Solid D2C Sales Drive VF Corporation’s Outdoor Business in 3Q17



The North Face’s sales fall on order book timing shift

In this article, we’ll look at the performance of VF Corporation’s (VFC) Outdoor and Action Sports segment, which accounted for more than 70.0% of the company’s 3Q17 sales.

VFC’s Outdoor segment mainly focuses on its Vans, The North Face, and Timberland brands. It recorded an 8.0% YoY (year-over-year) increase in sales to ~$1.5 billion during 3Q17.

Sales from The North Face fell 3.0% YoY on a currency-neutral basis, driven primarily by a shift in the order book timing. However, on a normalized basis, The North Face’s revenues increased 3.0%.

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The Direct-to-Customer (or D2C) business expanded at a low double-digit rate, while wholesale revenues fell 6.0% due to the falling order book shift mentioned above. The North Face’s sales comps were up at a mid-single-digit rate. Its digital channel was particularly strong and recorded a 20.0% jump during the quarter.

By region, sales in the Americas fell 10.0%, while sales in Europe and Asia rose 17% and 4%, respectively.

Vans delivers a stellar quarter

Vans, VFC’s largest and fastest-growing brand, recorded stellar 26.0% growth in global revenues. Sales were up 22.0% in the Americas, 39.0% in Europe, and 23.0% in Asia.

The D2C channel recorded 30.0% growth in sales as comps grew 30.0% during the quarter. The wholesale business grew a solid 19.0% YoY compared to a low single-digit rate decline in 2Q17. Growth during the quarter was anchored by a mid-single-digit growth in its Americas revenues and ~35.0% growth internationally.

Timberland sales also impacted by order book shift

Timberland’s global revenues fell 2.0%, driven by the shift in order book timing that affected The North Face. As a result of this shift, a high single-digit increase in its D2C revenues was more than offset by a mid-single-digit decline in its wholesale business. Digital sales were up 35.0% during the quarter

Investors looking for exposure to VFC can consider the PowerShares High Yield Equity Dividend Achievers Portfolio ETF (PEY), which invests 1.4% of its portfolio in VFC.

Please read the next section to learn about the performance of VFC’s other businesses.


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