sales, the north recorded a growth rate of 5%, while Timberland recorded a decline of 2%. The outdoor sector composed of the two giants had revenue of $1466.5 million in the second quarter, up 6% year on year, with fixed exchange rate and organic growth of 7% and 1% respectively.

At the end of July, when Weifu released its first quarter financial report, the stock price hit a new high He once warned that although Weifu Group's outdoor and extreme sports business accelerated growth, compared with the double-digit growth performance in fiscal 2016 and before, the balanced growth has been broken. From the historical trend, Vans The fluctuation of business has always been the largest. At present, this brand has become the only support of the group, and its driving foundation has actually become weaker than the previous "troika".

The sales of the cowboy business composed of Wrangler and Lee, two famous brands, fell by 7% in the second quarter, and the fixed exchange rate fell by 6%. In the first quarter, the business recorded a 2% growth in the fixed exchange rate.

The above performance also shows that Wrangler and Lee were completely abandoned after Weifu announced to spin off its cowboy business in August, and the Group Center has completely deviated from this business. Wrangler and Lee The largest competitor Levi's Levi's parent company Levi Strauss&Co The third quarter financial report released at the beginning of this month showed that the cowboy giant achieved revenue of $1394.2 million from June to August, up 9.9% from $1268.4 million in the same period last year. After excluding the impact of exchange rate, DTC And wholesale channels recorded an increase of 14% and 8% respectively, and the Americas, which contributed 56% of the Group's sales, rose 9% year on year, Europe and Asia 17% and 10% respectively.

As of September 29, the second quarter of fiscal year 2019, Weifu Group recorded a net profit of $507.1 million or earnings per share of $1.26, and adjusted earnings per share of $1.43, better than the market expectation of $1.33; The quarterly revenue was US $3.9074 billion, up 15% year on year, and the fixed exchange rate rose 16%, also exceeding the market expectation of US $3.86 billion.

With both business and revenue exceeding expectations, the stock price of Weifu Group still fell by more than 10%. The obvious answer can be found in the reports of industry analysts.

Christopher Svezia, an analyst at Wedbush Securities, said in the report that although the company's overall performance was strong, Lee Under the leadership of, the gross profit rate did not rise, while the cowboy business deteriorated.

No Agency Analyst Christina Ng It was pointed out in the report that the profit growth previously led by the extreme and outdoor business is now replaced by the split extreme business and the strengthened work clothes business. The direct business and e-commerce business can improve the profit margin when going along with the trend, but may become a burden when going against the trend. Given that the gross margin of the group did not improve in the second quarter, the rating of Weifu was lowered from "holding" to "neutral", The target price was lowered from $85 to $78.

However, some analysts believe that market concerns are unnecessary. Susquehanna Financial Group LLLP Analyst Sam Poser According to the report, the current pullback of Weifu's share price is driven by investors' groundless concerns about the slowdown of Weifu's growth in the second half of the year. However, the agency found through research that it was the group's intention to avoid oversaturation of the Vans market.

As of the end of September, in the second quarter, the gross profit margin and operating profit margin of Weifu recorded a decline of 10 basis points to 50.1% and 16.9%, and the adjusted gross profit margin was flat year on year, while the operating profit margin improved from 17.1% to 17.7%, and the adjusted operating profit margin, excluding acquisitions, increased by 100 basis points to 18.1%.

In the financial report, Weifu raised its annual revenue forecast from $13.6-13.7 billion to $13.7 billion, and raised its annual adj EPS It is expected to reach US $3.65, compared with US $3.52-3.57 previously. This is mainly because the revenue growth of the Limits Department was increased by one percentage point to 14-15%, while the revenue expectation of the Cowboy Department was lowered accordingly.

For the split of cowboy business, Steve Rendle, CEO of the Group, said that it was expected to be completed in April.

After Friday's crash, VF Corporation Narrow the cumulative increase of share prices this year from 16% to 4.49%.