Warnaco’s expectations look fair to me. Ditto for Guess!. But VF Corp is a different story. We need to assume that VFC’s 4Q business meaningfully outperformed in order to a) hit the quarter and b) mitigate the chance of a tepid outlook. That’s tough to assume. The North Face is weakening on the margin, the denim business is feeling price pressure from Levis in Wal*Mart, FX is not helping anymore, and the department store business – including contemporary brands – are not where they need to be.
In the meantime, VFC is trading at 6.5x EBITDA (30% premium to the group), 80% of sell-side ratings are ‘Buy’ (with no Sells), short interest remains low at 3.5% of the float, and management buying has been nil.
VFC’s communication strategy is quite good, which is why the company so frequently preannounces before a public appearance. Such announcements are usually positive for VFC. The math is tough for me to get all bulled-up this time. In fact, I’d argue that even a lack of an announcement is a negative.