VF Corporation released their Q2 financials today and the Outdoor and Action Sports segment of the conglomerate is leading the way. Overall, revenues were up 8% to $2.4 billion, with Outdoor and Action Sports up 16% overall. This included and 11% increase in The North Face® brand revenues, a 21% increase in Vans® brand revenues, and a 19% increase in Timberland® brand revenues.
In addition, the direct-to-consumer revenues were up 18 %.
Here’s more in an edited version:
“Our strong second quarter results, led by our Outdoor & Action Sports coalition, put us right in line with our full-year outlook and long-term growth commitments,” said Eric Wiseman, VF Chairman, President and Chief Executive Officer. “Looking toward the second half of 2014, our powerful brands and platforms have us well-positioned to continue our momentum and deliver another record year for VF and its shareholders.”
Revenues for the Outdoor & Action Sports coalition increased 16 percent in the quarter to $1.3 billion with double-digit growth in the Americas, European and Asia Pacific regions.
Second quarter revenues for The North Face® brand rose 11 percent globally driven by 37 percent growth in direct-to-consumer sales and a low single-digit increase in the brand’s wholesale business. The North Face® brand’s revenues were up at a mid-teen percentage rate in the Americas region, up by a high single-digit percentage rate in Europe and down at a mid single-digit rate in the Asia Pacific region, where we expect the brand to return to double-digit growth in the second half of the year.
Vans® brand revenues were up 21 percent with strong, double-digit growth across all regions as well as in the brand’s wholesale and direct-to-consumer channels. Revenues in the Americas and European regions were up at a high-teen percentage rate in the quarter, and by more than 40 percent in the Asia Pacific region. Global direct-to-consumer revenues for the Vans® brand were up 27 percent in the quarter.
Revenues for the Timberland® brand were up 19 percent in the second quarter. In the Americas region, revenues were up nearly 25 percent including more than 35 percent growth in its wholesale business and flat results in direct-to-consumer sales. In Europe and the Asia Pacific region, Timberland® brand revenues were up at a mid-teen percentage rate. Globally, the Timberland® brand achieved 10 percent growth in its direct-to-consumer business and more than 25 percent growth in wholesale revenues in the quarter.
In line with expectations, Jeanswear second quarter revenues were down 1 percent to $606 million. Coalition revenues in the Americas region were down at a low single-digit percentage rate due to ongoing challenges in the U.S. mid-tier/department store channel and consumer trends in women’s denim, which primarily impacted the Lee® brand.
As expected, Contemporary Brands coalition revenues were down 2 percent, to $96 million, reflecting challenging consumer trends in women’s premium denim.
Direct-to-consumer revenues grew 18 percent in the second quarter with double-digit increases in all regions of the world and growth in nearly every VF brand with a retail format. Forty-one stores were opened during the quarter bringing the total number of VF owned retail stores to 1,299. Direct-to-consumer revenues reached 26 percent of total revenues in the second quarter compared with 22 percent in the 2013 period. As previously discussed, effective fiscal 2014, VF now includes revenues from its concession locations in its direct-to-consumer business; on a comparable basis, direct-to-consumer revenues in the second quarter of 2013 would have been 23 percent of total VF revenue. References to direct-to-consumer and wholesale revenue growth rates reflect the change in reporting of concessions in all periods.
2014 Outlook
The outlook for the full year remains unchanged with revenues projected to increase 8 percent, and gross margin and operating margin expected to reach 49 percent and 15 percent, respectively. Earnings per share in 2014 are expected to reach $3.06 per share.
Third quarter revenues are expected to increase at a rate similar to that of the second quarter driven primarily by strength within the Outdoor & Action Sports coalition, our international operations and continued strength in our direct-to-consumer businesses. The strongest growth and profit comparisons of the year are expected in the fourth quarter, when direct-to-consumer represents the most significant contribution of the year.
