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TheStreet Open House

VF Reports First Quarter 2014 Results; Raises Full-Year Revenue And Earnings Outlook

Coalition Review

Revenues for the Outdoor & Action Sports coalition increased 14 percent in the quarter to $1.6 billion with double-digit growth across the U.S. and international markets as well as in wholesale and direct-to-consumer channels.

First quarter revenues for The North Face ® brand rose 14 percent globally driven by nearly 30 percent growth in direct-to-consumer sales and a high single-digit increase in the brand’s wholesale business. By region, The North Face ® brand’s revenues were up at a high-teen percentage rate in the Americas region, up at a mid-teen percentage rate in the Asia Pacific region and up at a low single-digit percentage in Europe.

Vans ® brand revenues, which represented the highest of any VF brand in the first quarter, were up 20 percent with strong, double-digit growth across all geographies, as well as in the brand’s wholesale and direct-to-consumer channels. Revenues in the Americas region were up at a low-teen percentage rate in the quarter, up more than 20 percent in Europe and more than 40 percent in the Asia Pacific region. Global direct-to-consumer revenues for the Vans ® brand were up 19 percent in the quarter.

Revenues for the Timberland ® brand were up 12 percent in the first quarter. In the Americas region, revenues increased at a high-teen percentage rate including greater than 20 percent growth in its wholesale business and solid direct-to-consumer results driven by double-digit comparable store growth rates. In Europe, the Timberland ® brand grew at a high single-digit percentage rate and in the Asia Pacific region, first quarter revenues were up at a low double-digit percentage rate. Globally, the Timberland ® brand’s growth was balanced between its direct-to-consumer and wholesale businesses in the quarter.

Jeanswear first quarter revenues were down 4 percent to $690 million. Coalition revenues in the Americas region were down at a high single-digit percentage rate due primarily to ongoing challenges in the U.S. mid-tier/department store channel and to a lesser extent, consumer trends in women’s denim. In Europe, revenues were up at a high single-digit percentage rate and sales in the Asia Pacific region were up 10 percent.

Revenues for the Wrangler ® brand in the first quarter were down 2 percent driven by a low single-digit decline in the Americas region, partially offset by a high single-digit increase in European revenues. First quarter revenues for the Lee ® brand were down 1 percent driven by a high single-digit percentage decline in the Americas region, partially offset by 10 percent growth in Europe and a mid-teen increase in Asia Pacific sales.

Imagewear revenues were up 4 percent in the quarter to $263 million driven by particular strength in its Licensed Sports Group business.

First quarter Sportswear revenues were up 3 percent to $132 million. Nautica ® brand revenues were flat, impacted by a shift in timing of shipments; second quarter revenues should grow at a low double-digit rate. The Kipling ® brand’s U.S. business achieved a high-teen percentage rate increase in revenues compared with the same period last year. Globally, the Kipling ® brand grew 23 percent.

In line with expectations amid a challenging premium denim market, first quarter revenues for the Contemporary Brands coalition were down 5 percent to $98 million.

International Review

International revenues in the first quarter grew 11 percent (up 10 percent in constant currency). Revenues in Europe rose 12 percent (up 8 percent in constant currency) with positive results from nearly every brand in VF’s portfolio. In the Asia Pacific region, revenues were up 16 percent (up 17 percent in constant currency) driven by 27 percent growth in China (up 25 percent in constant currency), which included strong results from every brand. Reported revenues were flat in the Americas (non-U.S.) region (up 8 percent in constant currency). International revenues were 43 percent of total VF first quarter sales in 2014 compared with 42 percent in the same period of 2013.

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