VF Corp. delivered a better-than-expected first quarter despite sales declines at all its brands, including star label Vans, as well as Timberland and The North Face.
For the three months ended June 27, the apparel and footwear retail group posted an adjusted loss of 57 cents per share, compared with analysts’ expectations of a loss of 67 cents per share. Its revenues decreased 48% to $1.1 billion, while market watchers predicted sales of $980.22 million.
The earnings and sales beat came despite a 52% slump in Vans’ revenues, a 45% drop at The North Face and a 43% fall at Timberland, as most of the company’s brick-and-mortar fleet shuttered to help prevent the spread of the COVID-19 outbreak.
During the three-month period, direct-to-consumer revenues sank 37%. Its digital business, however, rose 78%.
“VF is built for this moment, which is what gives us continued confidence and optimism,” chairman, president and CEO Steve Rendle said in a statement. “Our financial and operational rigor, the affinity consumers have for our iconic brands and the progress we’ve made in recent years with our digital transformation have us well-positioned to not only manage the complexities of the current environment, but to drive long-term growth.”
All of the Denver-based corporation’s stores in the Asia-Pacific region, including mainland China, and more than 90% of its locations in Europe, the Middle East and Africa reopened during the first quarter. (Most of its outposts that remained closed were in the United Kingdom.) International sales, reported the company, declined 39%, with a 48% decrease in Europe and flat revenues in Greater China.
In North America, about 75% of VF’s units have opened back up to the public. It reported that more than 120 stores that reopened were forced to temporarily shutter once again due to renewed lockdown restrictions following a spike in confirmed coronavirus cases in the United States.
VF Corp. ended the first quarter with approximately $2.8 billion of cash and short-term investments, in addition to $2.23 billion remaining under its revolving credit facility. Although it did not provide an outlook for fiscal 2021, the company expects second-quarter revenues to be down less than 25% and full-year free cash flow to exceed $600 million.
“As we continue through our fiscal year, we’ll build on the strengths we’re already seeing in the core elements of our strategy, including maintaining our strong cash and liquidity position and further accelerating our digital business worldwide, especially in China,” Rendle added.