just-styles round-up of Q1 apparel and footwear industry results

just-style's round-up of Q1 apparel and footwear industry results

In the latest first-quarter filings from US apparel and footwear brands and retailers, Macy's upped its guidance on the back of higher than expected earnings and sales, while Differential Brands widened its net losses. TJX Companies booked growth in both earnings and sales, while Kohl's booked a strong start to fiscal 2018.

L Brands

L Brands has reported a 49.5% drop in earnings for the first quarter as net income fell to US$47.5m from $94.1m in the year-ago period. Net sales, meanwhile, totalled $2.6bn, an increase of 8% compared to sales of $2.4bn last year, while comparable sales increased 3% compared to the prior yearquarter. The company has decreased its guidance for 2018 full-year earnings per share to $2.70 to $3.00 from $2.95 to $3.25 previously.

Target

US department store retailer Target has reaffirmed its full-year guidance as CEO Brian Cornell says the company has made significant progress in support of its long-term strategic initiatives during the first quarter. Total revenue reached US$16.8bn in the period, up 3.4% from $16.2bn last year, reflecting comparable sales growth of 3% combined with the contribution from non-mature stores. Comparable digital channel sales grew 28%and contributed 1.1 percentage points of comparable sales growth. Gross margin rate in the period was 29.8%, compared with 30% in 2017, reflecting pressure from digital fulfilments costs and sales mix, partially offset by the benefit of the company's cost saving efforts and the net impact of changes to its pricing and promotions. For full-year 2018, Target continues to expect a low-single digit increase in comparable sales, and both GAAP EPS from continuing operations and adjusted EPS of $5.15 to $5.45.

TJX Companies

Ernie Herrman, CEO of TJX Companies, said the firm is very pleased with its first quarter-results as both its consolidated comp store sales growth and earnings per share exceeded its expectations. For the first quarter ended 5 May, net sales increased 12% to US$8.7bn from $7.8bn last year, while consolidated comparable store sales increased 3% over the year-ago period. Net income, meanwhile, reached $716.4m, a 33.6% increase from $536.3m last year. Diluted earnings per share were $1.13, compared to $0.82 last year, while gross profit margin was 28.9%, down 0.1 percentage point versus the prior year. 

Kohl's

Michelle Gass, CEO of US department store retailer Kohl's, said the business is very pleased with its "strong" start to fiscal 2018 as net income rose 13.6% in the first quarter to US$75m, compared to $66m last year. Net sales also increased, reaching $3.95bn from $3.81bn in the year-ago period. Comparable sales, meanwhile, increased 3.6% while gross margin was up 50 basis points to 36.9%, compared to 36.4% last year. Kohl's said it now expects its adjusted fiscal 2018 diluted earnings per share to be $5.05 to $5.50, compared to its prior guidance of $4.95 to $5.45.

Urban Outfitters

Urban Outfitters has booked record first-quarter sales and a jump in earnings, with growth across all brands. Net income reached US$41.3m from $11.9m last year, while gross profit rate increased by 130 basis points, primarily driven by lower markdowns at all three brands. Net sales grew 12.4% to a record $856m thanks to comparable retail segment sales growth of 10%, driven by strong, double-digit growth in the digital channel and positive retail store sales. By brand, comparable sales increased 15% at Free People, 10% at the Anthropologie Group and 8% at Urban Outfitters.

Nordstrom

Nordstrom has booked a rise in both profit and revenue in the first quarter. For the period ended 5 May, net earnings reached US$87m, up 38% from $63m in the year-ago quarter. Gross margin decreased 21 basis points to 34.1% compared with the same period in fiscal 2017, reflecting higher occupancy expenses related to US and Canada Rack openings in addition to planned pre-opening expenses associated with the Nordstrom Men's Store NYC. Net sales, meanwhile, increased 5.8% to $3.5bn from $3.3bn last year. Comparable sales edged up 0.6% compared with the 13-week period last year.

Walmart

US retailer Walmart has booked a mixed first-quarter as sales grew but earnings remained flat. For the three months ended 28 April, total revenues grew 4.4% to US$122.7bn. US comparable sales were up 2.1%, while traffic increased 0.8%. In the retailer's international stores, sales grew 11.7% to $30.3bn. Eight of Walmart's 11 markets posted positive comparable sales, including its four largest. Operating profit, however, remained flat at $5.2m.

Dillard's

Dillard's continued its positive sales momentum in the first quarter a net sales increased 3.5% to US$1.46bn in the period from $1.41bn last year. Net income was also up, climbing 21.4% to $80.5m from $66.3m last year. Meanwhile, gross margin from retail operations declined 31 basis points compared to the prior year first quarter.

The Children's Place

Jane Elfers, CEO of children's speciality apparel retailer The Children's Place, said the company's ability to sell seasonal product in the first quarter was severely hampered by the combination of a record number of winter storms and the unseasonably cold temperatures that persisted across major markets. For the 13 weeks ended 5 May, net income slipped 13% to US$31.5m from $36.2m in the previous year. Net sales, meanwhile, slipped 0.1% to $436.3m, while comparable retail sales decreased 1.8%.

JC Penney

Department store retailer JC Penney booked a mixed first-quarter as it narrowed its net loss to US$78m from a loss of $187m in the same period last year, but saw its sales drop 4.3% to $2.58bn. The decline was primarily due to 141 store closures. Comparable sales edged up 0.2% in the quarter, impacted largely by a very late start to spring. The retailer revised its 2018 full-year guidance and now expects comparable store sales to remain at 0.0% to 2%, and adjusted earnings per share to be ($0.07) to $0.13.

Macy's

Department store retailer Macy's exceeded its expectations in the first quarter and saw a strong performance across all three of its brands and all geographic regions. Earnings reached US$139m from $78m a year earlier, while sales were up 3.6% to $5.54bn. Comparable sales on an owned basis grew 3.9%, and by 4.2% on an owned plus licensed basis. The company says it will now manage its China business itself, with support from Fung Omni, after ending its joint-venture with Fung Retailing. For the full year, Macy's has upped its forecast to adjusted earnings per diluted share of $3.75 to $3.95, and total sales to range from a 1% decline to a 0.5% increase.

Differential Brands Group

Differential Brands Group, which owns the Robert Graham and Hudson Clothing brands, widened its net loss in the first quarter. For the three months ended 31 March, net loss totalled US$4.09m, compared to $2.35m in the year-ago period. Net sales, meanwhile, decreased 3% to $38.8m from $40.1m last year, reflecting a 12% increase in consumer direct segment sales and an 8% decrease in wholesale segment sales. Gross profit margin on a comparable basis was 41.9% compared to 42.9% last year.

Iconix Brand Group

Iconix has reiterated its full-year guidance amid first-quarter results that were in line with company's expectations. For the period ended 31 March, net income totalled US$32.7m, compared to a net loss of $4.3m last year. Total revenue, meanwhile, was $48.5m, a 17% decline as compared to $58.7m in the prior-year quarter. Such decline was expected principally as a result of the transition of the firm's Danskin, Ocean Pacific and Mossimo direct-to-retail labels in its women's segment, as previously announced. Iconix said revenue in the first quarter of 2017 included about $1m of licensing revenue from its Southeast Asia joint venture which was deconsolidated in the second quarter of 2017. As a result, there was no comparable revenue for this item in the first quarter of 2018. Excluding Southeast Asia, revenue declined approximately 16% for the first quarter of 2018.

VF Corp

US apparel giant VF Corporation has posted total revenues that beat its expectations for the three month transition quarter to 31 March. Sales in the period reached US$3.05bn, up 22% from $2.5bn, and surpassing the $2.9bn forecast by the company last quarter.  Global brand revenue at Vans was up 45%, and by 11% and 5% at The North Face and Timberland respectively. Net income in the period, meanwhile, totalled $252.8m, a 21% increase on earnings of $209.2m last year. Gross margin improved 20 basis points to 50.5% as benefits from a mix-shift toward higher margin businesses and changes in foreign currency were partially offset by the impact of the Williamson-Dickie acquisition.

HanesBrands 

Apparel maker HanesBrands has reported first-quarter sales results that exceeded company guidance. For the period ended 31 March, net sales were up 7% to US $1.47bn  versus a guidance range of $1.42bn to $1.44bn. Net sales for Bras N Things, acquired in February 2018, and Alternative Apparel, acquired in October 2017, totalled $32m in the quarter. Sales for the activewear and international segments increased by 6% and 19% respectively, while sales decreased by 3% as expected for the innerwear segment. Net income, meanwhile, increased 12.5% to $79.4m from $70.6m in the year-ago period.

Under Armour

Under Armour CEO Kevin Plank remains confident in the firm's ability to deliver on its full-year targets, despite a widening of its net loss in the first quarter. For the period ended 31 March, net loss totalled US$30.2m, compared to $2.3m in the year-ago quarter. Excluding the impact of the firm's restructuring plan, adjusted net income was $1m. Net revenues, meanwhile, reached $1.2bn, up 6% from $1.1bn last year. North America revenue was relatively flat, while the international business continued to deliver strong growth with a 27% increase, representing 24% of total revenue. The EMEA, Asia-Pacific and Latin America all recorded increases, of 23%, 35% and 21%, respectively. Apparel revenues, meanwhile, were up 7%, while footwear revenues climbed by 1%. Accessories sales edged up 3%, led by men's training. Gross margin declined 120 basis points to 44.2% as benefits from changes in foreign currency rates were more than offset by accelerated inventory management initiatives.

Columbia Sportswear

Columbia Sportswear has upped its full-year guidance on the back of record earnings and revenue in the first quarter. Net income increased 25% in the period to US$45.1m, compared to $36m last year. Net sales, meanwhile, climbed 12% to reach $607.3m from $543.8m in the year-ago period. Gross margin increased 180 basis points to a record 49.3% from 47.5% last year. Looking ahead, the company currently expects 2018 net sales growth of about 8%-10% and 2018 net income to come in between  $213m and $220m as a result of better than expected first quarter net sales and profitability.

Carter's

Excluding the unusual charge related to the Toys 'R' Us bankruptcy, Carter's achieved its sales and earnings objectives in the first quarter, according to CEO Michael Casey. Net sales in the period increased 3.1% to US$755.8m from $732.8m, principally driven by growth in the company's US retail and international segments including contributions from the 2017 Skip Hop and Mexico licensee acquisitions, partially offset by a net sales decline in the US. Net income in the first quarter of fiscal 2018 however, decreased $4.1m, or 8.9%, to $42.5m, compared to $46.6m last year.

Rocky Brands

US apparel and footwear company Rocky Brands booked a mixed first-quarter as earnings climbed but sales slipped. For the period ended 31 March, net income reached US$3.3m, compared to $1.5m in the year-ago quarter. Net sales, meanwhile, slipped to $61.4m from $63.1m last year. Gross margin expanded to 34.2% from 31.3% for the same period last year. The company said the 290 basis point increase was driven by higher wholesale and military margins combined with a lower percentage of military sales, which carry lower gross margins than wholesale and retail sales.

Steve Madden

Edward Rosenfeld, CEO of US footwear and accessories specialist Steve Madden, said the company got off to a good start in 2018, with first quarter results that exceeded expectations. Net income for the three months ended 31 March were US$28.7m, compared to $20.2m in the prior year. Total net sales, meanwhile, increased 6.2% to $389m, from $366.4m a year ago. Net sales for the wholesale business increased 5.8% to $331.2m, while retail net sales rose 8.6% to $57.9m. Same store sales decreased 1.2% in the quarter as the result of a decline in the boot category, while gross margin was flat at 36.2%.

Levi Strauss & Co

Jeans giant Levi Strauss & Co saw net income decline US$79m in the first quarter due to a $136m provisional non-cash tax charge as a result of the enactment of the 2017 Tax Cuts and Jobs Act. As a result, net loss in the period totalled $19m, compared to net income of $60.1m last year. The San Francisco-based company said excluding this non-cash charge, adjusted net income was $117m, nearly double last year's $60m. Net revenues, meanwhile, were up 22% to $1.34bn from $1.1bn in the year-ago period. In Europe, net revenues were up by 46%, while in the Americas and Asia sales grew by 14% and 9% respectively. Gross margin expanded to 54.9% from 51.2%, reflecting the margin benefit from revenue growth in the direct-to-consumer channel and international business, lower product sourcing costs and a favourable transactional impact of currency.

Looking ahead, the company raised its full-year 2018 revenue growth guidance to a 6%-8% range in constant currency.

Skechers USA

Casual footwear brand Skechers USA achieved a new quarterly sales record, with net sales soaring 16.5% to US$1.25bn in the quarter to 31 March. Skechers said the rise was the result of a 17.9% increase in the company's international wholesale business, an 8.5% increase in domestic wholesale sales, and a 26.4% increase in company-owned global retail sales. Comparable same store sales in company-owned stores worldwide increased 9.5%, including 7% in the US and 17.6% internationally, as compared to the first quarter of 2017. Net income was up 25.2% to $117.7m from $94m a year earlier, while gross margin widened to 46.7% from 44.4% due to strength in the company's international subsidiary and company-owned international retail businesses.