VF Corporation lowered the full-year outlook for its flagship Outdoor & Action Sports Coalition after reporting its sales grew 2 percent in the second quarter ended July 2.

Second quarter revenue reached $1.42 billion at the coalition, where:

  • Revenue for The North Face brand was up 2 percent including low single-digit growth in the Americas; a high-teen percentage rate increase in Europe (up low-teen currency neutral); and, a high-teen percentage rate decline in Asia-Pacific (down mid-teen currency neutral).
  • Vans brand revenue was up 4 percent (up 6 percent currency neutral) driven by a high single-digit percentage rate increase in the Americas business; a high single-digit percentage rate increase in Asia-Pacific (up mid-teen currency neutral); and, as expected, a high single-digit percentage rate decrease in Europe where the brand continues to manage through elevated inventories related to its Classics collection.
  • Timberland brand revenue was down 7 percent in the second quarter including a high-teen percentage rate decrease in the Americas region; a low double-digit percentage rate increase in Europe (up high single-digit currency neutral); and, a high single-digit decline in Asia-Pacific.

Second quarter operating income for Outdoor & Action Sports declined 9 percent to $123 million (down 5 percent currency neutral). Operating margin was 8.7 percent compared to 9.7 percent in the same period last year.

International Review

International revenue in the second quarter was up 5 percent (up 7 percent currency neutral). Revenue in Europe was up 5 percent (up 3 percent currency neutral) and in the Asia-Pacific region was up 4 percent (up 6 percent currency neutral). Revenue in the Americas (non-U.S.) region was up 7 percent (up 20 percent currency neutral). The international business represented 35 percent of total VF second quarter sales, compared with 34 percent in last year’s same period.

Direct-to-Consumer Review

Direct-to-consumer revenue was up 6 percent (up 7 percent currency neutral) in the second quarter driven by a low double-digit percentage rate increase in the Outdoor & Action Sports business, which was partially offset by a mid-teen decline in Sportswear. The company’s e-Commerce business continued its strong momentum with a nearly 30 percent increase in revenue.

Excluding the Contemporary Brands coalition, which VFC is selling, there were 1,461 VF-owned retail stores at the end of the quarter compared with 1,319 for last year’s same period. Direct-to-consumer revenue reached 27 percent of total revenue in the second quarter compared with 26 percent in last year’s same period.

VF Corp. ended the quarter with inventories up 6 percent compared with the same period of 2015. Consistent with the 2015 year-end report in February and the first quarter report in April, about half of this amount is related specifically to core styles of cold-weather product expected to fill demand in the second half of 2016.

The company said it now expects revenue for the Outdoor & Action Sports coalition to increase at a mid-single-digit percentage rate compared with previous expectations of a high single-digit percentage rate increase.