Greensboro, NC–VF Corp., owner of the more than 30 brands including The North Face, Timberland, Vans, and Nautica, today reported higher second quarter income thanks to lower cotton prices and rising sales of high-margin merchandise.
For the quarter ended June 29, VF posted net income of $138.2 million, or $1.24 a share, compared with $155.3 million, or $1.40 a share, a year earlier. Excluding expenses from its Timberland acquisition and a gain on the sale of John Varvatos, adjusted income was $1.27 a share, 10 cents better than analysts’ average estimate.
Revenue rose 3.6% to $2.2 billion, bolstered by strong gains at The North Face and Vans which offset a decline at Timberland.
Gross margin widened to 48.5% from 46.1% thanks, the company said, to lower year-over-year product costs, lower cotton prices and the “continued shift in our revenue mix toward higher margin businesses.”
Kipling Sales Rise 30%
One of those high-margin businesses, Vans, reported a 15% global sales increase including low-teen percentage growth in the Americas, 20% growth in its European business and more than 20% growth in the Asia Pacific region. Vans posted strong mid-teen percentage revenue increases in both its wholesale and direct-to-consumer channels globally.
Sales at the outdoor and action-sports segment, VR’s largest division, rose 6.1% to $1.1 billion. One of the brands, The North Face posted revenues up 5% globally driven by a mid-teen percentage rate increase in its direct-to-consumer sales and more than 20% growth in its international business.
Another major outdoor brand, Timberland had a 3% decline in sales. In the Americas, revenues increased at a low single-digit percentage rate driven by a high single-digit increase in direct-to-consumer sales, offset by a modest decline in its wholesale business. In Asia Pacific, where Japan remains the brand’s largest market, second quarter revenues increased at a low single-digit percentage rate (low double-digit rate on a constant-dollar basis). Citing “continued challenging conditions in Europe,” VF said Timberland’s sales declined at a low double-digit percentage.
In the company’s sportswear segment, sales were up 14% to $133 million driven by a low double-digit percentage increase in the Nautica and nearly 30% growth in the Kipling U.S. brand. Globally, Kipling grew 18%.
In its jeanswear business–its second-largest segment–sales increased 3%.
VF raised its full year profit forecast by 10 cents to $10.85 a share in line with analysts’ estimates.