Clothing maker VF Corporation, whose lineup of high-profile brands includes Dickies, Vans, Timberland, The North Face and others, on Friday (Oct. 16) reported operating income of $256.7 million, or 66 cents a share, on revenue of $2.6 billion for the three months that ended Sept. 30, 2020. That compares to net income of $649 million, or $1.63 a share, on revenue of $3.2 billion for the year-ago quarter.
The Denver, Colorado-based company also declared a dividend of 49 cents per common share for the quarter ending Sept. 30, compared to 43 cents for the same quarter a year ago.
The company wrote in today's release: "Gross margin decreased 340 basis points to 50.8 percent, primarily driven by elevated promotional activity to clear excess inventory and the timing of net foreign currency transaction activity. On an adjusted basis, gross margin decreased 350 basis points to 50.9 percent."
By segment, in constant currency, the company reported $1.13 billion in "outdoor" for the three months that ended Sept. 30, $1.18 billion in "active" and $252 million in "work." The "other" category totaled $136,000 in revenue. All three categories were profitable.
"Our year-to-date results have surpassed our internal expectations across all brands, driven by digital and China, two of our key growth pillars,” Steve Rendle, VF’s chairman, president and chief executive, said in a prepared statement. “We are beginning to see signs of stabilization and strength across all aspects of our business, supporting our decision to raise the dividend and provide a financial outlook for the balance of the year.
"Although uncertainties remain, investments in our digital transformation are resulting in near-term momentum and improved capabilities to emerge in an even stronger position,” he added.
As far as COVID-19's impact on the company, Friday’s release states: "Nearly all of VF's retail stores in the EMEA and APAC regions, including Mainland China, remained open during the second quarter. In North America, 75 percent of all retail locations were open at the end of the first quarter and over 95 percent of all retail stores were open at the end of the second quarter. Additional retail locations have reopened since the end of the quarter, and currently, all of VF's North American retail stores are open. VF's wholesale customers in APAC, North America and EMEA have reopened almost all of their locations."
The company said most of its supply chain is operating, and that distribution centers "are operational in accordance with local government guidelines while maintaining enhanced health and safety protocols." However, there have been "isolated product delays," the release states.