Store closures and low consumer demand impact VF's Q1
31 Jul 2020
VF Corporation’s first quarter revenue decreased 48 percent or 47 percent in constant dollars to 1.1 billion dollars driven by store closures and lower consumer demand as a result of the Covid-19 outbreak. Gross margin decreased 340 basis points to 52.9 percent, and on an adjusted basis, gross margin decreased 220 basis points to 54.1 percent. Operating loss on a reported basis was 247 million dollars, while on an adjusted basis, operating loss was 230 million dollars. The company said that loss per share was 71 cents on a reported basis and 57 cents, on an adjusted basis. VF added that second quarter revenues are expected to be down less than 25 percent and full-year free cash flow is still expected to exceed 600 million dollars.
“Our financial and operational rigor, the affinity consumers have for our iconic brands, and the progress we’ve made in recent years with our digital transformation have us well-positioned to not only manage the complexities of the current environment, but to drive long-term growth. As we continue through our fiscal year, we’ll build on the strengths we’re already seeing in the core elements of our strategy, including maintaining our strong cash and liquidity position and further accelerating our digital business worldwide, especially in China,” said said Steve Rendle, VF’s Chairman, President and CEO in a statement.
Highlights of VF’s segment performance
The company further said that active segment revenue decreased 54 percent, down 53 percent in constant dollars including a 52 percent or 51 percent in constant dollars decrease in Vans brand revenue; outdoor segment revenue decreased 44 percent or 43 percent in constant dollars including a 45 percent or 44 percent in constant dollars decrease in The North Face brand revenue; work segment revenue decreased 19 percent or 18 percent in constant dollars including a 16 percent or 15 percent in constant dollars decrease in Dickies brand revenue.
International revenue decreased 39 percent or 37 percent in constant dollars) including Europe revenues down 48 percent or 47 percent in constant dollars; Greater China flat or up 3 percent in constant dollars, including an increase of 5 percent or 9 percent in constant dollars in Mainland China. Direct-to-Consumer revenue decreased 37 percent, while digital revenue increased 78 percent or 81 percent in constant dollars.
VF’s Board of Directors declared a quarterly dividend of 48 cents per share, payable on September 21, 2020, to shareholders of record on September 10, 2020.
Picture:Facebook/The North Face