High borrowing costs and still-high inflation have forced shoppers to move away from pricier products and spend their dollars mainly on essentials.
With demand for its higher-priced apparel and footwear easing as customers turn more cost conscious, especially in the United States.
As a result VF Corp reported a lower-than-expected second-quarter profit.
The company reported 21% fall in sales at its Vans brands, while The North Face brand saw a 19% increase.
An uncertain consumer spending environment has also forced several retailers including Foot Locker (FL.N) and Macy’s (M.N) to take a cautious stance going into the holiday season.
VF Corp’s margins have taken a hit from excessive discounts and promotions it has offered to attract shoppers as well as clear surplus inventory.
The company’s adjusted gross margins declined 20 basis points to 51.3% in the quarter.
Sales in Americas, its biggest market, fell 11% in the reported quarter, but rose 8% in Greater China helped by a rebound in demand after the COVID-19 pandemic.
It also said it was undertaking a large-scale cost reduction program, which it expects to deliver $300 million in fixed cost savings.
Its second-quarter revenue fell 2% to $3.03 billion in the quarter ended September, compared with analysts’ estimate of $3 billion, according to LSEG data.
