VF Corporation’s revenues for the period ended March 31 climbed by 10.8 percent to $1.85 billion, and net income grew by 11.1 percent to $149 million. Acquisitions contributed revenues of $141 million. The weak dollar boosted the turnover by $56 million and the bottom line by 6.8 percentage points.
The good results were led by VF’s Outdoor Coalition, where total revenues were up by 18 percent, with double-digit growth both inside and outside the domestic market. Double-digit sales gains were reported for The North Face, Vans, Kipling and Napapijri. The operating margin was up by 1 percentage point, to 16.6 percent.
Revenues for the sportswear division, which includes Nautica, John Varvatos and Kipling in North America, were down by 11 percent, mostly because of a customer’s decision to reduce Nautica stock in off-price points of sale.
For the company as a whole, the operating margin was 13.2 percent, up from the 12.9 percent posted for the same period last year. Good profitability in the international market, where sales were up by 21 percent to make up 36 percent of VF’s total revenues, was cited as a significant contributor to this performance. Growth in Western Europe is slowing, but sales remained strong in India, China, Russia and Latin America. The gross margin was up by 1.6 percentage points to 45.1 percent.
Retail operations are becoming more profitable. The group ended the quarter with 641 stores, of which 15 opened during the period. Between 15 and 20 new stores will be opened in the second quarter within the Outdoor Coalition alone.
The U.S. market remains tough and a modest slowdown is expected in Europe. However, the management reaffirmed its previous outlook for the year, expecting a 9 percent increase in revenues for the full year 2008. It did warn, however, of a drop in operating income and margins for the second quarter, largely in the outdoor sector where it will be spending more to open more stores and to advertise Vans and TNF. The outdoor unit is also seasonal, with the second quarter typically being the slowest of the year. Its operating performance for the full year is expected to be better than 2007’s.
