Vans reports decent Q1, Reef struggling

VF Corp., the parent company of Vans, Reef and myriad other brands, said today that Vans revenue rose 3 percent in the quarter ended March 31.

Vans global revenue was flat vs. the same quarter last year on a constant currency basis. Sales in Vans direct to consumer business rose 16 percent.

Comp store sales at Vans stores in the quarter rose in the mid-single digits, outperforming VF's retail portfolio overall, where comps declined in the mid-single digits.

Internationally, Vans' revenue growth slowed in the quarter due to the weakening of the pound against the Euro and slower sales after three years of very solid growth, executives said.

For the year, Vans global revenues are expected to grow in the mid-single digits.

VF executives described Reef as "struggling."

The North Face posted strong results for the quarter with revenues on a constant currency basis up 14 percent. Revenues in North Face's direct to consumer business jumped 35 percent. Internationally, North Face had a strong quarter and logged double-digit increases in fall bookings.

Overall, the Outdoor and Action Sports coalition reported a 5 percent decline in revenue, or a 2 percent increase minus the impact of currency fluctuations.

Contemporary brands

VF makes clothing for all different sectors. In addition to action sports and outdoor, I report on the contemporary brands division since it operates in many of the same channels as action sports brands.

The division includes 7 For All Mankind, Lucy, John Varvatos, Ella Moss and Splendid.

Overall, the Contemporary brand coalition revenues decreased 6 percent, or 4 percent on a constant currency basis.

Weak sales in the upper-tier channels hurt sales of premium denim brand 7 For All Mankind, but John Varvatos sales rose double digits.

VF corporate results

Revenue: down 7 percent to $1.7 billion, or 2 percent in constant currency.

Net income: $101 million, down 32 percent

Stores: VF opened 19 stores in the quarter and plans to open 70 stores this year.

Cash: The company ended the quarter with $276 million in cash and expects to have $600 million in cash by year-end barring acquisitions. It has $1.1 billion available in its lines of credit.

Inventories: Down 4 percent in the quarter and expected to be down 10 percent at year-end.

International sales were down 5 percent on a constant currency basis, while Asian sales rose 24 percent. Brands that are particularly strong in China are The North Face, Lee, Vans and Kipling.

Guidance: The company said it is not planning on the economy improving this year, and in fact has seen a significant deterioration in certain pockets. Those deteriorating areas are in the Eastern European and Scandinavian economies, which is impacting the company's jeans revenues; unemployment in the manufacturing sector that is hurting its uniform business; and the sagging luxury market which is negatively impacting its 7 For All Mankind premium denim business.

VF now expects annual revenues to decline 5 to 7 percent vs. 2008. Earnings per share should range from $4.70 to $5 compared to $5.42 in 2008.