Wrangler, North Face, Lee & Vans continue to perform well

30 Apr '09

5 min read

Global revenues of The North Face brand – VF's second largest brand – grew 14% in the quarter on a constant currency basis, with healthy growth in the brand's direct-to-consumer business. Global revenues of the Vans brand were about flat on a constant currency basis and were up 3% domestically. Total direct-to-consumer revenues for our Outdoor and Action Sports coalition rose 16%, as we continued to open new stores and expand our e-commerce business. On a reported basis, total revenues of our Outdoor and Action Sports coalition declined 5%.

Operating margins remained strong in the quarter, although down slightly due to the transactional impacts of foreign currency exchange rate fluctuations.

Jeanswear
Domestic jeanswear revenues rose 4% in the first quarter, with a 3% increase in Wrangler brand revenues and a 7% increase in Lee brand revenues and both brands continuing to gain share in their respective channels of distribution.

International jeanswear revenues dropped 8% on a constant currency basis, as sharper than anticipated economic declines impacted our Eastern European and Scandinavian businesses, which account for nearly 40% of our total annual jeans business in Europe. We continue to achieve strong results in Asia, where revenues rose 15% in the quarter.

On a global, constant currency basis, Wrangler brand revenues grew 1% while Lee brand revenues declined 4%. Total revenues of our Jeanswear coalition on a constant currency basis were down 1%, while on a reported basis total revenues were down 6%.

Operating income declined 25% on a constant currency basis, due to higher distressed inventory levels, lower absorption of fixed overhead expenses and transactional impacts of foreign currency exchange rate fluctuations primarily in our European jeans business.

Sportswear
Total revenues of our Sportswear coalition, which includes our Nautica brand and the Kipling brand in North America, decreased 14% in the quarter, reflecting the continuation of weak department and outlet store trends that impacted both brands, as well as our exit of the women's sportswear wholesale business in mid-2008.

Operating income more than doubled during the quarter; margins in the quarter reflect the seasonality of the business, and we remain on track to deliver significantly improved operating income and margins for the full year.

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