Canaccord Genuity Lists 6 Reasons to Buy VF Corp (VFC) Today

Canaccord Genuity analyst, Camilo Lyon, believes VF Corp. (NYSE: VFC) is better positioned than most to manage through this choppy consumer environment and suggests 6 reasons to Buy VFC today. No change to Buy rating or $88 PT.

Unlike most retailers that experienced weak traffic trends in September and October, VFC saw its business accelerate as Q3 progressed, with September being the strongest month.

The inventory level from the end of Q3 (Sept. 30), when it was +12%, has already come down significantly. Recall, there was a timing shift of deliveries into the first weeks of October that caused the comparison to look artificially inflated year/year.

VFC's brand mix is more diversified than it was during the last warm winter in 2011/12 when North Face was an estimated ~38% of the OAS Coalition. Today, by our estimates NF is ~31% of OAS with Vans (~29%) and Timberland (~25%) increasing in mix. This balanced mix should lessen the volatility of any one particular brand, thus underscoring the benefit of a diversified portfolio.

North Face is less "parka-centric": In recent years, VFC has tailored its North Face assortment to comprise more light weight/transitional apparel (e.g. jackets and vests) as opposed to concentrating on heavier parkas.

VFC has a robust supply chain/distribution network that it can leverage to manage its inventory from channel to channel as demand dictates. Moreover, its exposure to the mid-tier/ department stores is minimal at ~9%.

2016 could be the year in which VFC will acquire its next brand. The recent market volatility has compressed multiples across retail, making likely sellers more amenable to a deal. Also the specter of rising interest rates should also motivate all parties involved to act sooner than later.

For an analyst ratings summary and ratings history on VF Corp. click here. For more ratings news on VF Corp. click here.

Shares of VF Corp. closed at $64.61 yesterday.

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