A shaky global economy isn’t taking the wind out of VF Corp.’s sails, as the lifestyle giant turned in another record-setting second quarter.
But Eric Wiseman, president and chief executive officer, sounded a note of caution about overall business conditions.
“Make no mistake, it is tough out there, but it is in times like these that the VF business model really proves itself,” Wiseman said during a conference call with analysts.
“There continues to be a huge amount of concern out there about how the rest of the year will play out,” he said. “All along we’ve shared this concern. From the beginning of the year we’ve talked about difficult conditions persisting throughout the year.”
For the three months ended June 30, the Greensboro, N.C.-based company reported that earnings vaulted 27.3 percent to $104 million, or 94 cents a diluted share, bettering the consensus estimate of Wall Street analysts by 8 cents. Lazard Capital Markets retail analyst Todd Slater said VF has beaten consensus estimates for 30 consecutive quarters. In the same period a year ago, VF reported earnings of $81.7 million, or 72 cents a share.
Revenues increased 10.6 percent to $1.68 billion from $1.52 billion. Sales rose 10.5 percent to $1.66 billion from $1.5 billion. Royalties increased 12.5 percent to $19.1 million from $17 million.
International markets are proving key to VF’s growth, as economic conditions worsen in the U.S. and shrink consumer spending. International revenues increased 23 percent during the quarter and accounted for 27 percent of revenues or about $452.9 million. Owned-retail is providing a second pillar for growth, with retail revenues increasing 15 percent during the quarter and accounting for 15 percent of overall revenues, or $251.6 million.
The outdoor segment, home to The North Face, Vans, Napapijri and Kipling brands, continued to set the pace. Revenues for the segment rose 17.2 percent to $523.5 million from $446.7 million, with double-digit growth in domestic and international markets. The North Face brand posted a 40 percent boom in revenues and global revenues for Vans rose 14 percent. The company opened 12 stores in the outdoor segment during the quarter. Management believes the outdoor segment can achieve more than 15 percent revenue growth in the second half of the year, driven largely by its existing owned-retail operations and through its expansion plans.
Despite the impressive earnings, Wiseman acknowledged that VF is dealing with the same economic headwinds being faced by almost every consumer product segment, and that “pockets of weakness” are materializing. VF’s jeanswear coalition is one area reflecting the weakened state of the U.S. retail environment. Jeanswear revenues fell 1.4 percent to $646.2 million from $655.4 million. Domestic revenues slid 7 percent, while revenues in international markets rose 14 percent.
“I think in general, in every channel of distribution, consumers are trading down,” Wiseman said.
Imagewear revenues increased 4.9 percent to $241.2 million from $229.9 million. The sportswear segment experienced a decline of 3.5 percent to $148.3 million from $153.7 million because VF exited the women’s Nautica business. The recently formed contemporary brand coalition turned in revenues of $87.6 million.
For the first six months of the year, earnings gained 15 percent to $253 million, or $2.27 a share, from $220 million, or $1.93 a share. Revenues rose 10.4 percent to $3.52 billion from $3.19 billion. Sales increased 10.5 percent to $3.48 billion from $3.15 billion and royalties improved 8.6 percent to $40.1 million from $37 million.
Outdoor segment revenues spiked 17.7 percent to $1.16 billion from $985.5 million, while jeanswear revenues fell 4.1 percent to $1.36 billion from $1.42 billion. Imagewear revenues rose 10.1 percent to $488.3 million from $443.6 million, sportswear revenues fell 7.1 percent to $280.5 million from $302.1 million and revenues for contemporary brands came in at $183.5 million.
Based on the strength of results, management raised its guidance to a 12 percent earnings improvement from 10 percent, with revenues expected to rise more than 9 percent to $7.9 billion.
“As I look at the balance of the year, I am cautious and know it will not be easy,” Wiseman said.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast