US Q1 in brief – Macy's, Kohl's, Wolverine Worldwide
In the most recent first-quarter filings from US apparel and footwear brands and retailers, Wolverine Worldwide beat expectations, while Iconix Brand Group moved to a loss on the back of declining sales. Kate Spade, meanwhile, saw earnings slump on the back of sales declines and while Under Armour booked a net loss but beat analyst expectations resulting in a share price spike.
US department store retailer Macy's says its first-quarter sales and earnings results were consistent with its expectations, and that it remains on track to meet its 2017 guidance. Earnings in the period dropped to $71m from $115m last year, while gross margin narrowed to 38.1% from 39.1% in the prior year period. Sales totalled $5.34bn, a drop of 7.5% on sales of $5.77bn in the same period last year, reflecting, in part, store closures. Comparable sales on an owned basis were down 5.2%.
US department store retailer Kohl's has booked mixed first-quarter results as earnings climbed but sales fell. Earnings were up 14% to US$66m from $58m a year earlier, while gross margin improved 83 basis points to 36.4%. Sales, meanwhile, were down 3.2% to $3.84bn. CEO Kevin Mansell, however, said there had been a "significant improvement" in sales and traffic for the March and April period, after a weak February. "Continued strong inventory management led to a major improvement in gross margin, and our teams managed expenses exceptionally well."
Wolverine Worldwide booked what it says was a solid start to the year with earnings and sales that beat expectations and strong progress towards its strategic transformation plan. Revenues dropped 4.8% to US$591.3m due to an additional week of operations in the first quarter of 2017. Underlying revenue declined 2%. Earnings dropped to $16.7m from $17.4m, while gross margin widened slightly to 39.7% from 39.6% last year.
"The transformation of our business is well underway with our strategy focused on elevating our most powerful brands with consumers, delivering continuous product innovation and sustained organic growth, and unlocking incremental operational efficiencies, with an emphasis on pace and speed," said CEO Blake Krueger.
Iconix Brand Group
Iconix moved to a loss in its first-quarter on the back of declining sales as the the company looks to implement initiatives aimed at improving its balance sheet and driving organic growth. Losses amounted to US$4.3m from earnings of $18.6m a year earlier. Operating income declined 27% to $33.6m, while licensing revenue fell 13% to $58.7m. Separately, Iconix announced the sale of its entertainment segment for $345m in cash.
US value fashion retailer Citi Trends said total sales in the 13 weeks to 29 April increased 3.2% to US$200m, compared to $193.7m in the year-ago period. Comparable store sales meanwhile, were up 1% from the first quarter of fiscal 2016.
Acting CEO Bruce Smith, said: "We are pleased to report that our improved merchandising strategies are driving better performance, as demonstrated by the increase in our first quarter comparable store sales. After a very slow start to the quarter due to the later disbursement of tax refunds by the Internal Revenue Service, we were able to more than make up February's 21% comparable store sales decline with increases of 13% in March and 18% in April."
Weyco saw both sales and earnings slip in its first-quarter in the face of what it called a "challenging" retail environment. For the three months to 31 March, net earnings attributable to the company fell 17% to US$2.2m from $2.7m in the year-ago period. Meanwhile, net sales for the quarter slipped to $69.1m, down 12% from $78.9m last year.
CEO Thomas Florsheim Jr said: "The retail environment continues to be challenging, as retailers address reduced foot traffic in their brick and mortar stores. We continue to seek growth across all trade channels and are working to reduce our costs. This quarter we saw higher gross margins and reductions in several categories of selling and administrative costs as a result of our efforts."
US fashion retailer Hanesbrands said it is off to the strong start of 2017 that it sought, despite net income slipping 12% to US$70.6m from $80.3m in the year-ago period. Net sales meanwhile, increased 13.2% to $1.38bn from $1.22bn last year, thanks to acquisition contributions. Sales for the activewear and international segments increased, while sales decreased as expected for the innerwear segment and manage-for-cash businesses. Hanes has also launched a multiyear initiative to increase investment for growth, reduce costs, and drive cash flow. Project Booster, is expected to drive the company's Sell More, Spend Less, Generate Cash business strategy and is expected to generate about $100m in annualised net cost savings, and $300m of incremental annual net cash from operations after annualised growth reinvestment of $50m.
The company has also recently announced the departure of CFO Richard Moss who will retire at the end of 2017. Hanesbrands has initiated an internal and external search for his successor.
US apparel giant VF Corporation said its first-quarter results were "right in line" with expectations, despite a 2% fall in both sales and earnings for the period. Net income fell to US$209.2m in the three months to March, from $260.3m the year before. As a result of the sale of its licensed sports group business to Fanatics, VF's net loss from discontinued operations was $5.5m the first quarter of 2017. Gross margin improved 150 basis points to 50.2% on a reported basis, while total revenues fell to $2.55bn from $2.60bn in the year-ago period. Brand revenue at Vans was up 5% and by 6% at The North Face., but fell 5% at Timberland. For fiscal 2017, VF Corp is forecasting revenue to increase at a low single-digit percentage rate.
Columbia Sportswear has revealed record first-quarter net sales of US$543.8m, a 4% increase compared with net sales of $525.1m last year. Net income also reached record levels, up 13% to $36m from $31.8m in the year ago period. For the year ahead, the company expects net sales growth of around 3%, and net income of between $192m and $199m.
CEO Tim Boyle said: "Our first quarter results provide a good start to a year that presents many challenges, especially in the US, which has been impacted by customer bankruptcies, liquidations and ongoing efforts by US.retailers to rationalise their store fleets and square footage. We were encouraged by the Columbia brand's continued growth in Europe-direct markets during the first quarter and by the Sorel brand's successful launch of an expanded Spring assortment. In addition, our direct-to-consumer businesses were a source of growth in every region.
"In the midst of changing consumer shopping patterns, our portfolio of powerful brands and strong balance sheet give us the ability to continue to drive sustainable, profitable growth."
Online retail giant Amazon has booked increases in both sales and earnings in its first-quarter thanks to new product and service launches globally, including seven private apparel brands to Prime members. Net income reached US$724m from $513m a year prior. Net sales were up 23% to $35.7bn. Excluding a $492m unfavourable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 24%.
Under Armour's share price has spiked after the athletic wear maker posted a first-quarter loss that was better than analyst expectations and reaffirmed its full-year outlook. The loss for the three months to the end of March amounted to US$2.3m from earnings of $19.2m a year ago. Gross margin dropped 70 basis points to 45.2%. Net sales, however, grew 7% to $1.1bn. "Our first quarter results were in line with our expectations and we're off to a solid start in 2017," said Under Armour CEO Kevin Plank. "By proactively managing our growth to deliver superior innovative product, continuing to strengthen our connection with consumers and increasing our focus on operational excellence - we have great confidence in our ability to drive toward our full year targets."
Carter's booked a mixed first-quarter, with a slight rise in sales but a 13.6% decrease in net income from US$54m to $46.7m. Operating margin also decreased, falling 210 basis points to 10.7%. Net sales, meanwhile, grew 1.2% to $732.8m, reflecting growth in the company's domestic retail and wholesale sales, which was partially offset by a decline in International sales. CEO Michael Casey, said: "We achieved our sales and earnings objectives in the first quarter. Stronger than planned demand in our wholesale and ecommerce businesses helped to offset the effects of delayed tax refunds to families with young children and a later Easter holiday.
"We have seen a meaningful improvement in sales trends in April, driven by Easter holiday shopping, and expect good growth in sales and earnings in the balance of the year."
US footwear and accessories specialist Steve Madden said it pleased to have started off 2017 with a strong first-quarter, despite delivering a 15.6% drop in earnings. For the three months ended 31 March, net income fell to US$20.2m from $23.7m last year. However, the company said its highlight of the quarter was its Steve Madden women's wholesale footwear division, which enjoyed a period of "outstanding growth in a challenging retail environment". Net sales increased 11.2% to $366.4m, compared to $329.4m in the year-ago period. Gross margin widened to 36.2%, compared to 35.3% last year. CEO Edward Rosenfeld said the company will take a prudent approach to planning its business in light of retail industry headwinds, but added the strength in its core business "gives us confidence that we are well-positioned to navigate the uncertain environment".
Despite first-quarter net sales representing a new quarterly record and the first time the company has exceeded US$1bn in quarterly sales, footwear maker Skechers saw earnings slip in the three months ended 31 March. Sales in the quarter were up 9.6% to $1.07bn on last year, primarily due to a 16.8% increase in the company's international wholesale business and a 12.8% rise in its company-owned global retail business which included comparable same-store sales increases of 2.9%. However, earnings slipped 3.7% to $94m, compared to $97.6m in the year-ago period.
CEO David Weinberg said: "We are particularly proud of the growth in the quarter considering the tough comparison to 2016, which included the benefit of an additional day in February and Easter falling in March."
Rocky Brands says it has made a "solid start" to 2017 as it moved to a profit thanks to doubling its military segment sales to a quarterly record US$12m. Net income in the three months ended 31 March amounted to $1.5m from a loss of $0.2m a year earlier. Net sales meanwhile, increased 9.6% to $63.1m, compared to $57.5m in the year-ago period. Wholesale sales declined 2.5% to $39.2m, while retail sales edged up to $11.9m from $11.5m. Gross margin dropped 160 basis points to 31.3%, driven by the increase in military segment sales which carry lower gross margins than its wholesale and retail segments.
CEO Mike Brooks said: "The actions we have taken over the past six months to better position the company for profitable growth are clearly gaining traction. While there is still work ahead of us in order to maximise shareholder value over the long-term, we are confident we are heading in the right direction."
Kate Spade & Co
Kate Spade saw earnings slump to US$1.4m in the three months ended 1 April, from $11.6m a year earlier. The company incurred a $7m of pre-tax store impairment charge and $2m of pre-tax fees and expenses related to its strategic review. Gross margin widened to 63.2% from 61.8%, but net sales dropped 1.2% to $271m. Same-store sales fell 2.4% for the quarter, and were down 8.1% excluding e-commerce. Direct-to-consumer comparable sales fell 2%.
Levi Strauss & Co
Jeans giant Levi Strauss & Co saw net sales increase in the first quarter, up 4% to US$1.10bn from $1.06bn in the year-ago period. In the three months ended 26 February, net income slipped to $60m, down 9% from $66m last year. The decline primarily reflected lower gross margins, the San Francisco-based company said. Gross margin narrowed to 51.2% from 53%. In Europe, net revenues were up 12%, while in the Americas sales dropped by 1% and Asia net revenues declined 2%.
"Despite the on-going challenges in the industry, I am pleased that we delivered 5% currency-neutral growth over a strong Q1 last year," said Chip Bergh, president and CEO. "We were able to deliver these solid results despite a declining US wholesale business, because of the breadth of our portfolio. Specifically, we grew in all three regions, with particularly outstanding results in Europe; double digit growth in our direct-to-consumer business; and double digit growth on women's and tops."