Due to high negative special effects, the US clothing group VF Corporation ended the first quarter of the 2022/23 financial year in the red. However, against the background of the burdens caused by the temporary tightening of the Covid-19 restrictions in China and adverse general conditions in many other markets, sales developed surprisingly positively.
“We delivered solid first-quarter revenue results that exceeded our original expectations,” said Chairman and CEO Steve Rendle in a statement released Thursday evening. “The strong demand from customers for our outdoor, streetwear and sports brands in a weaker consumer environment and under inflationary pressure” was decisive for the development. The CEO also emphasized that despite the current uncertainties, the group is maintaining its operating forecasts for the full year. This proves “the resilience of our purposefully put together brand family,” says Rendle.
In the months of April to June, VF generated group sales of 2.26 billion US dollars (2.22 billion euros), exceeding the level of the same quarter of the previous year by three percent. Adjusted for exchange rate changes, revenues grew by seven percent. The North Face brand made a decisive contribution to the increase in sales, with sales increasing by 31 percent (adjusted for currency effects +37 percent) to USD 481.1 million. The Timberland label increased by eight percent (adjusted for currency effects +14 percent) to 269.5 million US dollars.
Vans, on the other hand, declined, with sales falling 7 percent (-4 percent at constant currency) to $946.8 million. At USD 170.4 million, the Dickies label also missed the level of the same quarter of the previous year (-15 percent, currency-adjusted -13 percent). The Group’s other brands, which also include the sportswear label Supreme, together generated sales of 393.9 million US dollars, exceeding the corresponding prior-year figure by nine percent (currency-adjusted +16 percent).
Earnings were impacted by higher freight costs, increased operating expenses and negative special effects in connection with acquisitions, restructuring measures and pension obligations. The operating profit shrank by 69 percent to 63.4 million US dollars. The bottom line was a net loss of 56.0 million US dollars (54.9 million euros), after the group had achieved a surplus of 324.2 million US dollars in the first quarter of the previous year. Diluted loss per share was $0.14 and adjusted for earnings of $0.09.
The annual forecasts remained essentially unchanged. Management continues to expect currency-adjusted sales growth of at least seven percent for 2022/23. The currency-adjusted earnings targets were also confirmed. However, due to the continued depreciation of numerous local currencies against the US dollar, the company revised downwards its guidance for adjusted diluted earnings per share to between US$ 3.05 and US$ 3.15, after previously US$ 3. $30 to $3.40 had been targeted.