VF reports upbeat jeanswear performance in 2Q15
VF Corporation’s (VFC) jeanswear revenue was flat year-over-year at $608 million in 2Q15. Wrangler, one of VFC’s oldest and most iconic brands, saw sales in the Americas grow in the mid-single digits in reported terms. Sales for Lee, however, fell 4% globally and in the mid-single digits in the Americas region. Currency headwinds have played a large part in muting the positive sales trends for both Lee and Wrangler in international markets.
Sportswear coalition sees profits surge
Sportswear, VFC’s fourth largest segment, saw a 41% surge in operating profit to $14 million. Gains were driven by strong sales for the segment’s Kipling brand, which saw a 20% sales increase in the United States. According to Steve Rendle, VFC’s president and COO (chief operating officer), the company’s shift to a more full-price model saw operating income margins for the segment rise 2.9% to 10.2% in 2Q15.
Challenging premium denim environment
VFC’s revenue and earnings performance was tempered by a fall in revenue and profitability for its Contemporary brands coalition, it’s smallest segment. This coalition, which includes premium denim brand 7 For All Mankind, Ella Moss, and Splendid, saw a 10% fall in sales and a whopping 87% fall in profit.
VFC’s premium denim sales and those of peers like Calvin Klein (PVH) have seen an increasingly competitive environment, particularly in US markets. US sales for Calvin Klein came in below expectations in the latest quarter ended May 3, 2015. The trend favoring premium activewear brands like Lululemon Athletica (LULU) has proved challenging for sales. LULU reported a 10% rise in sales in 1Q16.