Not all companies entered 2024 riding high. Normalization from the 2021 post-COVID boom has still been a common stay for many companies in the computer and technology and consumer discretionary sectors. Overproduction to avoid any future supply chain bottlenecks resulted in an inventory surplus that companies have been working through at the cost of contracting margins from promotions to move products. Here are three companies that are finally starting to gain traction in their turnarounds as demand picks up.
Mobileye Global: Recovering EV Market in China Fuels Turnaround
The slowdown in electric vehicle (EV) sales, notably in China, caused shares of Mobileye Global Inc. (NASDAQ: MBLY) to collapse as its clients continuously struggled with an inventory glut. The developer of advanced driver assistance systems (ADAS) couldn't do much about the inventory surplus its original equipment manufacturers (OEMs) had to work through. This made it especially difficult to unload its next-generation AI-powered SuperVision ADAS systems.
However, the China stimulus plan and a gradual improvement in auto demand have set the stage for a recovery in Mobileye’s stock. Mobileye posted Q3 2024 EPS of 10 cents, which was in line with consensus estimates as revenue still fell 8.8% YoY to $486 million but still came in nicely above the $465.27 million consensus estimates. While the initial headline revenue doesn't seem impressive, it's the 11% sequential increase in revenue over Q2 that is "another sign that inventory at our customers has normalized," according to Mobileye CEO Amnon Shashua.
VF Corp.: Trimming Inventories to Bolster Gross Margins
Global apparel and footwear maker VF Corp. (NYSE: VFC) has been gaining traction on its Reinvent turnaround strategy implemented by CEO Bracken Darrell upon taking the lead role in July 2023. The turnaround plan focused on improving North American sales cost cuts, saving up to $300 million by the end of fiscal 2025, divesting some of its 11 brands to improve its balance sheet, and revitalizing its VANS brand. The company sold off its Supreme brand on Oct. 1, 2024, to pay down its $1 billion term loan due in December.
Evidence of the traction came after a 22% spike resulting from its fiscal second quarter of 2025 earnings results. VF Corp reported EPS of 60 cents, which beat consensus estimates by 22 cents. Revenues fell 5.6% YoY to $2.76 billion, beating consensus estimates for $2.72 billion. The revenue declines have been getting smaller. The North Face revenue fell 3% YoY as expected, coming off fiscal Q1 2024 surge of 17% YoY. VANS revenue fell just 11% YoY, a big improvement from the 21% YoY drop reported in its last quarter and the 27% YoY revenue drop in the previous quarter. Inventories fell 13% YoY, which helped drive up gross margin by 120 bps to 52.2%.
The company will continue to pay quarterly dividends as it announced a 9 cents per share dividend payable to shareholders of record at the close of business on Dec. 10, 2024.
Camping World: Time to Pitch a Tent for the Recovery
While the pandemic was a boon to outdoor lifestyle and recreational vehicle (RV) retailers like Camping World Holdings Inc. (NYSE: CWH), the normalization has been brutal and exacerbated by high interest rates. The resumption of the Federal Reserve’s interest rate cut cycle has accelerated the recovery in RV sales.
Camping World reported Q3 2024 EPS of 17 cents, which nearly doubled consensus estimates for 9 cents. The revenue downdraft improved to just 0.3% YoY to $1.73 billion, which crushed the $1.64 billion consensus estimates. Same-store vehicle unit sales surged 28.8% YoY, while used vehicle sales fell 20.5%, resulting in overall same-store sales growth of 3.5% YoY, which was the first positive sales growth in 10 quarters.
Specifically, the new vehicle revenue jumped 21.5% YoY to $824.9 million, up $145.7 million. New vehicle units sold jumped 31% YoY to 19,943 units, up 4,738 units. Approximately 36% of its new vehicle units are actually contract-manufactured RVs exclusive to Camping World by THOR Industries Inc. (NYSE: THO) and Forest River. On the other hand, used vehicle revenue fell 24.2% to $447.2 million, and used vehicle unit sales fell 17.9% to 14,065 units.
The recovery is continuing as Camping World CEO Marcus Lemonis stated, "We are pleased to tell you that it looks like a large chunk of the RV market is much healthier than it was a year ago. They have the right disciplines, the good inventory strategy, and I compliment both THOR and Forest River for helping drive that process through discipline by not overproducing inventory.”