Investing.com -- JPMorgan added VF Corp (NYSE:VFC) to its Negative Catalyst Watch ahead of the company's Q2 FY25 earnings report on October 28 and its Investor Day on October 30.
In a note, the analysts expressed concerns over VF Corp's financial outlook, stating, "We cut our FY26 EPS to $0.65 (= 35% below Consensus)," said the bank.
JPMorgan (NYSE:JPM) lowered its 2Q EPS estimate to $0.36, slightly below the Street's forecast of $0.37.
The bank expects VFC's revenues to decline 8% year-over-year, with management's guidance pointing to 'sequential' revenue improvement relative to the 1Q revenue drop of 10% (excluding Supreme).
However, they note that key brands such as Vans are struggling. "We model Vans revenues -18% in constant currency,(vs. 1Q -21% & below Street -15%) in-line with management's guidance for continued sequential improvement," wrote JPMorgan.
They add that challenges extend to VF Corp's outdoor brand, The North Face, where wholesale softness is expected to drag results further.
The bank adds: "Further, our work points to continued wholesale challenges at The North Face, w/mgmt citing reluctance from retail partners to take on inventory risk early following a warmer start to Fall/Winter last year. At point of sale, our workpoints to ongoing traffic headwinds globally across brands in the portfolio (notably Vans/The North Face) weighing on DTC revenues."
Looking beyond the second quarter, the analysts warned of more downside risks. "We cut our 2H25 EPS -35% below consensus to $0.29, (< Street $0.45) based on revenues -2.1% (below Street +1.9%), 2H
gross margin expansion of +90bps Y/Y (< Street +120bps Y/Y), and SG&A leverage ~Flat Y/Y (vs. Street SG&A leverage of ~160bps)."
JPMorgan is cautious about the company's ability to improve margins, citing potential markdowns and subdued growth.
With concerns about underperforming brands, market challenges, and pressure on margins, JPMorgan maintains a long-term Neutral rating on VF Corp, setting a December 2025 price target of $16.