The outdoor and action sports business at VF Corp brought in mixed results for the second quarter ended July 2, combining sales increases for The North Face and Vans, and a decline for Timberland, caused by the Americas and Asia-Pacific.

The group said it was broadly on track but the Timberland brand was weaker than anticipated. Due to this decline and retail bankruptcies, VF downgraded its sales forecast for the full year, predicting that the turnover of the outdoor and action sports division should increase at a mid single-digit percentage rate, compared with the previous forecast of a high single-digit rate rise.

The division's sales reached $1,419.5 million for the quarter, up by 2 percent in reported terms and in constant currencies. While its own retail business inflated at a low double-digit rate, its wholesale turnover fell at a low single-digit rate. The group was affected by retail bankruptcies, while Timberland was hurt by an imbalance in inventories of boots in North America. These presumably short-term issues led to a downward revision for the footwear brand's full-year sales to a low single-digit rate.

The outdoor and action sports division's operating profit was down by 9 percent to $123.2 million for the quarter, and it still shrank by 5 percent in constant currencies. Its operating profit margin dipped by 1.0 percentage point to 8.7 percent.

TNF's turnover was up by 2 percent for the quarter, with a low single-digit increase in the Americas and a low-teens rise in constant currencies in Europe, but a decrease at a mid-teen rate without exchange rate changes in Asia-Pacific. The U.K., Germany, Italy, Spain and the Benelux countries all brought in double-digit sales increases. The group pointed to strong European demand for its mountain athletics range and for footwear, up by more than 20 percent.

The Vans brand's sales ended the quarter up 4 percent in reported and 6 percent in constant currencies. Again the performance varied strongly from one region to the other. In constant currencies, the action sports brand's turnover was up a high single-digit rate in the Americas, it jumped at a mid-teen rate in Asia-Pacific but fell at a high single-digit rate in Europe. This had been predicted earlier, as Vans is continuing to manage disproportionate inventories of its classics range. The group anticipates a slight decline for Vans in Europe in the third quarter but the business should return to growth in the fourth quarter.

Timberland's sales decline of 7 percent for the quarter includes a decrease at a high-teen percentage rate in the Americas and a high single-digit decline in Asia-Pacific, but the footwear brand's sales were up at a high single-digit rate in Europe in constant currencies. Growth in Europe was driven by own retailing, with soaring online sales.

The VF group's managers insisted in a conference call that the inventory issues in the Americas were temporary and should be cleared up in the second half. The strength of the brand was underlined by a rise of 25 percent in online sales, they added.

The entire group's turnover from continuing operations crawled up by 1 percent to $2,418.4 million for the quarter, with small increases in all major divisions other than sportswear. That division, including the Kipling and Nautica brands, saw its sales slip by 19 percent to $114.9 million.

The VF group's turnover was pushed up by increases of 7 percent in own retail sales and international turnover in constant currencies. The outdoor and action sports division contributed a low double-digit rise in own retail sales. Online sales soared by nearly 30 percent. The group's retail sales amounted to 27 percent of its quarterly turnover.

VF's gross margin was up slightly at 48.1 percent as lower product costs and favorable changes in mix and prices made up for unfavorable exchange rates and inventory issues. Operating profit was down by 3 percent to $211.4 million, with an operating margin decline of 0.4 percentage points to 8.6 percent.

The VF group has continued to adjust its brand portfolio, announcing at the end of June that it reached an agreement to sell its Contemporary Brands division to Delta Galil Industries for $120 million. This includes the 7 for All Mankind, Splendid and Ella Moss brands. The results of this business, which is expected to be sold in the third quarter, was treated as discontinued operations. VF suffered a net loss of $97 million from these discontinued operations, combining a loss from the sale and the division's operating loss for the quarter. Net income thus shrank by 70 percent to $51.0 million.

After the downgrade in the outdoor and action sports coalition's forecast for the full year, and due to weakness in the sportswear business, the entire VF group's turnover is predicted to advance at a rate of 3 to 4 percent for the year, compared with the previous outlook of a mid single-digit increase. This forecast relates to continuing operations and excludes the contemporary brands business. Gross margin is predicted to increase by about 0.5 percentage points to 48.7 percent, including a negative impact of 0.7 percentage points from currencies. The group's operating profit margin should reach 14.5 percent, with a hit of 0.6 percentage points from currencies. Reported earnings per share are expected to increase by 5 percent to $3.20, up by 11 percent in constant currencies.