VF Corp expects 3% growth in 2015 after +8% in 2014
In late December, at the end of its 2014 fiscal year, VF Corp could boast of having not only one, but two brands belonging to the 2 billion dollar club. Following The North Face (which generated 2.3 billion dollars last year), Vans also managed to surpass 2 billion US dollars in annual sales.
These two brands, the jewels of the US clothing giant’s portfolio, recorded annual growth after adjustments for currency fluctuations of 11% and 17% respectively in 2014 compared to 2013.
VF Corps saw its sales increase by 8% (after adjustment for exchange rate fluctuations) last year, reaching 12.282 billion US dollars.
Its Outdoor & Action Sports division remains its largest, accounting for 6.759 billion dollars and recording growth of 13%. In addition to The North Face and Vans, the company also owns Timberland, the sales of which rose by 13% to 1.69 billion dollars. Jeanswear sales declined very slightly to 2.63 billion dollars. Imagewear and sportswear (Nautica and Kipling) increased by 4%, respectively at 1.04 and 610 million dollars. Meeting with difficulties, its contemporary brands division recorded a 4% decline to 376 million dollars, while the group’s other business generated 119 million dollars.
In terms of profitability, the group reduced the carrying value of its contemporary brands, which include 7 For All Mankind, Splendid and Ella Moss for a pre-tax impairment charge of 373 million dollars. The group felt that it was necessary to adjust their value to a more realistic position, seeing its operating profit suddenly fall by 13% compared to 2013. Excluding this decision, its operating profit rose by 14% to 1.7 billion dollars.
In 2015, VF Corp’s management expects to be confronted with largely unfavorable exchange rates. The group expects 8% growth at constant exchange rates. However, with the euro and Swiss franc having been considerably weakened and the European market making up nearly a quarter of its revenue, the group expects a 3% increase taking into account currency fluctuations.
In fact, despite an initial increase expected in Europe, its revenues could be down by nearly 5% in dollars. The share of its international revenues is expected to go from 38% to 37%. The group emphasized that its forecasts were prepared using an exchange rate of 1.13 euro for 1 dollar and indicated that a change of 0.05 dollars would have a 125 million dollar impact for the full year.
Despite the uncertainty for the coming year, VF Corp will continue forward with its development plans. In particular, it expects to open 150 new stores for its brands and is aiming for 30% growth of its e-commerce sales. It also promised investors over a billion dollars through share repurchases and dividends.
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