In the latest second-quarter filings from US apparel and footwear brands and retailers, Boot Barn Holdings has delivered what CEO Jim Conroy called an “outstanding” second-quarter, VF Corp has reaffirmed its full-year outlook, and Oxford Industries has posted its tenth consecutive quarter of consolidated comparable sales growth. Elsewhere, Genesco moved to a profit, while G-III Apparel Group has revised its full-year guidance in the wake of Trump’s latest tariff hike.
Boot Barn Holdings
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Boot Barn Holdings CEO Jim Conroy said the company sustained its strong momentum from early in the new fiscal year and delivered an “outstanding” second-quarter. For the second fiscal quarter ended 28 September, net sales increased 11.3% to US$187.2m from $168.1m in the prior-year period. Consolidated same-store sales increased 7.8% with retail stores up 8% and e-commerce same-store sales up 7%. Boot Barn Holdings said the increase in net sales was driven by the hike in same-store sales and sales from stores added over the past twelve months. Net income, meanwhile, totalled $7.7m, compared to $4.5m in the prior-year period. Gross margin expanded to 32.6% from 31% in the prior-year period, primarily due to increased sales and an increase in merchandise margin rate.
VF Corp
VF Corp has reaffirmed its full-year fiscal 2020 outlook as CEO Steve Rendle said the company is pleased with the strength of its second-quarter and first-half results, driven by its two largest brands and international and direct-to-consumer platforms. For the three months to 28 September, revenue increased 5% (up 7% in constant dollars) to US$3.4bn. Excluding the impact of acquisitions and divestitures and on an adjusted basis, revenue increased 6% (up 8% in constant dollars). Net income, meanwhile, soared 28% to $649m from $507.1m in the prior-year period. Gross margin increased 90 basis points to 52.9%t, primarily driven by a favuorable mix shift toward higher-margin businesses and timing of net foreign currency transaction gains. On an adjusted basis, gross margin increased 90 basis points to 53.1%.
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“The quality and fundamentals of our business remain solid as a result of the focus and strategic execution of our business teams around the globe. Despite an increasingly uncertain geopolitical and macroeconomic environment, we are confident in the trajectory of our business as we move into the second half of our fiscal year, as reaffirmed by our outlook,” Rendle added.
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By GlobalDataStage Stores
Stage Stores has widened its net loss in the second quarter ended 3 August to US$23.9m from $16.9m in the prior-year period. Net sales slipped to $368m from $369m last year, while comparable sales increased by 1.8%. CEO Michael Glazer said the second-quarter comparable sales rise reflects a 150 basis point benefit from off-price conversions as well as stabilisation of its women’s apparel business. “We were excited to see that total comparable sales growth was driven by increases in both average transaction value and number of transactions,” he added.
J.Crew Group
J.Crew Group has announced flat sales of US$588.8m for the second quarter ending 3 August. Comparable company sales fell by 1%. The group’s namesake brand posted a 7% sales decrease to $399.1m, while sales at its Madewell arm grew by 15% to $139.7m. The group recorded an operating loss of $1.5m compared with an operating income of $33.3m year-on-year. Net losses grew to $44.2m from $6.1m a year earlier. CEO Michael Nicholson said the results reflect its “ongoing commitment to returning J Crew to profitable growth over time.”
In addition, the company has announced it isfiling for an initial public offering of its Madewell brand.
Oxford Industries
Oxford Industries, Inc has posted its tenth consecutive quarter of consolidated comparable sales growth with comparable sales increasing 3% on top of a 7% increase in the prior year. Second-quarter fiscal 2019 net sales were US$302m, flat with the prior year. The result included a 3% increase in comparable sales with increases at both Tommy Bahama and Lilly Pulitzer. The increase in direct to consumer sales was offset by lower wholesale sales. Net earnings, meanwhile, totalled $29.8m, up from $27.2m in the prior year quarter. Gross margin grew to 59.5% compared to 59.2% in the second quarter of fiscal 2018. Adjusted gross margin expanded 40 basis points to 59.8% from 59.4% in the same period of the prior year.
Tailored Brands
North America-based men’s tailored clothing and formalwear provider Tailored Brands saw net earnings, on a GAAP basis, slip to US$34.3m from $49.2m last year. On an adjusted basis, net earnings totalled $41.7m, compared to $54.6m in the prior-year period. The company said its second-quarter 2019 results exclude net charges of $10.4m comprised of $11.3m of charges related to its multi-year cost savings and operational excellence programmes, offset by a $0.9m net favourable adjustment primarily related to a derivative instrument entered into for the corporate apparel business. Total net sales, meanwhile, declined by 4.1% to $789.5m in the period. Retail net sales were also down by 4.1%, primarily due to a decrease in retail segment comparable sales of 3.6%. Corporate apparel net sales slipped by 3.9%, or $2.2m, primarily due to the impact of a weaker British pound this year compared to last year. As a percent of sales, consolidated gross margin decreased 250 basis points to 42.3%. On an adjusted basis, consolidated gross margin decreased 260 basis points to 42.6% primarily due to a lower retail gross margin rate.
The company sold its corporate apparel business for $62m in cash to a group led by the unit’s existing UK executive team last month.
Genesco
Genesco has moved to a profit in the second quarter as net earnings totalled US$577,000, compared to a net loss of $15,000 in the prior-year period. Net sales, meanwhile, were flat at $487m, compared to the second quarter of fiscal 2019. Excluding the effect of lower exchange rates, net sales would have increased by 1%. Comparable sales increased 3%, with stores up 1% and direct up 20%. Direct-to-consumer sales were 10.4% of total retail sales for the quarter, compared to 8.9% last year. Second-quarter gross margin was 48.6%, up 110 basis points, compared with 47.5% last year. The increase as a percentage of sales reflects freight claim credits for Journeys Group, improved wholesale gross margin in Johnston & Murphy Group and efficient sell through of sale product at Schuh Group with lower markdowns.
G-III Apparel Group
Despite booking increases in both earnings and revenue for the second quarter, G-III Apparel Group has revised its guidance to what CEO Morris Goldfarb said is a more “conservative posture” for the remainder of the fiscal year in the wake of Trump’s latest tariff hike. Goldfarb said the group’s “well-developed supply chain” and “long-standing strong vendor relationships”, have helped the company mitigate some of the tariff headwinds but noted it is “prudent to revise our guidance to a more conservative posture for the remainder of this fiscal year.” For fiscal 2020, the company is now forecasting net sales of about $3.3bn and net income between $154-$159m. This compares to net sales of about $3.08bn and net income of $138.1m for fiscal 2019.
For the second quarter of fiscal 2020 ended 31 July, net sales increased 3.1% to $643.9m from $624.7m in the same period last year. GAAP net income for the second quarter of $11.1m, compared to $10.1m in the prior year’s comparable period.
American Eagle Outfitters said total net revenue for the quarter ended 3 August increased by US$76m, or 8% to a record $1.04bn, compared to $965m last year. Included in total net revenue this year was $40m for Japan license royalties. Consolidated comparable sales increased 2%, marking the 18th consecutive quarters of comparable sales growth, following a 9% comparable sales increase last year. By brand, American Eagle’s comparable sales decreased 1%, following a 7% increase last year. Aerie’s comparable sales increased 16%, building on a 27% increase last year and marking the 19th consecutive quarter of double-digit growth. Gross margin rate of 36.7% compared to 36.6% last year. Flow-through from the Japan license royalties drove the increase in margin rate and dollars, which was offset by increased markdowns and delivery expense. Net income, meanwhile, totalled $65m, up from $60.3m last year.
Burlington Stores CEO, Tom Kingsbury, said the retailer is “very pleased” with its second-quarter results, driven by a 3.8% comparable-store sales increase and 10.5% overall sales growth. Total sales reached US$1.7bn in the 13 weeks to 3 August, up from $1.5bn in the prior-year period. Gross margin rate was flat versus last year at 41.4%, while net income surged 19% to $85m. Adjusted net income increased 16% to $91m, driven primarily by higher sales growth, as well as leverage on fixed expenses, disciplined expense management, and profit improvement initiatives.
Dollar General
Dollar General CEO, Todd Vasos, said the company is pleased with its second-quarter results, driven by a “strong performance” on both the top and bottom lines. Net sales increased by 8.4% to US$7bn in the second quarter of 2019, compared to $6.4bn in the second quarter of 2018. The increase included positive sales contributions from new stores and growth in same-store sales, modestly offset by the impact of store closures. Same-store sales increased by 4% compared to the second quarter of 2018, driven by increases in both average transaction amount and customer traffic. Gross profit as a percentage of net sales was 30.8% in the second quarter of 2019 compared to 30.6% in the second quarter of 2018, an increase of 13 basis points. Net income totalled $426.6m in the period, up from $407.2m in the second quarter of 2018.
The company also announced the promotion of Jeffery Owen to COO, with responsibility for store operations, merchandising and supply chain. Steven Sunderland will succeed Owen as executive vice president of store operations, overseeing Dollar General’s nearly 16,000 stores, as well as the real estate and new store development functions.
Dollar Tree
Consolidated net sales at discounter Dollar Tree increased 3.9% to US$5.74bn from $5.53bn in the prior year’s second quarter. Enterprise same-store sales increased 2.4%. Same-store sales for the Dollar Tree segment increased 2.4% on a constant currency basis (or 2.3% when adjusted to include the impact of Canadian currency fluctuations). Net income in the period slipped to $180.3m from $273.9m last year, while gross margin narrowed to 28.7% frrom 30.1% a year ago. The decrease in gross profit margin was driven by higher freight costs for both segments, and markdowns and shrink in the Family Dollar segment.
CEO Gary Philbin said the turnaround of the Family Dollar business “continues to gain momentum.”
Abercrombie & Fitch
Net losses widened at Abercrombie & Fitch during the second quarter to US$31.1m from $3.9m a year earlier. Net loss per diluted share was $0.48, reflecting the estimated adverse impact from flagship store exit charges of $0.50. This compares to last year GAAP net loss per diluted share of $0.06, adjusted non-GAAP net income per diluted share of $0.06 and adjusted non-GAAP net income per diluted share of $0.01 on a constant currency basis. Net sales, meanwhile, decreased 0.2% to $841.1m, and increased 1% on a constant currency basis as compared to last year. Comparable sales were flat against positive comparable sales of 3% last year. Gross profit rate of 59.3% was down 90 basis points to last year.
PVH Corp
PVH Corp reported second-quarter sales that were up 1.3% to US$2.36bn and net income rose from $165.2m to US$193.5m for the period ending 4 August. Earnings before interest and taxes on a GAAP basis for the quarter decreased to $17m from $33m in the prior-year period, principally due to gross margin pressure in both the wholesale and retail businesses attributable to a more promotional US retail environment. The firm slashed its full-year outlook citing macroeconomic pressures.
Tilly’s
“After a slow start to the second quarter during May, we posted positive comps both in stores and online during each of June and July to finish the quarter with better net sales, product margins, and earnings per share than expected,” said Tilly’s CEO Ed Thomas. Total net sales for the period ended 3 August, amounted to US$161.7m, an increase of $4.3m or 2.8%, compared to $157.4m last year. Comparable store net sales, which includes e-commerce net sales, increased by 0.6% compared to last year’s second-quarter increase of 4.4%. E-commerce net sales increased by 15.7% and represented about 14.1% of total net sales this year, compared to an increase of 8.1% and a 12.5% share of total net sales last year. Gross margin, or gross profit as a percentage of net sales, increased to 32% from 31.8% last year. Net income, meanwhile, fell to $9.3m from $9.7m last year.
Shoe Carnival
Shoe Carnival has reported second-quarter financial results in line with company expectations. Net income for the 13 weeks to 3 August was flat at US$11.8m as gross profit margin decreased 0.6% to 30.6% from 31.2% percent in the second quarter of fiscal 2018. Net sales, meanwhile, were down 0.1% to $268.2m from $268.4m in the prior year. Comparable store sales increased 1.4%.
Guess Inc
Carlos Alberini, CEO of Guess Inc, said he is “very pleased” with the company’s second-quarter financial performance, as total net revenue increased 5.8% to US$683.2m. This compares to $645.9m in the prior-year quarter. In constant currency, net revenue increased by 8.8%. Sales in the Americas increased by 0.9% in US dollars and 1.2% in constant currency, while sales in Asia were up 0.6% in US dollars and 5.2% in constant currency. Meanwhile, in Europe, revenues increased 9.1% in US dollars and 14.1% in constant currency. GAAP net earnings, however, slipped 0.8% in the period to $25.3m from $25.5m last year. Adjusted net earnings totalled $27.4m, a 6.9% decrease compared to $29.5m for the second quarter of fiscal 2019.
Chico’s
Chico’s CEO Bonnie Brooks said the retailer is seeing evidence of progress within the business amid second-quarter results that were in line with company expectations. For the fiscal 2019 second quarter ended 3 August, Chico’s reported a net loss of US$2.3m, compared to net income of $16.8m reported for last year’s second quarter). Adjusted net loss was $0.2m. Net sales, meanwhile, totalled $508.4m, compared to $544.7 million in last year’s second quarter. The 6.7% decline reflects a comparable sales fall of 6.1% as well as the impact of 53 net store closures since last year’s second quarter. The comparable sales decline was driven by lower average dollar sale and a decrease in transaction count. In the second quarter, comparable sales at Soma continued to show strong growth while Chico’s posted quarter-over-quarter improvement. The retailer added product, marketing and in-store presentation adjustments to change the performance at White House Black Market are underway. Gross margin in the period narrowed to 33.2% from 36.1% last year. The 290-basis point decrease primarily reflects an increased effort to clear White House Black Market inventory, continued charges related to omnichannel programmes and accelerated depreciation as a result of the retail fleet optimisation plan announced in the fourth quarter of fiscal 2018.
Express
Fashion apparel retailer Express has reported a net loss of US$9.7m for the 13 weeks to 3 August, compared to net income of $2.2m in the second quarter of 2018. Excluding costs related to the former CEO departure, adjusted net loss was $8.9m. Consolidated net sales decreased 4% to $472.7m from $493.6m in the second quarter of 2018, with consolidated comparable sales down 6%. Comparable retail sales, which includes both Express stores and e-commerce, declined 7% compared to the second quarter of 2018. In total, retail sales fell to $337.6m from $373.8m last year. Meanwhile, comparable outlet sales decreased by 2% versus the second quarter of 2018. In total, outlet sales increased to $121.3m from $107.2m in the second quarter of 2018. Gross margin contracted 160 basis points in the period to 26.8%, compared to 28.4% in last year’s second quarter. The decrease was driven by a 60 basis point decrease in merchandise margin and 100 basis point increase in buying and occupancy costs as a percentage of net sales.
Footwear retailer Caleres has reported record second-quarter sales for the 13 weeks to 3 August of US$752.5m, up 6.5% year-over-year. Brand Portfolio sales totalled $359.6m in the period, up 17.9% on last year, while Famous Footwear total sales were $419.8m, with same-store-sales up 1.5%. Net earnings, meanwhile, rose to $25.3m from $23.6m. Gross profit totalled $305.9m, up 4.4%, representing gross margin of 40.7%.
Foot Locker
Foot Locker CEO Richard Johnson said the company’s results in the second quarter came in at the low end of its expectations. Net income for the period ended 3 August, fell to US$60m, or $0.55 per share, compared to net income of $88m, or $0.75 per share in the corresponding prior-year period, as charges to the sum of about $16m took a toll on the retailer. Excluding these items, non-GAAP earnings were $0.66 per share and $0.75 per share for the second quarter of 2019 and 2018, respectively. Gross margin rate decreased to 30.1% from 30.2% a year ago. Total second-quarter sales, meanwhile, fell 0.4%, to $1.77bn from $1.78bn in the corresponding prior-year period. Excluding the effect of foreign exchange rate fluctuations, total sales for the second quarter of 2019 increased by 0.8%. Second-quarter comparable-store sales were up 0.8%.
The Buckle
Nebraska-based denim specialist The Buckle has booked a rise in both earnings and revenue for the second quarter of fiscal 2019. For the period ended 3 August 3, net income totalled US$16.4m, up from $15.7m reported for the second quarter of fiscal 2018. Net sales for the 13-weeks increased by 1.4% to $203.8m from net sales of $201.1m last year. Comparable store net sales were up 1.8% on the prior-year period, while online sales rose 9.2% to $23.1m.
Barbara Rentler, CEO of Ross Stores, said the company delivered “respectable gains” in both sales and earnings for the second quarter. For the 13 weeks ended 3 August, net earnings grew to US$413m, compared to $389m in the prior year. Sales rose 6% to $4bn, with comparable-store sales up 3% on top of last year’s strongest quarterly comparison of 5%.
Dick’s Sporting Goods
Net income for the second quarter ending 3 August fell at Dick’s Sporting Goods to US$112.5m from $119.4m a year earlier. Net sales for the period, meanwhile, increased 3.8% to $2.26bn, while consolidated same-store sales increased by 3.2%. CEO Edward Stack said the comp sales performance was driven by increases in both average ticket and transactions and represented the company’s strongest quarterly comp since 2016. “We saw growth across each of our three primary categories of hardlines, apparel and footwear, our brick-and-mortar stores comped positively and our e-commerce channel remained strong, increasing 21%,” he added.
L Brands
L Brands reported a 62% drop in earnings for the second quarter ended 3 August as net income slipped to US$37.6m from $99m last year. The second quarter 2019 reported results include a $39.6m pretax charge related to the early extinguishment of debt. Net sales in the period slipped to $2.9bn from $3bn last year, while comparable sales decreased 1% compared to last year. Second-quarter comparable sales declined 6% at the Victoria’s Secret segment but jumped 8% at Bath & Body Works.
Erik Nordstrom, co-president of Nordstrom, said the company delivered strong bottom-line results in the second quarter as earnings beat expectations. Net earnings were US$141m in the three months to 3 August, compared with $162m during the same period in fiscal 2018. However, while the company’s bottom-line exceeded expectations, sales were around the low end of its expected range. This reflected a “challenging” start to the quarter as well as softer performance for its anniversary sale and off-price business. Net sales in the period declined by 5.1% to $3.8bn from $4bn last year. Gross margin decreased 50 basis points to 34.5% compared with the same period in fiscal 2018, primarily due to deleverage on occupancy expenses.
Target Corp
Department store retailer Target Corp has reported a 17.4% increase in net income for the three months ended 3 August, with profit rising to US$938m from $799 last year. Second-quarter gross margin rate was 30.6%, compared with 30.3% in 2018, reflecting the benefit of merchandising efforts to optimise costs, pricing, promotions and assortment, combined with the benefit of favourable category sales mix. This favourability was partially offset by higher digital fulfillment and supply chain costs. Total revenue of $18.4bn increased 3.6% from $17.8bn last year, reflecting sales growth combined with a 6.3% increase in other revenue. The rise reflected comparable sales growth of 3.4% combined with the contribution from non-mature stores. Comparable digital sales grew 34%, contributing 1.8 percentage points to comparable sales growth.
The Children’s Place
Jane Elfers, CEO of The Children’s Place said sales for the second quarter met the company’s expectations but noted traffic remained “weaker than anticipated” which led to a late quarter increase in promotional activity across the sector. Net sales in the period decreased 6.3% to US$420.5m from $448.7m last year, primarily as a result of a comparable retail sales decrease of 3.8%. Net income tumbled to $1.5m from $7.5m in 2018. Adjusted net income was $3m, compared to adjusted net income of $11.7m in the comparable period last year.
With respect to the Gymboree integration, Elfers said the team is “focused and on track for a spring 2020 launch.” She added: “The relaunch of the Gymboree website has been very strong and the early response reinforces how emotionally attached the Gymboree customer is to the Gymboree brand name and how much she values the Gymboree brand above all other kid’s brands in the market.”
Urban Outfitters has booked a 3% drop in total company net sales for the three months ended 31 July as revenue declined to US$962.3m from $992.5m last year. Comparable retail segment net sales also decreased by 3%, driven by negative retail store sales, partially offset by growth in the digital channel. By brand, comparable retail segment net sales increased 6% at Free People and decreased 3% at the Anthropologie Group and 5% at Urban Outfitters. Wholesale segment net sales declined by 8%. Net income, meanwhile, fell to $60.3m from $90.8m in the prior-year quarter, while gross profit rate decreased by 304 basis points versus the prior year’s comparable period. The decline was driven by higher markdowns, deleverage in delivery and logistics expenses and store occupancy deleverage.
TJX Companies
TJX Companies has reported a rise in both earnings and revenue for the 13 weeks to 3 August. Net sales for the second quarter of fiscal 2020 increased 5% to US$9.8bn, while consolidated comparable store sales were up 2%, over last year’s 6% increase. Net income for the period, meanwhile, totalled $759m, compared to $739.6m in the prior-year quarter. Gross profit margin was 28.2%, a 0.7 percentage point decrease versus the prior year, in line with the company’s guidance. This was primarily due to a decrease in merchandise margin and higher supply chain costs.
Michelle Gass, CEO of US department store retailer Kohl’s, said the business strengthened as it progressed through the second quarter. For the three months ended 3 August, total revenue slipped 3.1% to US$4.43bn from $4.57bn in the year-ago period. Comparable sales decreased by 2.9%, while net sales fell to $4.17bn from $4.31bn last year. Net income, meanwhile tumbled 17% in the quarter to $241m, compared to $292m in the prior year period. Gross margin narrowed 72 basis points to 38.8% from 39.5% last year.
Walmart
Walmart has reported an increase of US$2.3bn, or 1.8%, in total revenue to U$130.4bn for the three months ended 31 July. Excluding currency, total revenue was $131.7bn, an increase of $3.7bn, or 2.9%. Comparable US store sales grew 2.8%, boosted by a 37% jump in domestic e-commerce sales. International net sales, meanwhile, declined 1.1% to $29.1bn. Net income, meanwhile, totalled $3.6bn, compared with a net loss of $861m year earlier.
JC Penney
JC Penney CEO Jill Soltau said she is pleased with the results the retailer has delivered in the quarter and the progress it is making against its plan as the company has narrowed its net loss. Net loss for the three months ended 3 August totalled US$48m, compared to $101m in the prior-year quarter. Adjusted net loss was $56m, compared to an adjusted net loss of $120m last year. Total net sales decreased 9.2% to $2.51bn, compared to $2.76bn last year, while comparable sales declined 9% for the quarter. Excluding the impact of the company’s exit from major appliance and in-store furniture categories, comparable sales decreased 6%.
Dillard’s widened its net loss to US$40.7m in the second quarter from $2.9m in the prior year 13-week period. Included in the net loss for the 13 weeks ended 3 August, 2019 is a pretax gain of $4.9m primarily related to the sale of a store property. Net sales, meanwhile, slipped to $1.43bn from $1.47bn last year, while comparable-store sales decreased 2% against a 1% increase in prior year 13-week period. Gross margin from retail operations declined 319 basis points of sales in the period compared to the prior year second-quarter primarily due to increased markdowns.
Macy’s Inc
Despite delivering another quarter of comparable sales growth, Macy’s had a slow start to the quarter and finished below company expectations. For the 13 weeks ended 3 August, net income totalled US$86m, compared to $166m in the year-ago period. Net sales, meanwhile, slipped to $5.55bn from $5.57bn last year, while the retailer reported comparable sales growth of 0.2% on an owned basis and 0.3% on an owned plus licensed basis.
Andrew Rees, CEO of Crocs, has hailed a “terrific” quarter for the company which reported a 9.4% rise in revenues to US$358.9m over the second quarter of 2018. On a constant currency basis, revenues were up by 12.5%. Crocs noted store closures reduced revenues by about $6m. Wholesale revenues grew 9.4% in the period, while e-commerce revenues surged 18%, and retail comparable store sales increased by 11.8%. Net income was $39.2m, up from $34.4m in the second quarter of 2018, while gross margin was 52.8%, compared to 55.3% in last year’s second quarter. Non-recurring expenditures related to the relocation of Crocs’ Americas distribution centre reduced gross margin by 80 basis points, resulting in an adjusted gross margin of 53.6%.
Wolverine Worldwide
Wolverine Worldwide has reported a 1.1% rise in second-quarter revenue to US$568.6m on a constant currency basis despite what CEO Blake Krueger called “unfavorable spring weather and overall sluggish US retail conditions”. On a reported basis, revenue increased 0.3% as compared to the prior year. Net earnings, however, declined to $40.2m from $55.5m last year, while reported gross margin of 40.5%, was in line with expectations, and compared to 41.3% in the prior year.
Weyco Group
Footwear maker Weyco has booked a decline in both earnings and revenue for the second quarter, with net income attributable to the company falling 7% to US$1.5m from $1.6m in the prior-year period. Net sales for the quarter ended 30 June slipped 1% to $60.5m, compared to second quarter 2018 net sales of $60.9m. Weyco warned the 1 August announcement that the US will impose an additional 10% tariff on certain categories of consumer goods exported from China, including footwear, is expected to increase the overall cost of its shoes as the company “sources a significant portion” of its footwear from China.
HanesBrands
Underwear and activewear maker HanesBrands has booked its eighth consecutive quarter of organic constant-currency sales growth as net sales increased 3% to US$1.76bn in the three months to 29 June. Activewear segment sales increased by more than 10%, while innerwear segment sales “met expectations.” International sales growth of 4% exceeded expectations, while global sales of Champion brand activewear and innerwear increased more than 50%, excluding the US mass channel. Net income, meanwhile, was up by 9.5% to $154m, compared to $140.6m in the year-ago period.
Kevin Plank, CEO of Under Armour, said the US sportswear brand’s second-quarter results show its transformation is making solid progress across the business. For the period ended 30 June, revenue edged up 1% to US$1.2bn (up 3% currency-neutral). Wholesale revenue fell 1% to $707m, while direct-to-consumer revenue was up 2% to $423m, representing 35% of total revenue. Domestic sales slipped 3% to $816m, while international business increased 12% to $339m (up 17% currency-neutral), representing 28% of total revenue. Within the international business, revenue was up 6% in EMEA, up 23% in Asia-Pacific, and down 3% in Latin America. Apparel revenue, meanwhile, slipped 1% to $740m, while footwear revenue rose 5% to $284m. Net loss narrowed to $17.35m from a loss of $95.5m a year earlier, while gross margin increased 170 basis points to 46.5% driven by supply chain initiatives, regional mix and restructuring charges in the prior-year period offset by foreign currency impacts.
Steve Madden
US footwear and accessories specialist Steve Madden announced record second-quarter results with net sales rising 12.4% to US$445m from $395.8m last year. Net sales for the wholesale business increased by 13.1% to $363.5m, with strong growth in both the wholesale footwear and accessories businesses. Retail net sales in the second quarter rose 9.6% to $81.5m, compared to $74.3m in the second quarter of the prior year, while same-store sales increased 6.2%, driven by strong performance in the company’s e-commerce business. Net income totalled $36.6m, up from $32.4m last year. Gross margin was 37.2% compared to 37.3% in the same period last year, a decrease of 10 basis points.
Columbia Sportswear reported record second-quarter results and updated its full-year outlook. Net sales for the period ended 30 June increased 9% (11% constant-currency) to a record US$526.2m from $481.6m for the same period in 2018. Net income surged 137% to $23m from $9.7m last time. The passage of a Swiss tax reform package resulted in a one-time tax benefit of $6.6m. In addition, second-quarter net income also included full ownership of the China business, which became a wholly-owned subsidiary from January 2019. Gross margin expanded 70 basis points to 48.2% from 47.5% last year.
Looking ahead, Columbia Sportswear now expects net sales of $3-$3.04bn (prior $2.98-$3.04bn) for the 2019 financial year, representing net sales growth of 7-8.% (prior 6.5-8.5%).
Carter’s has achieved its sales and earnings growth objectives in the second quarter, with growth driven by its retail and wholesale businesses, and reflecting “good demand” for its spring and summer product offerings. For the period ended 29 June, net sales increased US$38.2m, or 5.5%, to $734.4m from $696.2m last year. US retail segment sales increased 5.3%, to $423.1m, while US retail comparable sales rose 3.8%, reflecting growth in both retail store and e-commerce sales. US wholesale segment net sales were up by 9.4% to $229.1m, driven by increased demand for the company’s exclusive brands. Net income, meanwhile, increased $6.7m, or 17.9%, to $43.9m, compared to $37.3m in the second quarter of fiscal 2018.
Rocky Brands booked “very solid” second-quarter results with highlights including year-over-year sales increases in all three of its segments and an improvement in overall profitability. For the period ended 30 June, net sales increased 6.4% to US$62m, compared to $58.2m in the second quarter of 2018. Net income, meanwhile, rose to $3.2m from $2.6m last year. Gross margin widened to 34.6% from 33.6% for the same period last year, with the 100 basis point increase driven by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales combined with higher wholesale and military margins.
Skechers USA
Casual footwear brand Skechers USA reached record second-quarter sales of US$1.26bn, an increase of 10.9%, or 13.7% on a constant currency basis, on the same period last year. CFO David Weinberg said the increase is a testament to the demand and strength for the company’s brand and products. The retailer saw growth in every region, with the biggest dollar increases coming from India, the Middle East and China, as well as in Mexico with the conversion of the business to a joint venture. International sales jumped 19.8%, or 25.2% on a constant currency basis – representing 55.7% of total sales – while comparable same-store sales increased 4.9%, including increases of 4.2% domestically and 6.7% internationally. Net earnings were also up on last year, soaring 66% to $75.2m from $45.3m. But gross margin narrowed to 48.5% from 49.4% as a result of promotional efforts to clear seasonal merchandise in select international markets, although this was partially offset by higher domestic margins from improved retail pricing and product mix in direct-to-consumer and domestic wholesale businesses.
Levi Strauss & Co
Costs associated with its initial public offering (IPO) earlier this year have weighed on second quarter earnings at US jeans giant Levi Strauss & Co. Nevertheless, the company delivered what CEO Chip Bergh called “broad-based growth” across all brands, regions and key product categories in the second quarter, despite a challenging retail and macroeconomic environment.
For the quarter ended 26 May, net revenues grew 5% on a reported basis to US$1.3bn from $1.2bn in the prior year quarter. On a constant-currency basis, net revenues were up by 9%. In Europe, net revenues grew 9% on a reported basis and 18% on a constant-currency basis, while in the Americas, net revenues were up by 3% on a reported basis and 4% in constant-currency. In Asia, meanwhile, net revenues increased 6% on a reported basis and 12% on a constant-currency basis. However, second quarter net income tumbled by $49m, or 63%, to $29m from $77m last year. Levi Strauss said the decline was primarily due to $29m of costs associated with the company’s initial public offering (IPO), including $25m of underwriting commissions paid on behalf of the selling stockholders. The San Francisco based company also incurred higher advertising and promotion expenses during the quarter, with selling, general and administrative (SG&A) expenses rising to $638m from $594m a year earlier.
Gross margin narrowed slightly to 53.3% from 53.9% in the same quarter of fiscal 2018, primarily due to 100 basis-points of unfavourable currency, which was partially offset by less discounted sales and the margin benefit from growth in the company’s global direct-to-consumer channel.
