In the latest first-quarter filings from US apparel and footwear brands and retailers, VF Corp has raised its fiscal 2020 outlook, Cherokee Global Brands booked a mixed first quarter and announced it will officially rebrand to Apex Global Brands, Destination Maternity reported a challenging start to the year amid the news Marla Ryan will step down as CEO, while PVH Corp saw profits slip. Dick’s Sporting Goods enjoyed higher sales as did Footlocker.
Boot Barn Holdings
Boot Barn Holdings CEO Jim Conroy said the company made a “strong start” to fiscal 2020 as earnings and revenue were up on the prior-year period. For the first fiscal quarter ended 29 June, net sales increased 14.7% to US$185.8m, up from $162m last year. Consolidated same-store sales increased by 9.4%, including a rise in both retail store same-store sales and in e-commerce sales of 11.1% and 0.9% respectively. Boot Barn Holdings said the increase in net sales was driven by the hike in same-store sales, sales from new stores added over the past twelve months and the sales contribution from acquired stores. Net income, meanwhile, totalled $9.7m, compared to $6.8m in the prior-year period. Gross margin expanded to 33.5% from 31.8% last year, due to a 150 basis point increase in merchandise margin rate and 20 basis points of leverage in buying and occupancy costs.
Steve Rendle, CEO of apparel giant VF Corp, said the group’s first-quarter represents a new chapter following the spin-off of Kontoor Brands and its relocation to Denver, Colorado. As a result of what Rendle called “strong results and increased confidence in the full year”, VF has raised its fiscal 2020 outlook, including an additional US$20m of investments aimed at accelerating growth and value creation in fiscal year 2020 and beyond.
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For the period ended 29 June, revenue increased 6% (up 9% in constant dollars) to $2.3bn. Adjusted revenue increased 6% (up 8% in constant dollars) to $2.3bn. Excluding acquisitions and divestitures, revenue increased 9% (up 11% in constant dollars), driven by VF’s largest brands, international and direct-to-consumer platforms, as well as strength from the active and outdoor segments. Net income, however, dropped 69% to $49.2m from $160.4m in the year-ago period. VF said it incurred $13m in transaction and deal-related expenses in the first quarter of fiscal 2020 and $17m in costs related to strategic business decisions in South America and the operating results of jeanswear wind-down activities in South America following the spin-off of Kontoor Brands. Gross margin increased 140 basis points to 54.4%, driven by favorable mix and timing of foreign currency transaction hedge gains. On an adjusted basis, gross margin increased 120 basis points to 54.4%.
Looking ahead, VF expects full-year fiscal 2020 revenue to approximate $11.8bn, reflecting an increase of about 6% (8% on a constant dollar basis excluding the impact of acquisitions and divestitures). This compares to the previous expectation of revenue between $11.7bn and $11.8bn.
Cherokee Global Brands
Cherokee Global Brands booked a mixed first quarter as net loss narrowed but sales declined in the 13 weeks to 4 May. For the first quarter of fiscal 2020, net loss totalled US$2.3m, compared to a net loss of $2.7m in the first quarter of the prior year. Revenues, meanwhile, declined 6% to $5.1m from $5.4m in the prior year. The year-over-year decline largely reflects the non-renewal of the company’s Cherokee license in South Africa at the end of fiscal 2019, the sale of Flip Flop Shops in June 2018 and the impact of the economic uncertainty related to Brexit affecting several of the firm’s European licensees. Decreases in revenues were partially offset by revenues from the company’s new design services agreement in China.
Meanwhile, Cherokee announced that towards the end of June 2019, Cherokee Global Brands will officially rebrand to Apex Global Brands to appropriately reflect the company’s expanded brand portfolio and design services. The company’s Nasdaq ticker symbol will be changed to APEX at this time.
Vince Holding Corp
Brendan Hoffman, CEO of upmarket apparel and accessories company Vince Holding Corp, said the firm’s first-quarter results came in largely as expected. Net sales increased 1.1% to US$55.1m in the three months ended 4 May, up from $54.5m in the first quarter of fiscal 2018. Direct-to-consumer segment sales increased by 6.7% to $27.8m, while comparable sales rose by 1.1%, including e-commerce sales, primarily due to an increase in average dollar sale. Net loss was $7m, which includes $1.4m of strategic consulting costs, compared to a net loss of $5.6m in the same period last year. Gross margin expanded to 51.3% from 46.8% in the first quarter of fiscal 2018. The 450 basis point increase in gross margin rate was due to the nonrecurrence of an unfavorable adjustment to inventory reserves in the prior year, stronger full-price selling, and lower product costs.
North America-based men’s tailored clothing and formalwear provider Tailored Brands saw net earnings slip to US$7.1m in the 13 weeks to 4 May from $13.9m in the prior year quarter. The company said its first-quarter 2019 results include $4.4m of charges related to its multi-year cost savings and operational excellence programmes consisting of $3.1m in consulting costs, $1.1m in severance costs and $0.2m in lease termination costs. Total net sales, meanwhile, decreased by 4.5% to $781.4m. Retail net sales fell 4% primarily due to the decrease in retail segment comparable sales of 3.2%. Corporate apparel net sales decreased by 10.1%, or $6.4m, primarily due to lower replenishment demand in the US as well as the impact of a weaker British pound this year compared to last year. As a percent of sales, consolidated gross margin decreased 120 basis points to 41%. On an adjusted basis, consolidated gross margin decreased 120 basis points to 41.1% primarily due to deleveraging of occupancy costs and the greater mix of clothing product sales versus rental services revenue.
Destination Maternity had a challenging start to the year with comparable store sales down 7.2% in the first quarter, according to CFO Dave Helkey. Net income for the first quarter of fiscal 2019 was US$0.1m, compared to net income of $0.2m for the first quarter of fiscal 2018. Adjusted net income totalled $0.6m. Net sales for the period decreased 8.7% to $94.2m from $103.2m last year, with sales negatively impacted by the net closure of 32 owned locations and 88 leased lease locations as well as a 7.2% decline in comparable sales. Gross margin rate in the period was 54.8%, an increase of 110 basis points from the comparable gross margin in the first quarter of fiscal 2018.
In a separate statement, Destination Maternity announced its CEO Marla Ryan, by mutual agreement with the board, will step down from her role today (13 June). Ryan will remain with the company to assist with the transition and will also assume a new role as president of product design, sourcing and merchandising.
The board has created an ‘Office of the CEO’ on an interim basis, which will provide ongoing leadership and oversight of the day-day operations of the company while a search is conducted for a new CEO. Board member Lisa Gavales will serve as chair.
Thomas Chubb III, CEO of Oxford Industries, said fiscal 2019 has started well as the firm delivered its ninth consecutive quarter of consolidated comparable sales growth and its sales and earnings per share for the quarter were ahead of expectations. Consolidated net sales increased 3% to US$282m in the period ended 4 May, compared to $272.6m in the first quarter of fiscal 2018. The result included a 2% increase in direct to consumer comparable sales as well as a year-over-year increase in Lanier Apparel sales. Earnings on a GAAP basis were $1.29 per share, compared to $1.23 last year. On an adjusted basis, earnings were $1.30 per share, compared to $1.28 in the first quarter of fiscal 2018. Net earnings, meanwhile, totalled $21.7m, up from $20.6m in the prior year quarter. Gross margin narrowed to 58.8% from 60.2% in the first quarter of fiscal 2018, impacted by the increased proportion of sales from the company’s lower margin Lanier Apparel business compared to the prior year quarter and lower gross margin at Lilly Pulitzer reflecting increased off-price wholesale sales and increased gift with purchase activity in the quarter.
Chico’s said its first-quarter results stabilised in line with the fourth quarter of 2018. For the first quarter ended 4 May 2019, net sales totalled US$517.7m, compared to $561.8m in last year’s first quarter. The 7.8% decline reflects a comparable sales fall of 7% as well as the impact of 41 net store closures since last year’s first quarter. The comparable sales decline was driven by lower average dollar sale and a decrease in transaction count. Gross margin narrowed to 36.9% from 40.4%, with Chico’s attributing the 350-basis point decrease primarily to the impact of product liquidations, continued charges related to the firm’s omnichannel programmes and accelerated depreciation as a result of its retail fleet optimisation plan announced in the fourth quarter of 2018. Excluding the 100 basis-point impact of accelerated depreciation, gross margin decreased approximately 250 basis points. Net income, meanwhile, tumbled to $2m from $29m in the year-ago period. Adjusted net income totalled $5.6m.
Guess Inc booked a mixed first-quarter as net loss widened but sales increased. For the first quarter of fiscal 2020, the company recorded GAAP net loss of US$21.4m in the period, a 0.7% deterioration compared to $21.2m for the first quarter of fiscal 2019. Total net revenue, however, increased 3% to $536.7m from $521.3m in the prior-year quarter. In constant currency, net revenue increased by 8.2%. Sales in the Americas increased by 3% in US dollars and 3.9% in constant currency, while sales in Asia were up 1.4% in US dollars and 6.6% in constant currency. Meanwhile, in Europe, revenues increased 2.2% in US dollars and 12.3% in constant currency.
Zumiez delivered better than expected results to start the year due to strong performance in the last two months of the first quarter. For the period ended 4 May, total net sales increased 3.2% to US$212.9m from $206.3m in the prior year quarter. Comparable sales for the thirteen weeks increased 3.3% on top of a comparable sales increase of 8.3% for the thirteen weeks ended 5 May 2018. Net income, meanwhile, totalled $0.8m, compared to a net loss of $2.6m in the first quarter of the prior fiscal year.
American Eagle Outfitters
Jay Schottenstein, AEO’s chairman and CEO, said 2019 is off to a positive start and the company is “especially pleased” to deliver first-quarter sales and EPS growth ahead of its expectations. For the quarter ended 5 May, total net revenue increased US$63m, or 8% to a record $886m compared to $823m last year. Consolidated comparable sales increased 6%, following a 9% comparable sales increase last year. By brand, American Eagle’s comparable sales were up by 4%, following a 4% increase last year. Aerie’s comparable sales surged 14%, building on a 38% increase last year and marking the 18th consecutive quarter of double-digit comps. Net income, meanwhile, totalled $40.8m, up from $40m in the prior year quarter. Gross margin rate narrowed to 36.7% from 37% last year. Rent leverage and improved product costs were offset by increases in markdowns and delivery expense. EPS of $0.23 compared to $0.22 last year. Excluding restructuring charges of $0.01, the company’s adjusted EPS increased 4% to $0.24, compared to adjusted EPS of $0.23 last year.
G-III Apparel Group
G-III Apparel Group CEO Morris Goldfarb said the company’s first-quarter results were once again fueled by strong performance in its wholesale business led by its five global power brands DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld. Net sales for the period ended 30 April increased 3.6% to US$633.6m from $611.7m in the same period last year. The company reported GAAP net income for the first quarter of $12m, or $0.24 per diluted share, compared to $9.9m, or $0.20 per diluted share, in the prior year’s comparable period.
Consolidated net sales at discounter Dollar Tree rose 4.6% to $5.81bn during the three months to 4 May, while enterprise same-store sales (comps) grew 2.2% – its 45th consecutive quarterly increase. Gross profit increased 1.6% to $1.73bn. But gross margin as a percentage of sales dropped to 29.7% from 30.6% in the prior year, driven by lower initial markup at Family Dollar, higher domestic freight and distribution costs, shrink in the Family Dollar segment, and $6.7m in higher rent expenses. Net income climbed $107.4m to $267.9m, and operating income for the quarter fell 11.9% to $385.5m.
The company noted the Family Dollar turnaround is gaining traction, with CEO Gary Philbin adding: “Dollar Tree delivered a solid 2.5% increase in same-store sales while cycling its toughest quarterly compare from the prior year. Family Dollar’s 1.9% same-store sales increase is the strongest quarterly performance since we began reporting Family Dollar comps.” However, the earnings and sales view for fiscal 2019 is narrowed, with consolidated net sales of $5.66-$5.76bn expected for the second quarter.
Fashion apparel retailer Express saw a soft start to the year, but said it is making solid progress towards the goal of positioning Express for long-term growth. Comparable sales and earnings also beat the high end of its guidance.
During the first quarter, net sales fell 6% to $451.3m from $479.4m a year earlier, with comparable retail sales (including e-commerce sales) down 9%. In total, retail sales fell to $328.3m from $374.5m a year ago. Comparable outlet sales slipped 2%, but total outlet sales rose 17.8% to $106.4m. Gross margin fell 280 basis points to 27.1% of net sales. And overall the retailer slipped to a net loss of $9.9m from a net income of $0.5 in the first quarter of last year.
Footwear retailer Caleres reported net earnings of US$9.1m in the 13 weeks to 4 May, compared to a profit of $17.2m in the prior year quarter. Gross profit totalled $279.8m, up 1.8%, while gross margin was 41.3% and adjusted gross margin was 42.3% and excluded $7.2m related to Vionic inventory adjustment amortisation and for Brand Portfolio business exit expense. Net sales, meanwhile, rose to $677.8m from $632.1m last year, a rise of 7.2%. Brand portfolio sales of $341.1m were up 20.3%, while Famous Footwear total sales were $352.2m. Same-store-sales were down 1%.
Womenswear retailer J.Jill has said it is “disappointed” with its first-quarter performance and is taking “immediate actions” to clear excess inventory and position the business for improved results in the second half of the year, after sales fell 3.3% to US$176.5m for the 13 weeks to 4 May, and net income fell from $11.3m to $4.4m year-on-year. Operating income nearly halved to $10.8m from $20m a year earlier. Shares in the company plunged 53% in the wake of the announcement. Linda Heasley, president and CEO said the company is in the early stages of delivering on its long term strategies, with a new leadership team across key areas of the business now in place. Going forward the company is expecting comparable sales to decrease between 1-3% for the second quarter. For 2019, total comp sales are expected to decrease between 2-4% and net sales flat to -2% Diluted earnings per share is expected to be in the range of $0.17 to $0.21 compared to diluted earnings per share of $0.69 and Adjusted Diluted Earnings per Share of $0.72 in fiscal 2018.
Abercrombie & Fitch
Net losses narrowed at Abercrombie & Fitch during the quarter to US$18.28m from $41.5m a year earlier. Operating losses were also lower at $27.8m from $42.2m. Sales edged up to $733m from $730m a year earlier. Fran Horowitz, CEO, said: “We are focused on our transformation initiatives, with global store network optimisation a key priority. We continue to believe in stores and are committed to delivering intimate, omni-channel brand experiences that closely align with our customers’ needs. In line with our strategy, we are announcing plans to close three additional flagship locations, bringing the total to five since 2017. Except for the charges from these flagship store actions, we remain on track to achieve our previously communicated fiscal 2019 outlook and continue to lay the foundation to achieving our fiscal 2020 targets.”
J.Crew Group has reported a lower net loss for the first quarter at $16.2m compared with a loss of $33.9m for the same period a year earlier. It recorded an operating income of $22.1m compared with a $0.9m loss last year. Revenues were 7% higher at $578.5m.
Michael J. Nicholson, interim CEO, commented: “We are encouraged by the meaningful progress we have made in the first quarter, reporting a 31% increase in adjusted EBITDA driven by continued momentum at Madewell and the early impact of our swift actions to improve profitability at J.Crew. As we look ahead, we are optimistic about our plans to reignite the J.Crew Brand with new designs, assortments and brand expressions, and remain steadfast in our commitment towards achieving Madewell’s long-term growth potential as a leading global brand.”
Net income fell for the first quarter ending 5 May at Calvin Klein and Tommy Hilfiger owner, PVH Corp., to $81.6m from $178.9m a year earlier. Earnings before interest and taxes were also lower at $135.1m against $244.3m. Revenue grew 2%$2.2bn to $2.4bn. By division, revenue at Tommy Hilfiger rose to $1.05bn from $1.01bn; at Calvin Klein fell to $889.6m from $890m; and in Heritage Brands rose to $414.6m from $408.8m. CEO Emanuel Chirico called the global retail environment “challenging” during the quarter and said looking ahead it has continued into the second quarter with particular softness across the US and China retail landscape. ” Additionally, further volatility in foreign exchange rates is expected to pressure our full year earnings per share by an incremental $0.10 compared to our prior expectations. As such, we believe it is prudent to factor this into our updated full-year earnings outlook.”
Dick’s Sporting Goods
Net income for the first quarter ending 4 May fell at Dick’s Sporting Goods to $57.5m from $60m a year earlier. Operating income also slipped to $76m from $87m year-on-year. However, sales grew to $1.92bn from $1.9bn. “We were pleased with our start to 2019, delivering higher merchandise margins and first quarter earnings per diluted share above last year. Same-store sales turned positive in March and remained positive in April, as we started to see the benefits of our key strategies and investments,” said Edward W. Stack, chairman and CEO
“We started the year with great energy, innovative products, and exciting customer events, leading to solid top-line growth in the first quarter with strong performance across our regions, banners, channels, and categories,” said Richard Johnson, president, and CEO of US footwear firm Foot Locker. The company reported total sales of US$2.08bn in the period, up 2.6% from $2.03bn in the prior-year period. Excluding the effect of foreign exchange rate fluctuations, total sales for the first quarter of 2019 increased by 4.7%. First-quarter comparable-store sales rose 4.6%, while net income in the period was $172m, compared to $165m last year. Gross margin rate widened to 33.2% from 32.9% a year ago.
Ross Stores CEO Barbara Rentler said for the first quarter, the company delivered sales gains at the high end of its guidance as well as better-than-expected earnings per share growth despite continued underperformance in ladies apparel. For the 13 weeks ended 4 May, net earnings totalled US$421m, compared to $418m in the prior year. The firm reported earnings per share for the period of $1.15, up from $1.11 for the same period last year. The results include an approximate $.02 per share benefit from the favourable timing of expenses that are expected to reverse over the balance of the year. Sales for the period grew 6% to $3.8bn, with comparable store sales up 2%.
L Brands reported a drop in earnings for the first quarter ended 4 May as net income slipped to US$40.3m from $47.5m last year. Net sales in the period were flat at $2.62bn, while comparable sales were also flat compared to last year. First quarter comparable sales declined 5% at the Victoria’s Secret segment but jumped 13% at Bath & Body Works
Department store retailer Target Corp reported a 10.8% rise in net earnings for the three months ended 4 May, with profit reaching US$795m from $718m in the prior year period. Gross margin rate narrowed slightly to 29.6% from 29.8% in 2018, reflecting higher digital fulfillment and supply chain costs, partially offset by the benefit of merchandising strategies. Total revenue of $17.6bn increased 5% from $16.8bn last year, reflecting sales growth of 5.1% combined with a 0.5% increase in other revenue. The rise reflected comparable sales growth of 4.8% in the period, while comparable digital sales grew 42%, contributing 2.1 percentage points to comparable sales growth.
Shoe Carnival CEO Cliff Sifford said after a difficult February due to the later tax refund season as well as inclement weather, the company experienced a positive change in sales for the Easter time period of March and April. The footwear and accessories retailer reported net sales of US$253.8m for the first quarter of fiscal 2019, a 1.4% decrease compared to net sales of $257.4m for the first quarter of fiscal 2018. Comparable store sales decreased by 0.2%. Net income in the period, meanwhile, totalled $13.9m, up from $13m last year. Gross profit margin narrowed to 29.6% from 30% in the first quarter of fiscal 2018.
Ernie Herrman, CEO of TJX Companies, said the firm is “very pleased” with its continued strong performance in the first quarter as net sales for the period increased 7% to US$9.3bn. Consolidated comparable store sales increased 5% over last year’s 3% increase. Net income, meanwhile, totalled $700.2m, down from $716.4m in the prior year period. Gross profit margin was 28.5%, a 0.4 percentage point decrease versus the prior year. As expected, gross margin was negatively impacted by increased supply chain and freight costs.
Urban Outfitters has booked record first-quarter sales as total company net sales for the three months ended 30 April increased 1% over the same period last year to $864m. This compares to $856m last year. Comparable retail segment net sales increased 1%, driven by double-digit growth in the digital channel, partially offset by negative retail store sales. By brand, comparable retail segment net sales increased 2% at Free People, 1% at the Anthropologie Group and were flat at Urban Outfitters. Wholesale segment net sales increased 2%. Net income, meanwhile, slipped to $32.59m from $41.26m in the prior year period, while gross profit rate decreased by 167 basis points versus the prior year’s comparable period.
Erik Nordstrom, co-president of Nordstrom, said while the company expected softer trends from the fourth quarter to continue into the first quarter, it experienced a further deceleration. “We had executional misses with our customers, and we’re committed to better serving them. This is well within our control to turn around,” he said. First-quarter net earnings totalled US$37m, compared with $87m during the same period in fiscal 2018. Net sales, meanwhile, fell to $3.35bn from $3.47bn last year. Gross margin decreased 60 basis points to 33.5%, primarily due to planned markdowns to realign inventory to sales trends and deleverage on occupancy expenses.
Michelle Gass, CEO of US department store retailer Kohl’s, said the year has started off slower than the company would like, with its first-quarter sales coming in below its expectations. For the period ended 4 May, total revenue slipped 2.9% to US$4.09bn from $4.21bn in the year-ago period. Comparable sales were down by 3.4%, compared to a 3.6% rise last year. Net income tumbled 17% in the quarter to $62m, compared to $75m in the prior year period. Gross margin narrowed 6 basis points to 36.8% from 36.9% last year.
JC Penney widened its net loss to US$154m in the first quarter ended 4 May from $78m in the same period last year. Adjusted net loss was $147m, compared to an adjusted net loss of $69m last year. Total net sales decreased 5.6% to $2.44bn, compared to $2.58bn last year, while comparable sales declined 5.5% for the quarter. Children’s, women’s and men’s apparel were among the company’s top performing divisions during the quarter.
Iconix Brand Group
Bob Galvin, CEO of Iconix Brand Group, said the firm’s results for the first quarter of 2019 were “as expected” as it continues to stabilise the business and its operational cost structure. Total revenue in the period declined 26% to US$35.9m from $48.5m in the prior year quarter. Iconix said such decline was expected, principally as a result of the transition of its Danskin and Mossimo direct to retail licenses in its women’s segment, as previously announced. Its revenue for the first quarter of 2019 was also impacted by the effect of the Sears bankruptcy on its Joe Boxer and Bongo brands in women’s and the Cannon brand in home. GAAP net income, meanwhile, totalled $17.9m, compared to $27.8m for the first quarter of 2018.
Walmart revealed a rise in both earnings and revenue in the first quarter as net income totalled US$3.84bn, compared to $2.13bn in the year-ago period. Total revenue in the period reached $123.9bn, an increase of $1.2bn, or 1%. Excluding currency, total revenue was $125.8bn, an increase of $3.1bn, or 2.5%. Comparable US store sales, meanwhile, rose 6.8%, boosted by a 43% jump in domestic e-commerce sales. International net sales, meanwhile, were up 2.3% to $32.3bn.
Jeff Gennette, CEO of Macy’s Inc, said the department store chain is off to a solid start this year, delivering its sixth consecutive quarter of comparable sales growth and making progress against the North Star Strategy. For the 13 weeks to 4 May, net income totalled US$136m, compared to $1.31m in the year-ago period. Net sales, meanwhile, slipped to $5.50bn from $5.54bn last year, while comparable sales for the quarter edged up 0.7%.
Dillard’s booked a mixed first-quarter as profit dropped but revenue edged up. For the 13 weeks ended 4 May, Dillard’s reported net income of US$78.6m, compared to net income of $80.5m for the prior year first quarter. The company acknowledged a pretax gain of $7.4m related to the sale of two stores in the FY19 quarter. Net sales, meanwhile, were $1.47bn, up from $1.46bn in the prior year period. Gross margin from retail operations declined 141 basis points of sales for the 13 weeks, compared to the prior year first quarter primarily due to increased markdowns.
The Children’s Place
Net income at The Children’s Place plunged to US$4.4m from $31.5m a year earlier. Operating income declined to $5m from $23m and sales fell to $412.3m from $436.3m year-on-year. Jane Elfers, president and CEO said the results “significantly exceeded expectations” despite its 70% store overlap with the approximately 800 Gymboree and Crazy 8 liquidations that occurred in the first quarter and the headwind of a later Easter. She added sales began to accelerate in mid-March and continued to strengthen through the end of the quarter, resulting in positive comparable retail sales in excess of 20% for the month of April. “Our product clearly resonated with our customers and our inventory is well positioned entering Q2. With respect to the Gymboree integration, we are on track for an early 2020 launch…Several years ago, we developed a multi-pronged strategy to position the company to successfully compete in a period of rapid digital change. Fast forward to today– we are a global omni-channel retailer with a best-in-class management team. Our product offering is consistently well received, our real estate portfolio is optimised, our digital investments have been accelerated to position us to continue to capture market share, and our diversified sourcing strategy provides us with a key competitive advantage. The successful execution of these strategic initiatives has uniquely positioned us to succeed during a period of digital disruption and unprecedented industry consolidation.”
Wolverine Worldwide has reaffirmed its full-year outlook despite a 2% drop in reported revenue to US$523.4m during the first quarter. Adjusting for currency, sales decreased by 0.9%. CEO Blake Krueger said the firm expects revenue growth to resume in the second quarter and accelerate during the second half of the year, with the company continuing to expect full-year revenue in the range of $2.28bn-$2.33bn, representing growth of 3% at the mid-point of the range. Net earnings in the first quarter were also down, slipping to $40.6m from $46.6m in the prior year period. Reported gross margin was 42.1%, as compared to 42.7% last year.
Andrew Rees, CEO of Crocs, said 2019 is off to a great start as the US footwear firm’s revenues exceeded expectations in the first quarter. Revenues totalled US$295.9m in the period, growing 4.5% over the first quarter of 2018, or 9% on a constant currency basis. The firm said store closures and business model changes reduced its revenues by about $6m. It’s wholesale business grew 5.2%, its e-commerce businesses by 16.5% and its retail comparable store sales were up 8.7%. Net income was $24.7m, up from $12.5m in the first quarter of 2018, while gross margin was 46.5%, compared to guidance of 45.5%, a decrease of 290 basis points from 49.4% in last year’s first quarter. Non-recurring expenditures related to the relocation of Crocs’ Americas distribution centre reduced gross margin by 40 basis points, resulting in an adjusted gross margin of 46.9%, 250 basis points below last year’s first quarter.
Underwear and activewear maker HanesBrands has booked its seventh consecutive quarter of revenue growth as net sales increased 8% to US$1.59bn in the three months to 30 March. Activewear segment first-quarter sales increased by 17%, while innerwear segment sales decreased 3% in the first quarter, compared with expectations of a 4% decrease. Despite stronger than expected currency headwinds in the quarter, international segment sales increased 13%. Net income, meanwhile, totalled $79.48m, compared to $79.41m in the year-ago period.
US sportswear brand Under Armour posted a 2% rise net revenue for the first quarter ended 31 March, with sales reaching US$1.21bn from $1.19bn last year. Sales in the firm’s domestic business decreased 3% to $843m, while the international business increased by 12% to $328m, representing 27% of total revenue. Within the international business, revenue was up 3% in EMEA, up 25% in Asia-Pacific, and up 6% in Latin America. Apparel revenue, meanwhile, edged up 1% to $775m, while footwear revenue increased 8% to $293m, primarily driven by strength in the company’s run category. Net income in the period totalled $22.48m, compared to a net loss of $30.24 in the prior year quarter. Gross margin increased 100 basis points to 45.2% compared to the prior year driven by product cost improvements, regional mix and prior period restructuring charges, offset by channel mix.
Carter’s has exceeded its sales and earnings objectives in the first quarter and reaffirmed its growth targets for 2019. For the period ended 30 March, net sales decreased US$14.7m, or 1.9%, to $741.1m from $755.8m last year, principally driven by declines in the company’s US retail and US wholesale segments. US retail segment sales declined 1.7%, to $377.1m, while US retail comparable sales slipped 3.7%, reflecting a decline in store sales which were partially offset by growth in e-commerce sales. US wholesale segment net sales were down by 1.9% in period to $275.4m, reflecting lower shipments principally due to the loss of sales to Toys ‘R’ Us and Bon-Ton. Net income, meanwhile, fell $8m, or 18.8%, to $34.5m from $42.5 in the first quarter of fiscal 2018. Carter’s said fiscal 2019 results include an after-tax net charge of $5.2m relating to early extinguishment of debt, costs related to organisational restructuring, and changes in the company’s business model in China.
Edward Rosenfeld, CEO of US footwear and accessories specialist Steve Madden, says the company is off to a strong start in 2019, with first-quarter results exceeding expectations. Net sales increased by 5.6% to US$410.9m in the quarter, compared to $389m in the same period of 2018. Net sales for the wholesale business were up 5.1% to $348.1m, while retail net sales rose 8.6% to $62.8m. Same-store sales increased by 6.3% in the quarter driven by strong performance in the company’s e-commerce business. Net income attributable to Steven Madden Ltd, meanwhile, totalled $34.5m, up from $28.7m last year. Gross margin was 38.2% compared to 36.2% in the same period last year, an increase of 200 basis points.
Columbia Sportswear CEO Tim Boyle says momentum the company created in 2018 is continuing into this year, with record first quarter net sales, gross margin, operating income, net income and earnings per diluted share in the first quarter. For the period to 29 March, net sales increased 8% to US$654.6m from $607.3m a year earlier. Net income, meanwhile, surged 64% to $74.2m, or $1.07 per diluted share, from $45.1m, or $0.64 per diluted share. Gross margin expanded 210 basis points to 51.4% of net sales from 49.3% last year.
“Solid” first-quarter results at US apparel and footwear company Rocky Brands include an 18% increase in retail sales. First-quarter net sales increased by 7.4% to US$65.9m, compared to $61.4m in the first quarter of 2018. Net income, meanwhile, totalled $3.6m, compared to $3.3m in the year-ago period. Gross margin increased to 34.9% from 34.2%, with the 70 basis point increase driven by higher retail and military margins combined with a lower percentage of military sales, which carry lower gross margins than wholesale and retail sales.
Skechers CEO Robert Greenberg says the company achieved a new quarterly sales record in the first quarter of 2019. Sales grew 2.1% in the period ended 31 March to a record US$1.28bn as a result of a 9.3% increase in Skechers’ international business, partially offset by a 6.3% decrease in its domestic business. Comparable same store sales in company-owned stores and e-commerce increased 0.7%, including 0.2% in the United States and 2.3% internationally – excluding 61 stores in India that recently transitioned from third-party to company-owned. Net earnings, however, slipped to $108.8m from $117.7m a year ago. Gross margins were slightly lower as improved margins in company-owned domestic retail business were offset by lower international margins from higher discounts and negative foreign exchange impacts.
Levi Strauss & Co
Jeans giant Levi Strauss & Co has delivered its sixth consecutive quarter of double-digit constant-currency revenue growth. Growth was broad-based across all three regions and all channels in the first quarter, demonstrating “that our strategies are working and our investments are paying off,” according to CEO Chip Bergh. For the period ended 24 February, net revenues grew 7% on a reported basis and 11% on a constant-currency basis, excluding US$48m in unfavourable currency translation effects. In Europe, net revenues grew 3% on a reported basis and 10% on a constant-currency basis, while in the Americas, net revenues were up by 9% on a reported basis and 10% in constant-currency. In Asia, meanwhile, net revenues increased 8% on a reported basis and 14% on a constant-currency basis. First-quarter net income attributable to the company totalled $146.6m, compared to a loss of $19m. Levi Strauss says the $166m increase was primarily due to charges in the prior year from the transitional impact of the 2017 Tax Cuts and Jobs Act. First quarter adjusted net income grew 81% to $151m. On a reported basis, gross margin was 54.6% compared with 54.9% in the same quarter of fiscal 2018, primarily due to 90 basis-points of unfavorable transactional currency impact, which was partially offset by the margin benefit from growth in the company’s global direct-to-consumer channel.
Levi Strauss, which raised more than $623m in its initial public offering (IPO) in March, says it expects top open nearly 100 new stores in fiscal 2019.