V.F. Corporation: Mr. Market Is Probably Right

Summary

• VFC does a good job of maintaining the highest quality fashion and outdoor brands, as evidenced by a 780 basis point increase in gross margin since fiscal 2010.
• It, therefore, seems incomprehensible why the stock continues to tread water - the stock can be purchased at a price seen in 2013, 2017, and 2020.
• The main reasons for the poor performance are a lack of free cash flow growth, improvable working capital management, disproportionately rising SG&A expenses, and, most recently, fears of a recession.
• Insiders also appear to lack conviction, as evidenced by insider sales of $320 million since 2014, offset by only $3.2 million in purchases.
• I see VFC as a good company at its core, currently lacking in execution quality, but with potential for a turnaround.

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V.F. Corporation (NYSE:VFC) is a fashion and outdoor equipment company which owns well-known brands like Vans, The North Face, Timberland, Dickies and, since late-2020, also Supreme. I covered the company in late-January when

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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