The Outdoor and Action Sports Coalition of VF Corporation increased first quarter sales by 16 percent to $788.2 million, with revenues in the Americas rising by 12 percent and international turnover up by 21 percent.
The North Face and Vans, the division's two largest brands, achieved global revenue growth of 17 percent and 20 percent respectively. Reef increased revenues by 18 percent, Kipling by 29 percent and Napapijri by 9 percent. Total direct-to-consumer revenues for the division rose by 12 percent led by The North Face, Vans and Kipling.
The momentum continues to be strong at TNF as its order backlog for fall shipments is up by 16 percent in the U.S. and more than 25 percent overseas. Vans' orders are up 20 percent on a global basis.
Operating income for the coalition rose by 13 percent to $143.9 million. The operating margin decreased to 18.3 percent compared with last year's 18.7 percent because of a higher percentage of advertising. The division still expected to finish the full year with an operating margin close to 20 percent.
The outdoor and action sports coalition was the VF's fastest growing division in the quarter. Overall, VF booked a 12 percent increase in revenues in the first quarter to $1,958.8 million. The gross margin reached a record 47.2 percent, up from 46.7 percent a year earlier. Operating margins rose to 14.2 percent from 12.9 percent. Gross and operating margins both benefited from a 0.40 percentage point boost from a change in inventory accounting. Net income rose by 23 percent to $200.7 million
The company upgraded its guidance and forecast revenue rising by approximately 10 percent in 2011, compared with a previous forecast of an 8-9 percent increase, due largely to the impact of a weaker dollar in translating foreign currencies and broad-based strength across its businesses.
Earnings per share are now anticipated to increase to $7.25, up from a previous guidance of $7.00-7.10 . VF sees cash flow from operations reaching $1 billion in 2011. But the bright note was marred by news that a tornado that hit Alabama on Wednesday destroyed a jeans distribution center owned by the group, killing an employee. The loss of inventory could affect second quarter results but not the full year, the company said (more in The Outdoor Industry Compass).
