Investors returned to beleaguered apparel maker VF Corp(NYSE: VFC) over the past few days. Much of this was due to the company's surprisingly robust second-quarter fiscal 2025 results and the pronouncements made by management at the company's subsequent investor day event. As a result, according to data compiled by S&P Global Market Intelligence, VF Corp stock was up by almost 24% in price week to date as of early Friday morning.
The turnaround just might be working
Previous to that earnings release, which occurred after market close on Monday, VF Corp stock had been in the doldrums. Sales were sluggish, and profitability was weak.
Yet, those second-quarter figures strongly indicated that management's turnaround attempts were bearing fruit. Revenue fell by 6% year over year (to $2.76 billion), not quite meeting the consensus analyst estimate of $2.77 billion. Although negative growth and a miss on estimates are not ideal, the decline was less steep than in previous quarters. The market took this as a sign that the situation is improving.
On the bottom line, non-GAAP (adjusted) net income measured on a per-share basis fell from $0.63 to $0.60. Prognosticators following the stock were expecting a much steeper tumble, as their average expectation for the metric was a mere $0.37.
Sounding the right notes
VF Corp's well-timed investor day event, which came on the heels of the earnings release, saw management make several bullish pronouncements that went down well with investors. Among the numerous initiatives and goals discussed by company officials were a pledge to keep cleaning the balance sheet (an effort that should include debt retirement) and improvements in key metrics, like adjusted gross margin and operating margins.
All this is encouraging, but we should bear firmly in mind that one shockingly profitable quarter does not a turnaround make. Investors might be best served to wait another quarter (or several) to determine whether VF Corp is truly on a meaningful rebound.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
