VF Group Sports Sales Rose 16% In The Third Quarter, Denying The Acquisition Of Skechers Rumors

VF, the US apparel retailer, recently released its third quarter financial report in fiscal 2019.

In the three months ended December 29th, operating income increased by 8% to $3 billion 900 million. Adjusted earnings per share rose 30% to $1.31, while gross margins rose by 60 basis points to 52.2%.

Immediately after that, VF group raised its expected performance in fiscal year 2019, and expects to achieve annual revenue of US $13 billion 800 million. At the same time, the group plans to increase investment by 45 million US dollars to promote the growth of fiscal year 2020, and the specific areas of investment have not been disclosed.

Steve Rendle, group president and chief executive officer, said: "the third quarter growth has been driven by the strong growth of our biggest brands and the balanced improvement of our core portfolios."

The biggest brand in Steve Rendle mouth is Vans. In the third quarter, this sport tide brand still performs well, and sales in the period increased by 25% compared with the same period last year, which promoted the VF sports department sales to grow by 16%. Among them, the Chinese market has increased by more than 20%.

The sustained growth of Vans benefited from the promotion of direct business, and its direct sales grew by 50% over the same period. The brand's goal is to increase the total sales volume to 5 billion US dollars in 2023, and the proportion of direct business will reach 60%, that is to say, it will touch 3 billion US dollars.

The outdoors The North Face, which had been flat before, increased by 14% over the same period, and sales in the Asia Pacific market increased by 23%. In the case of VF group's overall wholesale revenue growth of 6%, The North Face wholesale business revenue growth of up to 19%.

During the three quarter, The North Face opened an outdoor lifestyle store in Broolyn, New York. Unlike previous professional outdoor products, the shop called North Face Prototype sells all lifestyle footwear and apparel.

In order to cater for the lifestyle, apart from selling clothes, the new store also has entertainment activities such as art and music. The first performer is Broolyn rapper Jones (Topaz Jones). This outdoor sport veteran is considered to be at the crossroads.

"Both mountaineers and musicians can be linked by curiosity," says Tim Bantle, vice president of lifestyle lifestyle. "Through the new retail concept, create new culture and experience for the brand."

In the five year plan of The North Face, its performance target is that sales in 2021 amounted to US $3 billion. At present, this figure is about $2 billion 400 million, and brands need to substantially increase sales growth in the coming years. Lifestyle deployment is expected to become a driving force for growth.

VF announced earlier that the jeans department, which stripped the poor performance, has made new progress in recent years.

In December 2018, the group said the jeans department to be split will form an independent company and named it Kontoor Brands, which includes two brands of Lee and Wrangler. The resolution is expected to be completed in the first half of 2019, and the final approval of the board of directors and the completion of various legal procedures will still be required.

"The income of the VF group cowboy sector has been flat for about 10 years, and stripping the business is conducive to the group buying more developed brands," Michael Binetti, an analyst at Credit Suisse Bank, commented earlier.

With the promotion of business divestiture, VF group will focus on developing Vans and The North Face with better profitability.

At the same time, the media reported that VF Group intends to buy Skechers, the American leisure sports brand (Cage) at a total price of 6 billion 500 million US dollars, and the stock price of both sides rose immediately. Soon after, VF group president Steven Rendle denied the rumor by telephone conference.

VF's share price rose more than 10% after the three quarter announcement. As of January 18th, the closing price was $82.34 per share, with a total market value of about $32 billion 673 million.