VF Corp reports $2.4 billion revenue in Q2, updates fiscal 2017 guidance
VF Corporation released on Monday its second quarter 2017 results that were “solid and consistent with our expectations,” according to President and CEO Steve Rendle.
In the second quarter, VF completed the sale of its Licensed Sports Group business to Fanatics. Net loss from discontinued operations was $5.0 million, which includes an adjustment to the estimated loss on the sale of the Licensed Sports Group in the first quarter of 2017. The company also in the second quarter issued a new policy that prohibited the use of fur, angora and exotic leathers.
The Greensboro, North Carolina-based company also announced on Monday the retirement of Eric C. Wiseman, Executive Chairman of the Board and as a Director of VF Corporation, on October 28, 2017. Wiseman has served over 20 years at VF Corp, and his retirement is part of the company's planned leadership succession, which began with the promotion of Rendle to President and COO in June 2015, and to CEO in January. Rendle will also succeed Wiseman effective upon his retirement.
Second quarter revenue from continuing operations increased 2% to $2.4 billion, with Outdoor & Action Sports revenue increasing 4%, Imagewear revenue increasing 11%, international revenue increasing 4%, direct-to-consumer revenue increasing 13% and digital revenue increasing 34%.
Vans brand revenue increased 8%, The North Face revenue increased 5%, and Timberland revenue increased 2%, but Wrangler and Lee revenue decreased 2% and 7%, respectively. Also, revenue in China increased 13%, followed by the APAC region, which increased 7%, and the Americas (non-US) segment that increased 5%.
For the 6 months ended in June 2017, total revenues and net sales were flat, international revenue increased 3%, and only Vans and The North Face posted increases in revenue at 7% and 6%, respectively.
Gross margin in the quarter improved 80 basis points to 49.7% on a reported basis, operating income was down 14% at $168 million, and earnings per share on a reported basis was down 11% to $0.29 compared to $0.32 in the prior year.
“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,” said Rendle.
“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.”
As a result of the second quarter performance, VF updated its fiscal 2017 outlook and now expects revenue to be $11.65 billion, and for direct-to-consumer revenue to increase between 10% and 11%. Also, earnings per share are now expected to be $2.94, down 1% from the 2016 adjusted EPS of $2.98.
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