VF Corp. posted first-quarter results that missed Wall Street’s consensus estimates, but were in line with the company’s expectations.
For the three months ended April 1, net income fell 19.6 percent to $209.2 million, or 50 cents a diluted share, from $260.3 million, or 61 cents, in the year-ago quarter. Reflecting just continuing operations — VF said on April 4 that it would sell its Licensed Sports Group in the second quarter — diluted EPS was 52 cents versus last year’s 56 cents. The company also said its net loss from the discontinued licensed business for the quarter was $5.5 million. Net sales slipped 2 percent to $2.56 billion from $2.61 billion.
Wall Street was expecting 55 cents in diluted EPS on sales of $2.72 billion.
Steve Rendle, president and chief executive officer, said, “VF’s first-quarter results were right in line with our expectations. The company’s largest brands and international and direct-to-consumer platforms performed well, delivering solid results against a retail backdrop that continues to experience significant dislocation.”
The ceo said a diversified value-creation model and focus on becoming more agile and consumer-centric will position the firm to accelerate growth through 2017.
The company said that its key growth drivers, international, direct-to-consumer and its Outdoor & Action Sports Coalition “delivered stronger results during the quarter.” Further, gross margin improved 150 basis points to 50.2 percent on a reported basis. The gain came from benefits from pricing, lower product costs and a mix-shift toward higher-margin businesses that were partially offset by changes in foreign currency. Inventories were up 2 percent versus a year ago.
VF also updated its outlook for 2017, taking into account the sale of its Licensed Sports Group. It now forecasts EPS to be down at the low single-digit percentage rate, compared to 2016 adjusted EPS of $2.98. Revenue is expected to rise at a low single-digit percentage rate, including a 2 percentage point negative impact from changes in foreign currency. The company said it anticipates gross margin to reach 49.6 percent, a 20 basis point increase over 2016 gross margin.
Separately, the company’s board has approved a quarterly dividend of 42 cents a share, payable on June 19 to shareholders of record on June 9.