VF Profits Up 9.9% in First Quarter

Company raises full-year earnings and sales guidance.

Lifted by continuing strength in its Outdoor & Action Sports coalition, VF Corp. reported a 9.9 percent increase in first-quarter profits and a 6.5 percent boost in quarterly revenues.

Both the top and bottom lines exceeded analysts’ consensus expectations. The Greensboro, N.C.-based apparel giant boosted its full-year earnings and revenue guidance.

In the three months ended March 29, net income reached $297.2 million, or 67 cents a diluted share, up from $270.4 million, or 60 cents, in the comparable period last year. Analysts on average had expected EPS of 63 cents.

Revenues rose to $2.78 billion from $2.61 billion, with sales at the Outdoor & Action Sports group, the company’s largest, ahead 14 percent to $1.57 billion. Within the outdoor group, Vans revenues were up 20 percent and were the highest of any brand in the VF portfolio.

The North Face sales rose 14 percent, with its direct-to-consumer component ahead almost 30 percent, while Timberland sales rose 12 percent.

Strength in outdoor was offset somewhat by weakness in the Jeanswear coalition, where sales fell 4 percent, to $690.3 million, and were down at a high-single-digit rate in the Americas as department and midtier stores struggled with the denim classification. Similarly, Contemporary coalition sales were off 5 percent to $98 million as Seven For All Mankind struggled against a “challenging premium denim market,” the company said.

International sales were up 11 percent, 10 percent in constant currency, while direct-to-consumer sales were up 16 percent, including double-digit gains in all regions.

Gross margin checked in at 49.4 percent of sales, up 130 basis points from a year ago and the highest measure for any quarter in VF’s history. VF said margins increased in all of its coalitions.

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“VF’s first-quarter results reflect the continued strength of our brands and our global business platforms,” said Eric Wiseman, chairman, president and chief executive officer of VF. “Led by outstanding performance from the Outdoor & Action Sports coalition, which had balanced growth across all channels and geographies, we delivered strong growth in revenue and profitability.”

In updated guidance, VF now expects full-year EPS of about $3.06, 1 cent higher than the top of its previous range of between $3 and $3.05, and revenue expansion at the higher end of its previous guidance for an increase of between 7 and 8 percent.