US firm VF Corporation's revenue at $2.1 bn in Q1 FY24

The North Face led the pack with a robust 12 per cent YoY rise in revenue to $0.5 billion in Q1 FY24, marking its 10th consecutive quarter of double-digit constant dollar revenue growth. However, Vans’ revenue dipped by 22 per cent to $0.7 billion, largely affected by the downturn in wholesale in the Americas, which saw a 39 per cent YoY (40 per cent in constant dollars) reduction as efforts to turn the brand around continue, VF Corporation said in a press release.

Direct-to-consumer (DTC) sales in Q1 FY24 were down 3 per cent YoY (2 per cent in constant dollars), though excluding Vans, there was an uptick of 6 per cent (7 per cent in constant dollars).

Internationally, the markets saw a 3 per cent YoY increase (4 per cent in constant dollars), with Greater China taking the lead with a significant 24 per cent rise in revenue (31 per cent in constant dollars). This contributed to a 13 per cent improvement in the APAC region (18 per cent in constant dollars). However, EMEA revenue dipped by 2 per cent (3 per cent in constant dollars) due to continued growth in DTC being offset by lower wholesale revenue.

The gross margin stood at 52.8 per cent, marking a 110 basis points decrease, with the adjusted gross margin also at 52.8 per cent, down 130 basis points primarily due to increased promotions. These adjusted gross margin headwinds include 200 basis points of unfavourable rate impact (including promotions) and 10 basis points of adverse foreign currency exchange rates, partially offset by 80 basis points of mix benefits.

Operating margin declined sharply by 320 basis points to minus 0.4 per cent, with adjusted operating margin also falling by 380 basis points to minus 0.4 per cent. This contraction was driven by 130 basis points of unfavourable gross margin impact and 250 basis points of deleverage.

Overall, the company reported a loss per share of $0.15 in Q1 FY24, a 2 per cent decline from the previous period. This is in stark contrast to the Q1 FY23 adjusted earnings per share of $0.09.

“While our Q1 performance is not reflective of our standards, we achieved our earnings target in the quarter. We remain focused on improving our operational execution, although it will take time for our revenue performance to benefit from actions that are underway. We are well positioned to advance our key priorities this year with an emphasis on increasing operating earnings through improved gross margins, generating healthy cash flow and reducing debt, all of which lead to a strengthened financial position,” said Matt Puckett, CFO.

Fibre2Fashion News Desk (DP)