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VF Corp Sales Affected Due to Slowdown

VF Corporation

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.

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