VF Corp. reports better-than-expected third quarter results on Vans sales
VF Corporation reported strong third quarter results on Thursday, thanks to one brand in particular that was the real earnings driver. The results have also led the company to raise its annual outlook.
The parent company of over two dozen brands such as The North Face, Wrangler, Timberland and more, reported revenue of $3.5 billion, up 5 percent from the same period last year.
“VF’s third quarter results were strong, fueled by accelerated momentum across the company’s international and direct-to-consumer platforms and our Outdoor and Action Sports and Workwear businesses,” said Steve Rendle, President and Chief Executive Officer. “Based on the strength of our third quarter performance and the stronger growth trajectory we see for the remainder of 2017, we are again increasing our full year outlook and making additional growth-focused investments aimed at accelerating growth and value creation into 2018 and beyond.”
The driving force behind the results was the company’s outdoor and action sports division, which saw an increase of 8 percent, but most notably due to the Vans brand where revenue increased 28 percent for the quarter ended September 30.
In 2016, Vans became VF Corp.’s leading label, edging past The North Face, and has since been on a steady growth streak. Vans is currently big among street-culture trends and received viral recognition last year when the “Damn Daniel” meme drove a spike in sales of white Vans sneakers.
Meanwhile, brands such as The North Face and Timberland saw earnings fall by both 2 and 1 percent, respectively.
In the jeanswear division, revenue fell 1 percent to less than $698 million, imagewear grew 9 percent to nearly $139 million, and sportswear remained stable at $140 million. The rest of its activities accounted for $29 million, 6 percent less than last year.
In the third quarter, VF completed the sale of its Licensed Sports Group (LSG) business, including the Majestic brand. The company also completed the sale of its contemporary brands businesses, which included the 7 For All Mankind, Splendid and Ella Moss brands. Net loss from discontinued operations was less than $1 million in the third quarter. Last quarter, VF went on to finalize the purchase of Williamson-Dickie (Dickies).
Earlier this year, VF introduced its 2021 growth plan to investors that detailed an increased focus on its international and direct-to-consumer businesses.
Part of the growth plan is to prioritize digital and direct-to-consumer, increase focus on the Asian market, particularly China, and reshape the company’s brand portfolio.
“Our 2021 strategic growth plan fuels our aspiration to consistently grow by creating amazing products and brand experiences that transform and improve the lives of consumers worldwide,” said Rendle, back in March.
In line with its mission, VF Corp saw the fruits of its labour with third quarter results showing international sales to be the most interesting.
Outside the United States, the company saw sales increase by 13 percent, with increases of 18 percent in Europe and 9 percent in China. In particular, Vans sales were again strong, growing by 39 percent at a constant currency in Europe during the last quarter, while The North Face increased by 17 percent, Timberland by 3 percent, Lee by 7 percent and Wrangler fell by 2 percent.
Similarly, the company’s digital and direct-to-consumer components were also strong. Its store networks and e-commerce sites posted an 18 percent increase in sales, with digital sales growth of 38 percent. Wholesale sales were stable.
VF Corp now expects growth of 6 percent (5.5 percent at constant exchange rate) compared to 3.5 percent previously in 2017. An increase that will bring in around $12.1 billion in annual sales. The 2017 year's reported earnings per share is now expected to be $2.73.
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