VF Corporation suffered a 6.5 percent drop in total revenues for the first quarter to $1,725.5 million, including royalties, or a 2 percent drop at constant currencies
Net income fell by 32.3 percent to $100.9 million, spurred by softness in traditional department store channels and high unemployment in industrial sectors that hurt its uniform business. This translated to a currency-neutral drop of 25 percent. The figures also included a $12.2 million pension payment and a similar hit for currency exchange.
The North Face boosted VF Corp.’s fortunes to some degree with a 14 percent increase in sales at constant currencies. But overall, the Outdoor and Action Sports Coalition saw a 5 percent decrease in revenues to $605.9 million, with a 12.8 percent drop in operating income to $92.0 million. In constant currencies revenues were up by 2 percent.
Revenues from the Americas grew by 4 percent but the segment’s turnover in the rest of the world went down by 1 percent in dollars. The newly developing Asian region continued to be a strong point, up by 24 percent, with solid growth in The North Face, Vans, Napapijri and Kipling, as well as the jeans brand Lee. The good development of the Outdoor and Action Sports Coalition was partially driven by increased own direct-to-consumer sales in the U.S. This business was up by 16 percent, mainly thanks to The North Face and Vans.
Vans’ global sales were flat at constant currencies and up by 3 percent in the U.S. Direct-to-consumer revenues rose by 16 percent. VF Corp. noted that its flagship brands - TNF in outdoor and Vans in action sports - were performing well, but the group has seen some shortfalls among the smaller brands such as Reef and Eagle Creek. For the year, VF still expects to see growth in the Outdoor and Action Sports Coalitions in constant currencies.
TNF’s perspective is to become even stronger in corporate retail operations – especially outside the U.S. - to which doors in Bristol and Glasgow, both in the U.K., were added in the last quarter. Another store is planned for Copenhagen later this year. The brand intends, however, not only to push its own retailing, but also to strengthen its partnership with retail customers. The North Face wants to increase the number of its shop-in-shops and partnership stores internationally by 70 this year. By the end of this year, TNF will have more than 220 surfaces – partner stores and shop-in shops alike – in Europe alone.