Shares of VF Corporation (NYSE: VFC) fell as much as 9% early Monday, then settled to trade down 7% as of 1:30 p.m. ET after the parent company of brands including Vans, The North Face, Timberland, and Smart Wool disclosed a cyberattack that could have a material impact on its holiday sales.
A cyberattack at the worst possible time for VF Corporation
In an SEC filing this morning, VF says it detected unauthorized access to a portion of its information technology (IT) systems on Dec. 13, 2023. VF immediately took steps to contain and remediate the incident, including shutting down some systems and starting discussions with leading external cybersecurity experts. It also noted the threat actor disrupted operations by not only encrypting some of its IT systems, but also stealing some data from the company, including personal data.
Worse yet, VF says it's still working to bring the impacted portions of its IT systems back online while putting workarounds in place to reduce disruption to its ability to serve customers during the crucial holiday season. Though VF-operated retail stores are still open and consumers can still purchase available merchandise, the cyberattack has impacted its ability to fulfill orders placed by customers online.
What's next for VF investors?
VF added that it still doesn't know the full scope and impact of the incident, but admitted it "has had and is reasonably likely to continue to have a material impact" on its operations until the issue is resolved.
For perspective, VF Corporation most recently reported fiscal second-quarter 2024 results (for the period ended Sept. 30, 2023) in late October. Shares fell at the time after the company withdrew its full-year outlook, with management citing weak sales in the U.S. and a lack of progress improving the performance of the Vans brand. Meanwhile, VF shifted its focus to a large-scale cost-reduction program that aims to deliver $300 million of fixed-cost savings by removing spend in non-strategic areas of the business. Suffice to say this cyberattack is doing it no favors to that end.
If the timing of VF's previous earnings releases is any indication, it should be slated to announced fiscal third-quarter 2024 results in early February. Given the yet-to-be-known scale and cost of this cyberattack, however, it's no surprise to see some investors tapping that sell button right now.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
