Slow economy and warm weather weigh on VF Corp revenues

VF Corporation said that its revenue was down 5 percent or 1 percent currency neutral in the fourth quarter. Excluding the impact of changes in foreign currency and the 53rd week, fourth quarter revenue increased 3 percent.

“The final quarter of 2015 challenged many companies to leverage core strengths and adapt quickly to a changing landscape,” said Eric Wiseman, VF Chairman and Chief Executive Officer, adding, “Our full year 2015 was also affected by many of the same challenges we saw in the fourth quarter, including a tough comparison against 2014’s 53rd week. In fact, when normalized over 2014 and 2015, currency neutral revenue grew 7 percent and earnings grew 13 percent annually over this period, in line with our long-term earnings growth target.”

Fourth quarter and FY15 financial review

Adjusted earnings per share were 0.95 dollars per share compared with 0.98 dollar per share during the same period last year. Excluding the negative impact of foreign currency, fourth quarter adjusted earnings per share was up 5 percent. On a GAAP basis, earnings per share were up 157 percent to 0.72 dollar.

For the full year, adjusted earnings per share was in line with 2014 adjusted EPS of 3.08 dollars per share or up 12 percent currency neutral. On a GAAP basis, full year earnings per share were 2.85 dollars, an increase of 20 percent compared with 2014.

Review of different segments

Fourth quarter revenue for the Outdoor & Action Sports coalition was down 3 percent and up 1 percent currency neutral to 2.1 billion dollars. Full year Outdoor & Action Sports revenue increased 3 percent in 2015 and up 9 percent currency neutral to 7.4 billion dollars. Excluding the negative impact of foreign currency and the 53rd week, fourth quarter and full year revenue increased 5 percent and 11 percent, respectively.

Jeanswear fourth quarter revenue was down 2 percent or up 1 percent currency neutral. Excluding the negative impact revenue was up 6 percent. Revenue for the Americas region was down at a low single-digit rate and flat currency neutral. In Europe, revenue was down at a low double-digit percentage rate or up low single-digit currency neutral and in Asia, revenue was up at a mid-single-digit rate or up low double-digit currency neutral. In 2015, global Jeanswear revenue was flat at 2.8 billion dollars or up 4 percent currency neutral.

Imagewear revenue was down 13 percent and down 12 percent currency neutral in the fourth quarter with low single-digit growth in the Licensed Sports Group business offset by more than 20 percent lower revenue in the workwear business. Excluding the negative impact, fourth quarter revenue for Imagewear was down 7 percent. For the full year, revenue for the Imagewear coalition was down 2 percent or down 1 percent currency neutral.

Sportswear fourth quarter revenue decreased 9 percent to 196 million dollars. For the year, Sportswear coalition revenue was down 2 percent to 635 million dollars. Contemporary Brands coalition fourth quarter revenue was down 19 percent or down 17 percent currency neutral to 86 million dollars. Excluding the negative impact, fourth quarter revenue for Contemporary Brands was down 10 percent. For the full year, Contemporary Brands coalition revenue was down 14 percent or down 11 percent currency neutral.

Slow economy and warm weather weigh on VF Corp revenues

International and direct-to-consumer review

International revenue in the fourth quarter was down 6 percent or up 4 percent currency neutral. Excluding the negative impact, fourth quarter international revenue was up 7 percent. Revenue in Europe was down 9 percent or up 2 percent currency neutral and in the Asia Pacific region was up 3 percent or up 8 percent currency neutral. Revenue in the Americas (non-US) region was down 8 percent or up 7 percent currency neutral. For the full year, international revenue represented 36 percent of total VF sales, compared with 38 percent in 2014.

Direct-to-consumer revenue was down 1 percent or up 3 percent currency neutral in the fourth quarter, a result negatively impacted by record warm weather and a sluggish economic environment. Excluding the negative impact, direct-to-consumer revenue was up 11 percent. There were 1,520 VF owned retail stores at the end of 2015. For the full year, direct-to-consumer revenue was 27 percent of total VF revenue compared with 26 percent in 2014.

Outlook for fiscal 2016

For 2016, 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. By coalition, revenue for Outdoor & Action Sports is expected to increase at a high single-digit percentage rate; mid-single-digit growth for Jeanswear; low single-digit growth for Imagewear; a slight decline in Sportswear; and, a mid-single-digit decline in the Contemporary Brands business.

International revenue is expected to increase at a high single-digit rate on a currency neutral basis and up mid-single-digit reported. European revenue is expected to be up at a mid-single-digit rate currency neutral or up low single-digit rate reported. In the Asia Pacific region, full year currency neutral revenue is expected to increase at a low double-digit percentage rate and up high single-digit reported. And in the Americas (non-US) region, revenue is expected to be up at a low-teen percentage rate currency neutral and up low single-digit reported.

Direct-to-consumer revenue is expected to grow at a low double-digit percentage rate, including about a point of negative impact from changes in foreign currency. Direct-to-consumer growth in 2016 will be driven by an increase of approximately 80 stores and comparable sales growth including an expected increase of more than 20 percent in e-commerce revenue. VF’s Board of Directors declared a quarterly dividend of 0.37 dollar per share.

 

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