Greensboro, NC—Thanks to strong demand for its North Face, Vans and Timberland brands, VF Corp. today reported its first quarter profit rose 9.9%.
For the quarter ended March 29, the parent to Wrangler and Lee jeans posted net income of $297.19 million, or 67 cents a share, up from $270.42 million. or 60 cents a share in the prior-year quarter. That beat analysts’ average estimate for 63 cents a share.
Total net revenue was up 6% to $2.78 billion just edging past analysts’ estimate for $2.76 billion in sales. Sales growth was driven by double-digit growth of 14% in outdoor & action sports, 16% in direct-to-consumer businesses and 11% in international.
In the outdoor & action division, The North Face recorded a 14% increase in sales. By region, The North Face brand’s revenues were up at a high-teen percentage rate in the Americas, up at a mid-teen percentage rate in the Asia Pacific region and up ata low single-digit percentage in Europe.
Kipling Sales Rise Too
Vans posted the highest percentage sales increase of any VF brand in the first quarter, growing 20% with strong, double-digit growth across all geographies, as well as in the brand’s wholesale and direct-to-consumer channels. Revenues in the Americas were up at a low-teen percentage rate in the quarter, up more than 20% in Europe and more than 40$% in the Asia Pacific region. Global direct-to-consumer revenues for the
Revenues for the Timberland brand were up 12%. In the Americas, revenues increased at a high-teen percentage rate including greater than 20% growth in its wholesale business and direct-to-consumer results driven by double-digit comparable store growth rates. In Europe, the Timberland brand grew at a high single-digit percentage rate and in the Asia Pacific region, first quarter revenues were up at a low double-digit percentage rate.
First quarter Sportswear revenues were up 3% to $132 million. Nautica brand revenues were flat, impacted by a shift in timing of shipments; second quarter revenues should grow at a low double-digit rate. Kipling’s U.S. business achieved a high-teen percentage rate increase in revenues compared with the same period last year. Globally, the Kipling brand grew 23%.
In the jeanswear division, sales were down 4% to $690 million due primarily to “ongoing challenges in the U.S. mid-tier/department store channel and to a lesser extent, consumer trends in women’s denim.” In Europe, revenues were up at a high single-digit percentage rate and sales in the Asia Pacific region were up 10%.
Revenues for the Wrangler brand were down 2% driven by a low single-digit decline in the Americas region, partially offset by a high single-digit increase in European revenues. First quarter revenues at Lee were down 1% driven by a high single-digit percentage decline in the Americas region, partially offset by 10% growth in Europe and a mid-teen increase in Asia Pacific sales.
Imagewear revenues were up 4% in the quarter to $263 million driven by particular strength in its Licensed Sports Group business.
“VF’s first quarter results reflect the continued strength of our brands and our global business platforms,” said Eric Wiseman, VF chairman/president/ceo.“Led by outstanding performance from the outdoor & actionsSports coalition, which had balanced growth across all channels and geographies, we delivered strong growth in revenue and profitability.”
Gross margin improved 130 basis points to 49.4%, an all-time high for any quarter in VF’s history. The higher gross margin is primarily driven by the continuing shift toward higher margin businesses and includes 30 basis points related to the previously disclosed change in classification of retail concession fees.
Selling, general and administrative expenses as a percent of revenues rose 50 basis points to 34.9% in the first quarter.
Looking forward, VF forecast full year earnings of $3.06 a share, up from its previous forecast for $3 to $3.06 a share, but maintained its sales growth forecast for 7% to 8%.
Continued Growth Ahead?
Analysts’ average forecast is for $3.06 a share on sales of 7.5% to $12.28 billion.
The company added that second-quarter revenues are expected also projected to increase at a similar level to that of the first quarter, driven primarily by strength from outdoor & action sports coalition.
“Looking towards the balance of 2014-we are confident in our business plan and look forward to delivering another record year for our shareholders,” Wiseman added.