In addition, it plans on luring these consumers away from big brands via a cost leadership strategy, which could work however, nothing is certain, especially during an era where globalization and digitalization have caused affordable shoes and apparel to flood the market. Vans' current strategy is to target younger consumers to tap into a long-term-oriented focus. Moreover, recovering from a consumer shift can take and burn cash because successful research and development isn't exactly an on-and-off switch. In our opinion, an over-reliance on core products will, in most cases, eventually lead to severe cyclicality as consumer trends often fluctuate abruptly while also being difficult to predict. Yet, one cannot help but think there's more to it than that. Corp's Vans brand has struggled since the start of the pandemic, with the firm's management blaming systemic features such as supply-chain issues, and lower store inventory volumes for the brand's recent drawback. Corp's cornerstone brand is under pressure amid slow product redevelopment and concentration risk within its product line. However, as illustrated by its 22% slump in year-on-year sales, V.F. Corporation's Vans brand makes up for the bulk of its revenue, with the business contributing approximately 35.35% in V.F. In addition, matters in Africa and the Middle East aren't looking much better, as many of the regions suffered dearly in the aftermath of the COVID-19 pandemic. Europe looks set to take time to recover after its energy crisis last year enforced significant pressure on households. On the other end of the spectrum, EMEA remains uncertain. Corp's products would not be surprising to see. In fact, it is one of the few regions with low inflation, and its reopening spending spree is yet to hit full flight as such, higher wholesale demand for V.F. We believe China is well positioned to reignite demand, as illustrated by its latest PMI numbers. However, the same cannot be said about EMEA, as Europe, in particular, is struggling with increased financial pressure on households, leading to a 3% decline in segmental revenue. Corp experienced welcoming tailwinds from its Asia Pacific sales in Q1 amid an 18% year-on-year sales. Therefore, we urge investors to consider that lower interest rates might not send consumer goods sales into the stratosphere should a recession occur. In addition, while interest rates do have some expansionary effects, they aren't overly helpful in pulling an economy out of a recession. However, it is critical to consider that inflation remains resilient, meaning interest rates could stay high for a prolonged period. The realized slowdown in consumer sentiment is echoed by the company's 15% year-over-year decline in the Americas revenue, experienced during its first quarter.Ĭonsumer sentiment may tick up once interest rates eventually decline, as reduced household liabilities might free up disposable income. Consumer Sentiment (Trading Economics, University of Michigan) Although often detached from the supply-side factors in the real economy, consumer sentiment dictates the scoreboard for retail stocks. consumer sentiment remains of significant concern as three straight months of decline paints a glum picture for retail stocks such as V.F. Let's look at a few macro variables to start proceedings. Most of the firm's brands will be discussed as a collective, with Vans partitioned into a separate section as we see its prospects as potentially cataclysmic. Corp.'s corporate portfolio includes some of the most solid outdoor brands on the planet, namely Vans, Timberland, The North Face, and Dickies. A Few Macro Concernsįor those unaware, V.F. Let's dive into a deeper discussion about our recent findings on V.F. However, we urge investors to be careful of merely relying on mean-reversion as various concerns regarding V.F. Corporation, as the stock has lost nearly half its value in the past year, placing its relative strength index at a mere 34.71, suggesting a technical buying opportunity exists. Many market participants might think it's a good time to buy V.F. consumer firm that has shed a significant amount of its market value in the past year due to various company-specific and systematic headwinds.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |