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Q2 revenues jump by 7% at VF Corp
22 Jul '10
5 min read
Operating income increased 40%, with a significant increase in operating margins to 17% in the quarter.
Sportswear: Our Sportswear business also resumed growth in the quarter, with revenues rising 5%. Revenues of our Nautica brand increased 4% with a double-digit increase in the brand's wholesale business with department stores. Kipling brand revenues in the U.S. increased 17% in the quarter, reflecting the successful launch of a new, exclusive program with Macy's. The improvements in profitability achieved in the past several quarters continued in the second quarter, with operating income and operating margins improving substantially over those of the prior year's quarter.
Contemporary Brands: Revenues of our Contemporary Brands coalition, which consists of the 7 For All Mankind, John Varvatos, Splendid and Ella Moss brands, rose 18%, driven by double-digit growth across all brands.
Operating income rose 12%, with a slight decline in operating margins reflecting higher brand spending as well as investments in new 7 For All Mankind retail stores.
Imagewear: As anticipated, our Imagewear business rebounded in the quarter, with revenues rising 8% driven by growth in both our Image and Licensed Sports Apparel businesses. Operating income rose 36% in the quarter with operating margins improving by 250 basis points to 12%.
Expansion in International and Direct-to-Consumer Businesses
Our international and direct-to-consumer businesses remain important long-term drivers of both organic growth and margin expansion. During the quarter, international revenues increased 6% on a constant currency basis driven by strong growth in our Outdoor & Action Sports and Contemporary Brands businesses. Our momentum in Asia continued in the quarter, with revenues rising 26% reflecting double-digit growth in The North Face, Vans and 7 For All Mankind brands.
Our direct-to-consumer revenues increased 7%, driven by new store openings in the quarter. The direct-to-consumer businesses of The North Face, Vans, 7 For All Mankind and lucybrands each achieved double-digit revenue gains in the period. We opened a total of 25 stores across our brands in the quarter and 41 stores year-to-date, bringing the number of owned retail stores to 768 at the end of the quarter. We remain on track to open a total of 80 to 90 stores this year.
Gross Margins Reach Record Level in Quarter
Second quarter gross margins reached record levels, rising 320 basis points to an all-time high of 47.1%. As in the first quarter, this substantial improvement was driven by three primary factors: 1) lower product costs; 2) continued expansion and improved gross margins in our retail stores; and 3) generally clean inventories across our businesses. Operating margins rose to 10.6% from 8.1%, while marketing spending increased 19% as we continued to implement a focused program of investment spending behind our strongest and most profitable brands.
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Sportswear: Our Sportswear business also resumed growth in the quarter, with revenues rising 5%. Revenues of our Nautica brand increased 4% with a double-digit increase in the brand's wholesale business with department stores. Kipling brand revenues in the U.S. increased 17% in the quarter, reflecting the successful launch of a new, exclusive program with Macy's. The improvements in profitability achieved in the past several quarters continued in the second quarter, with operating income and operating margins improving substantially over those of the prior year's quarter.
Contemporary Brands: Revenues of our Contemporary Brands coalition, which consists of the 7 For All Mankind, John Varvatos, Splendid and Ella Moss brands, rose 18%, driven by double-digit growth across all brands.
Operating income rose 12%, with a slight decline in operating margins reflecting higher brand spending as well as investments in new 7 For All Mankind retail stores.
Imagewear: As anticipated, our Imagewear business rebounded in the quarter, with revenues rising 8% driven by growth in both our Image and Licensed Sports Apparel businesses. Operating income rose 36% in the quarter with operating margins improving by 250 basis points to 12%.
Expansion in International and Direct-to-Consumer Businesses
Our international and direct-to-consumer businesses remain important long-term drivers of both organic growth and margin expansion. During the quarter, international revenues increased 6% on a constant currency basis driven by strong growth in our Outdoor & Action Sports and Contemporary Brands businesses. Our momentum in Asia continued in the quarter, with revenues rising 26% reflecting double-digit growth in The North Face, Vans and 7 For All Mankind brands.
Our direct-to-consumer revenues increased 7%, driven by new store openings in the quarter. The direct-to-consumer businesses of The North Face, Vans, 7 For All Mankind and lucybrands each achieved double-digit revenue gains in the period. We opened a total of 25 stores across our brands in the quarter and 41 stores year-to-date, bringing the number of owned retail stores to 768 at the end of the quarter. We remain on track to open a total of 80 to 90 stores this year.
Gross Margins Reach Record Level in Quarter
Second quarter gross margins reached record levels, rising 320 basis points to an all-time high of 47.1%. As in the first quarter, this substantial improvement was driven by three primary factors: 1) lower product costs; 2) continued expansion and improved gross margins in our retail stores; and 3) generally clean inventories across our businesses. Operating margins rose to 10.6% from 8.1%, while marketing spending increased 19% as we continued to implement a focused program of investment spending behind our strongest and most profitable brands.
Click here for more details
VF Corporation
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