VF beats Q1 estimates with help from Vans, raises full-year guidance
VF Corporation, the Greensboro, North Carolina-based owner of Vans, The North Face and Timberland, reported on Friday that its revenue increased 23% in the first quarter of 2019, or 21% in constant currencies, beating out Wall Street estimates, with growth driven by the group’s active and work segment and international sales.
Net sales for the quarter ended June 30, 2018 therefore totaled $2.8 billion, including a $249 million contribution from newly acquired brands Williamson-Dickie, Icebreaker and Altra. Excluding revenue related to these acquisitions, the group’s net sales rose 12%, or 10% in constant currencies.
The group’s active segment, which includes the Vans, Eastpak and Kipling brands, among others, and accounts for around 40% of VF’s total revenue, saw a 25% rise in net sales during the period (22% in constant currencies), with Vans leading the way with strong growth of 35%.
VF’s work segment, which features brands such as Timberland Pro and Wrangler, was also a strong performer during the quarter, posting an impressive 114% increase in revenue.
By region, the company’s international sales rose 27%, pushed by 45% revenue growth in China (35% in constant currencies), while, by channel, VF’s direct-to-consumer business saw revenue growth of 22%, with digital posting a 54% increase.
Operating income in the quarter came to $231 million, a 45% increase compared to the prior-year period, while net income totaled $160 million.
“VF's first quarter results were strong, driven by continued broad based acceleration across our core brands and platforms,” said VF Chairman, President and CEO Steve Rendle. “We are executing well against our 2021 growth plan and continuing on our journey to reshape the portfolio and transform VF into a purpose-led, performance driven, consumer-centric organization focused on and committed to delivering superior returns to shareholders.”
As well as completing the acquisitions of Williamson-Dickie, Icebreaker and Altra in Q1, VF also sold Nautica to Authentic Brands Group and divested itself of its licensing business as the company continues to reposition itself around an activewear and outdoor focus.
Due to its strong results in the first quarter, VF has revised up its full-year outlook for fiscal 2019. Adjusted revenue is now expected to be in the range of $13.6 billion to $13.7 billion, compared to a previous guidance of between $13.45 billion and $13.55 billion.
Adjusted earnings per share (EPS) for the year are now projected to be between $3.52 and $3.57, compared to a previous prevision of $3.48 to $3.53.
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