VF Corp. delivered stronger-than-anticipated earnings and sales — thanks to a spike in digital demand as well as its performance in China amid the coronavirus pandemic.
For the second quarter ended Sept. 26, the apparel and footwear group reported adjusted earnings per share of 67 cents, well above analysts’ expectations for EPS of 49 cents. Revenues fell 18% to $2.6 billion but bested market watchers’ bets of $2.5 billion.
Shares for VF were up 1.5% to $79 in Friday premarket trading.
“Our year-to-date results have surpassed our internal expectations across all brands, driven by digital and China, two of our key growth pillars,” chairman, president and CEO Steve Rendle said in a statement.
VF’s direct-to-consumer digital revenues increased 44% during the quarter. What’s more, while sales in the United States and the Europe-Middle East-Africa region were down a respective 21% and 16%, Greater China saw a 16% improvement in the three-month period.
Nearly all of VF’s stores in the EMEA and Asia-Pacific regions, including mainland China, were in operation during the three months. In North America, 75% of its locations were open at the end of the first quarter and more than 95% were open at the end of the second quarter. Additional outposts have reopened since the end of Q2, and all of the company’s North America-based units are back in business.
The company’s earnings beat also comes despite declines at its main footwear brands: Sales at Vans dropped 10%, The North Face saw a 25% drop and Timberland fell 24%. However, workwear label Dickies saw a gain of 19% in sales.
“We are beginning to see signs of stabilization and strength across all aspects of our business, supporting our decision to raise the dividend and provide a financial outlook for the balance of the year,” Rendle added. “Although uncertainties remain, investments in our digital transformation are resulting in near-term momentum and improved capabilities to emerge in an even stronger position.”
At the end of the period, VF had approximately $2.7 billion of cash and short-term investments, in addition to more than $2.2 billion remaining under its revolving credit facility. It also returned $186 million to shareholders through dividends.
In addition, the company provided an outlook for the 2021 fiscal year: It anticipates revenues of at least $9 billion, while adjusted earnings per share is expected to drop 55% to at least $1.20.