- Angela Gonzalez-Rodriguez |
Strong performance across its largest global brands, as well as an ever-growing digital and international footprint, lifted VF Corp.'s profits in the second quarter, leading the company to raise its outlook.
“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 Steve Rendle, president and CEO.
For the quarter ended July 1, VF Corp.’s revenue increased 2 percent to 2.4 billion dollars, surpassing the Zacks Consensus Estimate of 2.289 million dollars. While earnings per share dropped 11 percent to 29 cents, this still beat analysts’ consensus forecast of 28 cents.
The company’s direct-to-consumer division’s revenue increased 13 percent while its digital revenue jumped by a whopping 34 percent.
Over this period, the company’s gross margin improved 80 basis points to 49.7 percent on a reported basis, even as benefits from pricing, lower product costs and a mix shift toward higher margin businesses were partially offset by changes in foreign currency. These foreign currency changes negatively affected reported gross margin by 80 basis points during the quarter.
Boosted by such a positive quarter, the fashion group raised its full-year outlook, now expecting revenue to come in at circa 11.65 billion dollars, up 2 percent on a reported basis. The company’s direct-to-consumer revenue is now expected to increase between 10 percent and 11 percent versus the previous expectation of a high single-digit percentage rate increase. Digital revenue is expected to increase more than 25 percent.
Likewise, gross margin is now expected to reach 49.8 percent, versus the previous expectation of 49.6 percent, a 40 basis point increase over 2016 gross margin. This includes about a 70 basis point negative impact from changes in foreign currency.
“We have really good momentum as we move into the second half of 2017 and are confident in our growth engines, as evidenced by an increase in our full year outlook and our plan to increase our cash returns to shareholders,” Rendle explained this raise in the company’s 2017 outlook.
“Based on the strength of the first half of 2017 and our expectations for the second half of the year, we are making growth-focused investments in our largest brands and platforms to generate additional value for our shareholders both in the near and long term.”
On another note, the company also announced that Eric C. Wiseman will retire as executive chairman of the Board and Directors, effective October 28. Rendle will succeed Wiseman as the chairman after his retirement.