VF Corp reports revenue rise of 8 percent in Q1

VF Corporation, for its first quarter ended April 4, 2015 reported revenue rise of 8 percent on a currency neutral basis including growth in its outdoor & action sports, jeanswear, imagewear and sportswear coalitions as well as international and direct-to-consumer businesses. On a reported basis, revenues increased 2 percent over the 2014 quarter.

“We remain confident in the year ahead, the fundamental strength of our business, and the significant momentum we see across our diverse portfolio of brands,” said Eric Wiseman, VF Chairman, President and Chief Executive Officer.

Gross margin was 49.0 percent on a reported basis, down 40 basis points compared. The company continues to expect a 70 basis point improvement for the full year to reach 49.5 percent on a currency neutral basis and 49.2 percent on reported basis. Operating income on a reported basis was down 1 percent to 398 million dollars compared with the same period of 2014. Operating margin on a reported basis declined 50 basis points to 14.0 percent. Earnings per share were up 13 percent on a currency neutral basis and were flat on a reported basis compared with last year’s same period.

First quarter revenues for the outdoor & action sports coalition were up 10 percent on a currency neutral basis and up 2 percent on reported basis to 1.6 billion dollars. First quarter currency neutral revenues for The North Face brand rose 7 percent, including a 20 percent increase or 13 percent on reported basis in direct-to-consumer business. By region, The North Face brand’s revenues were up at a mid-single-digit percentage rate in the Americas, high single-digit rate in Europe and low double-digit percentage rate in the Asia Pacific region. For the full year, the company’s expectation for low double-digit currency neutral revenue growth for The North Face brand remains unchanged.

Currency neutral revenues for the Vans brand were up 16 percent including balanced growth in its direct-to-consumer and wholesale businesses. Revenues in the Americas region were up at a high-teen percentage rate, up more than 45 percent in the Asia Pacific region and at a mid-single-digit rate in Europe. In 2015, the company continues to expect a mid-teen currency neutral percentage rate increase in revenues for the Vans brand.

First quarter revenues for the Timberland brand were up 10 percent on a currency neutral basis including a 16 percent increase in its wholesale business. In the Americas region, revenues were up at a high-teen percentage rate driven by significant wholesale growth. In Asia Pacific, revenues in the first quarter were up at a high single-digit rate and in Europe, the Timberland brand was up at a low single-digit rate. There is no change to the company’s expectation for the Timberland brand revenues to increase at a low-teen percentage rate on a currency neutral basis in 2015.

Jeanswear first quarter revenues were up 6 percent and up 1 percent reported, to 700 million dollars. Revenues for the Americas region and Europe improved at a mid-single-digit percentage rate. In Asia, revenues were up at a high single-digit rate. Revenues for the Wrangler brand were up 9 percent driven by strength in the Americas region, which realized low double-digit growth in the US mass channel and a mid-single-digit increase in its western specialty business. Wrangler brand revenues in Europe were down at a mid-single-digit percentage rate and down more than 20 percent reported due to weakness in Eastern Europe and up at a low double-digit percentage rate in the Asia Pacific region.

Global revenues, on a currency neutral basis, for the Lee brand were up 4 percent and down 1 percent reported including a high single-digit percentage rate increase in Asia Pacific and a mid-teen percentage increase in Europe. The Americas region, which saw a low single-digit percentage decline in revenues, continues to work through ongoing challenges in the US mid-tier channel.

Imagewear revenues were up 8 percent or 7 percent reported to 283 million dollars driven by a mid-teen percentage rate increase in the workwear business with continued strong demand for the Red Kap brand. Sportswear revenues increased 3 percent to 136 million dollars. Nautica brand revenues were up at a low single-digit percentage rate driven by strength in wholesale sales. The Kipling brand’s revenues in the US were up 9 percent compared with the same period last year.

Contemporary brands coalition first quarter revenues were down 7 percent and down 11 percent reported to 88 million dollars, reflecting ongoing challenges in demand for the sector. International revenues, on a currency neutral basis, were up 9 percent and down 5 percent reported in the first quarter. Revenues in Europe were up 4 percent and down 14 percent reported and in the Asia Pacific region were up 17 percent and up 13 percent reported. Revenues in the Americas region were up 16 percent and up 4 percent reported). On a reported basis, international revenues were 40 percent of total VF first quarter sales compared with 43 percent in the same period of 2014.

Direct-to-consumer revenues, on a currency neutral basis, grew 11 percent and up 5 percent reported with positive comparable sales growth in all regions and particular strength in Europe. Twenty-three stores were opened during the first quarter bringing the total number of VF-owned retail stores to 1,395. On a reported basis, direct-to-consumer revenues reached 24 percent of total revenues in the first quarter compared with 23 percent in the same period of 2014.

Earnings per share, on a currency neutral basis, are now expected to increase by 14 percent compared to adjusted earnings per share of 3.08 dollars in 2014. This is an increase from the previous expectation of 12 percent per share growth provided on February 13, 2015. Earnings per share, on a reported basis, are still anticipated to increase by 4 percent to 3.20 dollars compared to adjusted earnings per share of 3.08 dollars in 2014. VF’s Board of Directors declared a quarterly dividend of 0.32 dollars per share.