Analysis of the outdoor and action sports brands
As discussed in the previous section, The North Face, Vans, and Timberland are VF Corporation’s (VFC) major brands in its outdoor and action sports category. In this section, we’ll analyze the performances of each of these brands in the current quarter.
The North Face
The North Face is one of VF Corporation’s most successful brands. In 2013, it became the company’s first brand to achieve $2 billion in sales. The brand’s products include high-performance outdoor apparel, footwear, and equipment, especially for extremely cold conditions.
Revenue from The North Face brand rose by 2% YoY (year-over-year) in 2Q16. This rise was driven by a low single-digit percentage rise in the Americas and a high-teen percentage rise in Europe, partially offset by a high-teen percentage fall in the Asia-Pacific region.
While the direct-to-customer channel recorded a rise of more than 20%, the wholesale channel reported a high single-digit percentage rate fall compared to the same quarter last year.
The Vans brand specializes in action sports–inspired footwear and apparel. Revenue from the brand rose by 4% on a GAAP (generally accepted accounting principles) basis and by 6% on a constant currency basis in 2Q16. While the direct-to-customer channel reported a percentage rise in the mid-teens, the wholesale channel remained almost flat.
Sales at Vans’s American and Asia-Pacific businesses rose in the high single digits. This was partially offset by a high single-digit percentage fall in Europe. The fall in the brand’s European sales was the result of high inventory levels of its classic collection. The company expects this business to return to growth in 4Q16 after registering a slight fall in 3Q16.
Revenue from the Timberland brand fell by 7% in 2Q16 as the low single-digit percentage rise in its direct-to-customer revenue was offset by a low double-digit percentage fall in its wholesale sales. Timberland’s revenue from the Americas recorded a high-teen percentage fall, while its sales from the Asia-Pacific region recorded a high single-digit percentage fall. The brand’s European business remained strong, reporting a low double-digit percentage rise.
ETF investors seeking to add exposure to VFC can consider the SPDR S&P 500 ETF (SPY). SPY also invests in VFC’s peers Nike (NKE), Under Armour (UA), and PVH Corporation (PVH). SPY has a combined weight of 0.7% in the above-mentioned four companies.