VF Corp. today reported first-quarter profit for 2016 that beat estimates while its revenues were in line with predictions.
The Greensboro, N.C.-based firm said its net income for Q1, which ended April 2, declined 10 percent year over year, to $260.3 million, or 61 cents per diluted share, from $288.7 million, or 67 cents per diluted share, in the prior year’s same period. Despite the decline, it was a beat on analysts’ expectations for earnings per diluted share of 58 cents.
Sales remained flat at $2.8 billion, but gained 2 percent on a currency-neutral basis. Analysts had expected sales of about $2.8 billion.
During the firm’s conference call, VF chairman and CEO Eric Wiseman said that the strongest segment of the business in Q1 was direct-to-consumer, which grew 8 percent and included a low single-digit comp gain.
Wiseman said the company continues to focus on being consistent in a volatile environment, rife with retail uncertainty and ongoing FX pressures.
“Our first quarter results demonstrate the ability of our diversified business model to perform as expected in an inconsistent environment,” Wiseman said. “By leveraging our strengths — driving innovation into the marketplace, connecting with consumers and operating with financial discipline — we are on track to deliver results consistent with our 2016 outlook, while also delivering on our commitment to shareholders.”
VF’s wholesale businesses, Wiseman said, are still navigating through the inventory carryover from a challenging fourth quarter. Meanwhile, international sales were up 1 percent, or 4 percent on a currency-neutral basis. By brand, as analysts had predicted, tough year-on-year comparisons caused revenues at Vans to decline 1 percent while revenue at Timberland grew 2 percent.
The company maintained its full-year outlook. FY16 revenue is expected to increase at a mid-single-digit percentage rate, including about one percentage point of negative impact from changes in foreign currency. EPS, on a currency neutral basis, is expected to increase 11 percent (up 5 percent reported) compared to an adjusted EPS of $3.08 in 2015.
Wiseman also said the firm is continuing to explore strategic alternatives for its Licensed Sports Group business, a decision it had announced in late March.