Strong quarter encourages VFC to promote growth
With strong third-quarter results, lifestyle apparel group VF Corporation (VFC) has pushed out its growth expectations and plans further investment.
VFC’s portfolio includes The North Face, Timberland, Lee and Wrangler.
President/CEO Steve Rendle says the US company’s results were fuelled by accelerated momentum across its international and direct-to-consumer platforms and for it Outdoor & Action Sports coalition, notably its Vans brand, and workwear businesses.
“Based on the strength of our third-quarter performance and the stronger growth trajectory we see for the rest of the year, we are again increasing our full-year outlook and making additional growth-focused investments aimed at accelerating growth and value creation.”
Revenue for the quarter to the end of September grew 5 per cent to US$3.5 billion (up 4 per cent currency neutral).
Gross margin improved 100 basis points to 50.1 per cent, as benefits from pricing and a mix shift toward higher-margin businesses were partially offset by changes in foreign currency and higher product costs. Changes in foreign currency negatively affected reported gross margin by 80 basis points during the quarter.
Operating income on a reported basis was down 20 per cent to $484 million compared to the same period last year. On an adjusted basis, operating income was down 2 per cent to $593 million. Changes in foreign currency hit profits by three points.
Operating margin decreased 450 points to 13.8 per cent. On an adjusted basis, the decline was 140 points to 16.9 per cent. Foreign currency has an 80-point impact.
In April, the company completed the sale of its Licensed Sports Group (LSG) business, including the Majestic brand. In conjunction with the LSG divestiture, VF executed its plan to entirely exit the licensing business. It has decided to sell the JanSport collegiate business as well.
In August last year the company completed the sale of its contemporary brands businesses including 7 For All Mankind, Ella Moss and Splendid.
VF’s net loss from discontinued operations was less than $1 million in the third quarter.
Founded in 1899, VF runs its socially and environmentally responsible business across a range of geographies, product categories and distribution channels.