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Wrangler, North Face, Lee & Vans continue to perform well
30 Apr '09
5 min read
VF Corporation, a global leader in branded lifestyle apparel, announced results for the first quarter of 2009. All per share amounts are presented on a diluted basis.
On a constant currency basis, revenues were down 2%, net income decreased 25%, and earnings per share declined 24% to $1.01. Higher pension expense impacted constant dollar earnings by $.11 per share. Most of the remaining decline resulted from “transactional” impacts of foreign currency exchange rate fluctuations, related to the exceptional volatility in these rates during the quarter.
Revenues on a reported basis decreased 7% to $1,725.5 million, compared with $1,846.3 million in the first quarter of 2008. Foreign currency translation accounted for five percentage points of the decline, which was more than the four percentage points assumed in our prior guidance. Net income in the current quarter was $100.9 million compared with $149.0 million in the prior year's quarter. Earnings per share declined to $.91 from $1.33, with most of the decline due to the aforementioned higher pension expense and transactional currency impacts, in addition to foreign currency translation that reduced earnings by $.10 per share.
There is no question that global volatility and challenging economic conditions affected our businesses in the first quarter. It is important to note that our four largest and most powerful brands, which represent over 60% of VF's total revenues – Wrangler, The North Face, Lee and Vans – continue to perform well in this environment, with global sales for Wrangler and The North Face up on a constant currency basis during the quarter, and Lee and Vans brand revenues up domestically. These brands continue to gain or hold share in most markets, which gives us confidence in our ability to navigate successfully through these difficult times.
“We are pleased that we met our first quarter targets,” said Eric C. Wiseman, Chairman, President and Chief Executive Officer. “Our balance sheet, liquidity and cash flow remain very strong, inventories are down and we're on track with our cost reduction initiatives. However, changes in several key markets have led us to reduce our top and bottom line assumptions for the balance of the year.
He continued, “Times like these offer strong companies with strong brands like ours a unique opportunity to drive market share gains and improve their long-term competitive position. We intend to take advantage of this opportunity by continuing to invest behind our brands' core growth strategies to gain share, and we intend to emerge from these difficult times stronger than ever.”
First Quarter Business Review
Outdoor and Action Sports
Our Outdoor and Action Sports results reflect the strength of our brands, which continue to perform very well despite challenging global conditions. On a constant currency basis, total revenues increased 2%, with revenues in our Americas businesses rising 4% and international revenues down 1%. In Asia, our revenues grew at a strong double-digit rate in the quarter as we continue to aggressively expand our business there.
On a constant currency basis, revenues were down 2%, net income decreased 25%, and earnings per share declined 24% to $1.01. Higher pension expense impacted constant dollar earnings by $.11 per share. Most of the remaining decline resulted from “transactional” impacts of foreign currency exchange rate fluctuations, related to the exceptional volatility in these rates during the quarter.
Revenues on a reported basis decreased 7% to $1,725.5 million, compared with $1,846.3 million in the first quarter of 2008. Foreign currency translation accounted for five percentage points of the decline, which was more than the four percentage points assumed in our prior guidance. Net income in the current quarter was $100.9 million compared with $149.0 million in the prior year's quarter. Earnings per share declined to $.91 from $1.33, with most of the decline due to the aforementioned higher pension expense and transactional currency impacts, in addition to foreign currency translation that reduced earnings by $.10 per share.
There is no question that global volatility and challenging economic conditions affected our businesses in the first quarter. It is important to note that our four largest and most powerful brands, which represent over 60% of VF's total revenues – Wrangler, The North Face, Lee and Vans – continue to perform well in this environment, with global sales for Wrangler and The North Face up on a constant currency basis during the quarter, and Lee and Vans brand revenues up domestically. These brands continue to gain or hold share in most markets, which gives us confidence in our ability to navigate successfully through these difficult times.
“We are pleased that we met our first quarter targets,” said Eric C. Wiseman, Chairman, President and Chief Executive Officer. “Our balance sheet, liquidity and cash flow remain very strong, inventories are down and we're on track with our cost reduction initiatives. However, changes in several key markets have led us to reduce our top and bottom line assumptions for the balance of the year.
He continued, “Times like these offer strong companies with strong brands like ours a unique opportunity to drive market share gains and improve their long-term competitive position. We intend to take advantage of this opportunity by continuing to invest behind our brands' core growth strategies to gain share, and we intend to emerge from these difficult times stronger than ever.”
First Quarter Business Review
Outdoor and Action Sports
Our Outdoor and Action Sports results reflect the strength of our brands, which continue to perform very well despite challenging global conditions. On a constant currency basis, total revenues increased 2%, with revenues in our Americas businesses rising 4% and international revenues down 1%. In Asia, our revenues grew at a strong double-digit rate in the quarter as we continue to aggressively expand our business there.
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