(Reuters) - VF Corp VFC.N trimmed its full-year forecasts on Thursday, as the apparel maker struggles with waning demand for its Timberland outerwear and slowing growth at Vans.
Shares dropped 8% in morning trading as the company also fell short of quarterly sales estimates.
The results come as the 120-year-old company has been spending heavily on marketing, launching new products and improving its online presence to fend off larger rivals Nike NKE.N and Under Armour UAA.N.
Vans, the company’s biggest brand, posted its slowest revenue growth in two years at 12% in the third quarter, amid new launches that included a sneaker line inspired by skater Anthony van Engelen.
The outdoor segment, which includes Timberland and The North Face brands, reported revenue of $1.66 billion, missing the average analyst estimate of $1.7 billion.
“This morning’s results suggest the greater need to pare back the underperforming aspect of the (outdoor) portfolio,” RBC Capital Markets analyst Kate Fitzsimons said.
Timberland, a brand VF calls one of its “top four,” was particularly hit, falling 5% globally due to weakness in online sales, leading the company to cut its full-year revenue forecast for the business. Sales fell in the Americas, and Europe and Middle East, while they were flat in the Asia-Pacific region.
VF now expects full-revenue at the brand to decline 1% to 2%, compared with a 1% to 2% rise expected earlier. Revenue growth in The North Face brand near halved from a year earlier.
An uptick in promotional activity, starting pretty early and specifically with our cold weather brands, hit North Face and Timberland, Chief Financial Officer Scott Roe said on a post-earnings call.
The company estimated annual revenue of $11.75 billion, compared with its prior forecast of $11.8 billion. It projected adjusted profit per share to be about $3.30, lower than its prior range of $3.32 to $3.37.
Wedbush analyst Christopher Svezia called the lowered outlook a rarity for the company over the last several years.
VF, which spun off its jeans business as Kontoor Brands KB.N in May, is pushing ahead with divesting its non-core brands. The company announced on Tuesday a review for nine workwear brands, including Red Kap and Bulwark.
Net revenue rose 4.6% to $3.38 billion in the three months ended Dec. 28, but fell short of the average analyst estimate of $3.43 billion, according to IBES data from Refinitiv.
Excluding items, the company earned $1.23 per share, beating estimates of $1.21.
Reporting by Praveen Paramasivam in Bengaluru; Editing by Sriraj Kalluvila
Our Standards: The Thomson Reuters Trust Principles.