Revenue grows 23% at VF Corporation in Q1FY19

July 26, 2018 - United States Of America

The revenue from continuing operations in VF Corporation has grown 23 per cent (up 21 per cent in constant dollars) to $2.8 billion in Q1 of fiscal 2019. Excluding the revenue from acquisitions, revenue grew 12 per cent (up 10 percent in constant dollars), driven by strength across VF’s global and direct-to-consumer platforms, active and work segments.

For the reported period, gross margin from continuing operations increased 70 to 50.3 per cent. While on adjusted basis, gross margin increased to 50.5 per cent. Earnings per share from continuing operations were $0.40. Adjusted earnings per share from continuing operations increased 62 per cent (up 56 per cent in constant dollars) to $0.43, including a $0.04 contribution from acquisitions.

The company's operating income on a reported basis was $231 million. On an adjusted basis, operating income climbed 57 per cent to $250 million, including $20 million contribution from acquisitions. Operating margin on a reported basis soared to 8.3 percent. Adjusted operating margin went up to 9.0 per cent. Adjusted operating margin, excluding acquisitions, elevated to 9.1 per cent.

"VF's first quarter results were strong, driven by continued broad based acceleration across our core brands and platforms," said Steve Rendle, chairman, president and chief executive officer. "We are executing well against our 2021 growth plan and continuing on our journey to reshape the portfolio and transform VF into a purpose-led, performance driven, consumer-centric organization focused on and committed to delivering superior returns to shareholders."

For fiscal 2019, revenue is expected to be in the range of $13.6 billion to $13.7 billion, reflecting an increase of 10 per cent to 11 per cent, and includes more than a $150 million negative impact from unfavourable foreign currency exchange rates relative to the prior outlook. This compared to the previous expectation of revenue between $13.45 billion and $13.55 billion, which reflected a 9 per cent to 10 per cent increase. By segment, revenue for Outdoor is expected to increase 6 per cent to 8 per cent, Active is expected to increase 13 per cent to 14 per cent, Work is expected to increase more than 35 per cent and Jeans is expected to be about flat compared to the prior year.

International revenue is now expected to increase between 12 per cent and 13 percent versus the previous expectation of a 13 per cent to 15 per cent increase. By geographic region, Europe revenue is expected to increase 12 per cent to 13 per cent, Asia Pacific revenue is expected to increase 14 per cent to 15 per cent and Americas (non-US) revenue is expected to increase 9 per cent to 10 per cent.

Direct-to-consumer revenue is now expected to increase between 11 per cent and 13 per cent versus the previous expectation of an 8 per cent to 10 per cent increase. Digital revenue is now expected to increase more than 30 per cent versus the previous expectation of more than 25 per cent increase.

The company expects gross margin to be approximate 51 per cent. Operating margin is likely to increase to about 13.4 per cent, versus the previous expectation of about 13.2 per cent. (RR)