VF Corp. has what all retailers want right now: a portfolio of thriving brands, and resilience in the face of macroeconomic pressures.
The company, which recently announced plans to relocate to Denver from its former home of Greensboro, N.C., reported adjusted earnings per share of $1.31 on Friday before market open, soaring past the consensus estimate of $1.10. Its net revenue reached $3.94 billion, up 8 percent and beating Wall Street expectations of $3.87 billion.
Vans’ results for its fiscal third quarter were a particular highlight as they have been for the past several quarters. On a call with investors and analysts, Steve Rendle, VF’s chairman, president and CEO, called out the skate lifestyle brand for its “strongest quarter in the last two years,” pointing to 25 percent revenue growth (27 percent on a constant currency basis) over last year’s already strong sales, as well as 50 percent growth in the direct-to-consumer online channel.
“Vans has delivered another exceptional quarter of growth, further cementing their rightful place as the No. 3 global sport/lifestyle brand,” said Rendel. “While obviously a brand this size won’t grow at these exceptional rates forever, we have great confidence in their ability to sustain double-digit growth by relying on not just one thing to drive this business to $5 billion by 2023.”
The company expects Vans’ full-year growth to reach 23 percent, driven particularly by momentum in North America and Asia. (The China slowdown that has hit other brands in recent months has yet to make a dent in VF’s sales, and the country is still a strategic investment priority, it said.) While the Old Skool has been the brand’s hero style for several years running, this quarter, it highlighted the slip-on as its fastest-growing style.
“The resurgence of the slip-ons is just a proof point and not just one thing,” said Rendel, “and I think that’s a great thing to keep in mind when you think about the forward trajectory of Vans.”
Among the rest of its portfolio, The North Face’s turnaround efforts appeared to be gaining traction, with revenues up 16 percent over the same period in 2017.
The company, which in August announced plans to spin off its denim businesses into a separate corporate entity called Kontoor Brands Inc., also updated its full-year guidance to account for the strong sales: the outdoor segment is now expected to grow 8 percent (versus 7 percent previously), active 16 percent (versus 14 to 15 percent) and work 39 percent (versus 35 percent or more). Jeans is now forecast to decline 3 percent (versus 1 to 2 percent).