VF Corp on Friday reported that first quarter revenue from continuing operations rose 23% (21% currency neutral) to $2.8 billion. Excluding the contribution from acquisitions, revenue rose 12% (10% currency neutral), according to a company press release.
By segment and brand: Active segment revenue rose 25% (22% currency neutral) including a 35% (32% currency neutral) increase in Vans revenue. Outdoor segment revenue rose 6% (3% currency neutral) including an 8% (5% currency neutral) increase in The North Face and a 6-percentage point revenue growth contribution from acquisitions, the company said.
Direct-to-consumer revenue rose 22% (20% currency neutral), including a 6-percentage point revenue growth contribution from acquisitions, and digital revenue rose 54% (50% currency neutral), including a 21-percentage point revenue growth contribution from acquisitions, the company also said. And international revenue rose 27% (22% currency neutral), including a 13-percentage point revenue growth contribution from acquisitions.
VF Corp. handily beat Wall Street's expectations in its first fiscal quarter after making adjustments to its brand portfolio in recent months and years. Its top brands now include Vans, The North Face, Timberland, Wrangler and Lee.
It's taken a while to get there. The company in March sold off its Nautica brand to Authentic Brands Group; two years ago it sold its contemporary brands businesses — including 7 for All Mankind, Splendid and Ella Moss — to Israeli apparel company Delta Galil Industries for $120 million; and last year it unloaded Licensed Sports Group to Fanatics, which included the Majestic brand. At that point, management said it would build on momentum for its Vans and North Face brands.
Investors had grown impatient with VF Corp.'s status quo and began urging it to add to its stable. That had analysts buzzing about a possible acquisition of Lululemon or Lands' End. But executives pushed back and for the most part, except for its purchase of Williamson-Dickie last year, the company has pared down its portfolio as it sought to balance earnings growth and free cash flow.
That appears to be paying off. The company raised its guidance for the year, saying that fiscal 2019 revenue is now expected to range between $13.6 billion and $13.7 billion, an increase of 10%-11% percent.
Vans is the brand carrying the company, according to a note emailed to Retail Dive from investment research firm Jane Hali & Associates, which called the skater brand VF's "only true strength." The North Face, meanwhile, is not delivering on promised women's merchandise, though its men's assortment has strengthened, and the best items from its Lee denim brand are found abroad and through its direct channels, rather than at retailers like Kohl's and J.C. Penney, the note warned.
Vans is a different story. "[Vans']continued strategy of releasing exclusive drops [has] been key," according to Jane Hali. "Vans also distributes exclusive product to other retailers, (mostly streetwear focused shops such as Chimp) and maintains the ability to differentiate their product across their channels."
Correction: An earlier version of this story listed the wrong brand as part of VF's sale of its Licensed Sports Group. Majestic was the primary brand included in that sale.