Freight costs and China lockdowns impact VF Corp Q1 results

United States
Published:  01 August, 2022

VF Corp, whose brands include Timberland, The North Face, Vans and Eastpak among others on July 28 released Q1 fiscal 2023 results with revenues slightly up compared with the same period last year. 

Frist quarter fiscal 2023 revenue increased 3% (up 7% at a constant dollar exchange rate) to $2.3 billion driven by increases in the EMEA and Americas regions which partially offset by a decline in the APAC region primarily due to Covid-19 lockdowns in China.

Gross margin decreased to 53.9%, primarily driven by mix and higher freight costs partially offset by price increases. On an adjusted basis, gross margin decreased to 54.1%. Operating income on a reported basis was $63.4 million. On an adjusted basis, operating income decreased 48% (down 40% for a constant dollar exchange rate) to $77.5 million. Operating margin on a reported basis was 2.8%. Adjusted operating margin decreased to 3.4%.

Steve Rendle, Chairman, President and CEO of VF said: “We delivered solid top-line results in Q1, ahead of our initial expectations, led by strong consumer engagement with our outdoor, streetwear and active brands amid a softer consumer environment and inflationary pressures. Importantly, we are maintaining our operating outlook for FY23, a testament to the resiliency of our purpose-built family of brands. While uncertainty persists across geographies and marketplaces from ongoing macro-economic headwinds, we are focused on the things that we can control and will continue our strategic investments to ensure long-term, sustainable and profitable growth.”