VF Corp lifts FY view, CEO to add chairman duties
VF Corporation CEO Steven Rendle will take on the additional role of chairman when Eric Wiseman retires later this year – as the US apparel giant raised its outlook for the year.
The company, whose brands include Timberland, Wrangler and The North Face, today (24 July) reported net income jumped 115% to $109.9m in the three months to 1 July, up from $51.0m in the same period last year.
Revenue rose 2% to $2.36bn, from $2.32bn a year earlier. Outdoor and Action Sports revenue rose 4% to $1.47bn; Jeanswear revenue fell 6% to $600.1m; Imagewear revenue rose 12% to $150m; and Sportswear revenue dropped 1% to $114.2m.
Gross margin in the quarter improved 80 basis points to 49.7%, as benefits from pricing, lower product costs and a mix shift toward higher margin businesses were partially offset by changes in foreign currency. Changes in foreign currency negatively affected reported gross margin by 80 basis points during the quarter, the company said.
Operating income on a reported basis was down 14% to $168m compared to the same period of 2016. Changes in foreign currency negatively affected the operating profit decline by 8 percentage points during the quarter.
Operating margin on a reported basis decreased 130 basis points to 7.1%, with changes in foreign currency negatively affected reported operating margin by about 70 basis points in the quarter.
"VF's second quarter results were solid and consistent with our expectations, driven by strong results from our largest global brands, the company's international and direct-to-consumer platforms, and our growing workwear businesses," said Rendle. "We have really good momentum as we move into the second half of 2017 and are confident in our growth engines.
Looking ahead, the company raised its full-year revenue guidance to $11.65bn, an increase of 2% on a reported basis and a 3% growth on a currency-neutral basis.
It also expects earnings of about $2.94 per share for 2017, at the top end of its previous guidance range of $2.89 to $2.94 per share.
Separately, the company said Eric Wiseman will retire as executive chairman and as a director of VF Corp on 28 October – and that Rendle will then become chairman.
Wiseman's retirement completes VF's planned leadership succession, which began with the promotion of Rendle to president and chief operating officer in June 2015, and to CEO in January of this year.
Wiseman, who began his career with VF in 1995 and has served as chairman for nearly ten years, said: "Steve's transition to CEO has gone smoothly, and just as he was the right person to serve as VF's next CEO, Steve is the right person to now serve as our chairman of the board."
During the second quarter, VF completed the sale of its licensed sports group business to Fanatics for an undisclosed amount. The unit, which includes the Majestic brand, supplies apparel and fanware through licensing agreements with US and international professional sports leagues and teams.
It has also embarked on its latest five-year growth plan that sets out the company's goals to 2021, including a ramped-up focus on its top-performing Vans, Timberland and The North Face brands.