VF Corporation Q2 revenues up 8 percent

REPORT_ VF Corporation reported that its financial results for the second quarter ended June 28, 2014 witnessed 8

percent increase in revenues to 2.4 billion dollars and a 16 percent increase in earnings per share to 0.36 dollar.

“Our strong second quarter results, led by our Outdoor & Action Sports coalition, put us right in line with our full-year outlook and long-term growth commitments,” said Eric Wiseman, VF Chairman, President and Chief Executive Officer, adding, “Looking toward the second half of 2014, our powerful brands and platforms have us well-positioned to continue our momentum and deliver another record year for VF and its shareholders.”

Gross margin was 48.4 percent, down 10 basis points against last year’s same period. Operating income increased 9 percent to 220 million dollars in the second quarter, compared with 201 million dollars in the same period of 2013. Operating margin was 9.2 percent compared with 9.1 percent in the second quarter of 2013.

Revenues for the Outdoor & Action Sports coalition increased 16 percent in the quarter to 1.3 billion dollars with double-digit growth in the Americas, European and Asia Pacific regions. Second quarter revenues for The North Face brand rose 11 percent globally driven by 37 percent growth in direct-to-consumer sales and a low single-digit increase in the brand’s wholesale business. The North Face brand’s revenues were up at a mid-teen percentage rate in the Americas region, up by a high single-digit percentage rate in Europe and down at a mid-single-digit rate in the Asia Pacific region, where company expects the brand to return to double-digit growth in the second half of the year.

Vans brand revenues were up 21 percent with strong, double-digit growth across all regions as well as in the brand’s wholesale and direct-to-consumer channels. Revenues in the Americas and European regions were up at a high-teen percentage rate in the quarter, and by more than 40 percent in the Asia Pacific region. Global direct-to-consumer revenues for the Vans brand were up 27 percent in the quarter.

Revenues for the Timberland brand were up 19 percent in the second quarter. In the Americas region, revenues were up nearly 25 percent including more than 35 percent growth in its wholesale business and flat results in direct-to-consumer sales. In Europe and the Asia Pacific region, Timberland brand revenues were up at a mid-teen percentage rate. Globally, the Timberland brand achieved 10 percent growth in its direct-to-consumer business and more than 25 percent growth in wholesale revenues in the quarter.

In line with expectations, Jeanswear second quarter revenues were down 1 percent to 606 million dollars. Coalition revenues in the Americas region were down at a low single-digit percentage rate due to ongoing challenges in the US mid-tier/department store channel and consumer trends in women’s denim, which primarily impacted the Lee brand. In Europe, revenues were up at a mid-teen percentage rate and sales in the Asia Pacific region were up at a low single-digit rate.

Second quarter revenues for the Wrangler brand were up 4 percent driven by a mid-single-digit increase in the Americas region and a high single-digit percentage rate increase in European revenues. Second quarter revenues for the Lee brand were down 7 percent driven by a mid-teen percentage revenue decline in the Americas region, offset by 25 percent growth in Europe and a mid-single-digit increase in Asia Pacific sales.

Imagewear revenues were up 3 percent in the quarter to 250 million dollars driven by a mid-single-digit increase in its Image business and a low single-digit increase in its Licensed Sports Group business. Second quarter Sportswear revenues were up 5 percent to 140 million dollars. Nautica brand revenues grew 2 percent as the brand faces challenging market dynamics in the US department store channel. The Kipling brand’s US business was up at a high-teen percentage rate compared with the same period last year. Globally, the Kipling brand grew 27 percent. Contemporary Brands coalition revenues were down 2 percent, to 96 million dollars, reflecting challenging consumer trends in women’s premium denim.

International revenues in the second quarter grew 14 percent. Revenues in Europe rose 16 percent (up 11 percent in constant currency) with positive results from nearly every brand in VF’s portfolio. In the Asia Pacific region, revenues were up 17 percent (up 18 percent in constant currency) including 15 percent growth in China (up 13 percent in constant currency). Reported revenues in the Americas (non-US) region were up 6 percent (16 percent in constant currency). International revenues were 36 percent of total VF second quarter sales in 2014 compared with 34 percent in the same period of 2013.

The outlook for the full year remains unchanged with revenues projected to increase 8 percent, and gross margin and operating margin expected to reach 49 percent and 15 percent, respectively. Earnings per share in 2014 are expected to reach 3.06 dollars per share. Third quarter revenues are expected to increase at a rate similar to that of the second quarter driven primarily by strength within the Outdoor & Action Sports coalition, international operations and continued strength in direct-to-consumer businesses. On July 15, 2014, VF’s Board of Directors declared a quarterly dividend of 0.2625 dollars per share, payable on September 19, 2014 to shareholders of record on September 9, 2014.