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VF Corp, owner of the Timberland brand, has reported strong results for the second quarter of 2015, with solid growth for most of the company’s brands.
On a reported basis, revenue is up 5% over the 2014 quarter, driven by growth in the outdoor and action sports and jeanswear coalitions, as well as the international and direct-to-consumer businesses.
Operating income is up 1% to US$223 million compared with the same period in 2014 but the operating margin declined to 8.9% due to the negative impact from changes in foreign currency rates.
The foreign currency change has also impacted the gross margin which is 48.3%, slightly down compared to last year, but in line with the company’s expectations. Earnings per share are up 22%.
VF’s international business has increased 13%, with an 11% growth in Europe, 12% in the Americas region, and 17% in the Asia-Pacific region.
Second quarter revenue for the Timberland brand is up 10% on a currency neutral basis, including a 17% increase in its wholesale business.
In the Americas, in a quarter that typically represents less than 15% of Timberland's annual revenue, the brand was up at a mid single-digit rate with a low teen increase in the wholesale space, led by boots and hikers.
In Europe, revenue was up close to 20% with strong growth in wholesale. In the men's business, SensorFlex and Cupsole continue strong for the footwear business. In Asia, revenue increased at the high single-digit percentage led by strong wholesale growth. Growth in the footwear business was driven by men's casual styles and sandals.
The company has invested massively in getting closer to end consumers. A new timberland.com website platform was launched during Q2 with an updated look and interface that marries content and commerce. It has features such as “Shop the Look” and “Quick Shop” to inform style choices and inspire expression and expedite the purchase experience. An interacting community was created that encourages consumers to share their Timberland photos. This element was recently recognised by L2 Think Tank as one of the eight brands making the right moves with user generated content alongside some great companies. An updated “Design Your Own Footwear” customisation webpage has seen positive results.
On the Timberland Pro side, they have continued the “When Your Feet Hurt Your Work Suffers” media campaign and saw particular strength in the Pro Boondocks and Pro Powertrain collections.
“Our second quarter was another strong illustration of the ability of our global, diverse and powerful brands and platforms to deliver consistent, profitable growth,” said Eric Wiseman, VF Chairman and Chief Executive Officer. “Our strategy for continued growth and fuelling our momentum is working: Keep the consumer at the centre of everything we do; deliver innovative and relevant product; and focus our execution and discipline to maximise long-term growth opportunities.”
VF Corp has over 20 internationally recognised brands including Timberland, Vans, Kipling, Wrangler and The North Face.
Source: The Street