NEW YORK — Soaring sales of outdoor apparel and equipment helped VF Corp. to an 18.3 percent net gain in the first quarter.
The Greensboro, N.C.-based apparel giant reported earnings of $122.9 million, or $1.07 a share, for the three months ended April 2, besting Wall Street’s consensus estimate of $1.02 a share. In the year-ago quarter, VF had earnings of $103.9 million, or 93 cents a share.
Sales for the period increased 9.1 percent to $1.56 billion from $1.43 billion. The firm’s outdoor apparel and equipment segment, which includes The North Face, Vans, JanSport and Eastpak, jumped 126.6 percent to $282.3 million from $124.6 million.
The company said North Face sales rose 18 percent during the quarter and the brand continues to show strength, with fall bookings up 27 percent in the U.S. and 19 percent in Europe.
“Our outdoor business is really on a roll despite the fact that the overall outdoor action sports market is relatively flat,” Mackey McDonald, chairman and chief executive officer, said during a conference call with analysts.
McDonald said North Face’s growth has been organic, stemming from increased buying on the part of the brand’s traditional sport specialty store customers.
Sales in the company’s imagewear segment rose 8.2 percent to $187.2 million, getting a boost from the January acquisition of Holoubek.
“The acquisition of Holoubek has positioned us as one of Harley Davidson’s key partners,” said McDonald. “We are also benefiting from strength in our baseball business.”
Sales of jeanswear, the company’s largest segment, remained essentially flat, declining 0.2 percent to $706.7 million. McDonald characterized the jeans market as “quite stable” during the call.
“We hear a lot about the buzz in the premium end of the market, but this is a very small piece of the business at retail in total,” said McDonald.
According to McDonald, jean sales to the firm’s largest mass channel customers have grown, with shipments of Wrangler jeans up 18 percent for the quarter.
McDonald acknowledged that cooler spring weather had resulted in weaker sales in the department store channel. However, the recent spate of mergers and acquisitions in that channel could have an even greater effect on sales.“I know many of you have questions about our take on the Sears-Kmart and the Federated-May mergers,” said McDonald. “At this point, it’s simply too early to say what, if any, impact this consolidation will have on our brands and business.”
Sales of intimate apparel dipped 8.9 percent to $227.3 million from $249.4 million. During the call, McDonald noted that the intimate segment was up against a tough comparison from the previous year, when the company launched a new line with a specialty store customer. Even so, results were still weaker than anticipated.
Lehman Brothers analyst Robert S. Drbul believes the acquisitions of Nautica, Vans, Napapijri and Kipling will provide a basis for growth.
“We believe VF is successfully integrating these acquisitions and as the company executes its growth strategies for these new businesses, the shares should experience multiple expansion,” wrote Drbul in a research report.
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