VF Corporation: 1Q15 Results Lose Luster on Strong Dollar

VF Corporation (VFC) reports 1Q 2015 earnings

On May 1, VF Corporation (VFC) released its financial report for the first quarter of 2015—the fiscal period ending April 4, 2015. The company reported $2.8 billion in sales, a 2% gain over levels in 1Q14. VFC’s diluted EPS (earnings per share) came in at $0.67 in the quarter, the same as in 1Q14. The company’s performance was largely in line with consensus Wall Street analyst estimates.

VF Corporation: 1Q15 Results Lose Luster on Strong Dollar

US dollar plays spoilsport

VFC’s performance, though in line with consensus estimates, took a severe hit due to the appreciating US dollar. The US dollar trade-weighted index was up by 4.5% in 1Q15, reaching ten-year highs during the quarter. Although reported EPS was flat year-over-year, EPS was up by 13% on a constant-currency basis. Sales were up 8% on a currency-neutral basis.

VFC derives most of its international revenue from Europe. The depreciating euro affected sales performance. European sales rose by 4% on a currency-neutral basis but declined by 14% on a reported basis. The US dollar appreciated by over 12% against the euro in 1Q15. The weak euro impacted EPS by $0.06, according to company estimates.

Peer group comparisons

In contrast, VFC’s peers Nike (NKE) and Columbia Sportswear (COLM) reported stronger quarterly performances. COLM, which reported first-quarter earnings on April 30, had a record quarter. Reported revenue was up 13% to a record $479 million, including the 4% negative effect of adverse currency movements.

Nike’s (NKE) 3Q15 EPS rose 19% year-over-year to $0.89, which pushed the stock up to a record high. However, adverse currency movements affected Nike’s revenue growth, causing the company to miss consensus Wall Street analyst revenue expectations. Sales grew 7% in reported terms and 13% in constant-currency terms.

NKE and VFC together constitute 3.1% of the Consumer Discretionary Select Sector SPDR Fund (XLY) and 0.5% of the SPDR S&P 500 ETF (SPY).

For a detailed overview of VFC and its operations, read our earlier series An Investor’s Must-Know Guide to VF Corporation.