VF Corp. has raised its full-year guidance following a better-than-expected earnings quarter that marked its first since the spinoff of its denim business.
The Greensboro, N.C.-based firm posted Q1 revenues that climbed 6.3% to $2.27 billion, topping Wall Street estimates of $2.24 billion. Although reported profits dropped from $160.4 million to $49.2 million — due mostly to costs associated with splitting from the denim business — on an adjusted basis, they gained 61% to 30 cents per share, beating consensus bets at 29 cents.
“Our first quarter results demonstrate the power of VF’s evolved portfolio and our progress along our journey to become a purpose-led, performance-driven, value-creating enterprise anchored in our commitment to be more consumer-minded and retail-centric in everything we do,” said chairman, president and CEO Steve Rendle. “As a result of our strong results and increased confidence in the full year, we are raising our fiscal 2020 outlook, including an additional $20 million of investments aimed at accelerating growth and value creation in fiscal year 2020 and beyond.”
In May, VF completed the separation of its more profitable active and outdoor businesses including Vans, Timberland and The North Face from the newly named Kontoor Brands Inc., which houses heritage denim brands Wrangler and Lee as well as VF’s outlet operations. (Kontoor is now an independent, publicly traded company under the stock ticker “KTB.”)
Following the announcement, analysts appeared bullish on VF’s future, with Canaccord Genuity analyst Camilo Lyon expecting the apparel and footwear firm to enter the fiscal year “as a much leaner and more agile business, with revenue and gross margin characteristics that should show accelerated growth from the faster growing brands and margin expansion…”
As for its footwear business, VF continued to highlight Vans, which saw sales jump 20%. The North Face was another top performer, with revenues increasing 9%. The firm also reported a 14% hike in its direct-to-consumer business, while China led by double-digit growth in both brands as well as Timberland.
VF now puts its full-year adjusted profit in the range of $3.32 to $3.37 per share, compared with its previous forecast between $3.30 and $3.35. At market open on Wednesday, its stock was up 3% to $91.
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