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September 7, 2022updated 17 Nov 2022 11:26am

US Q2 in brief – TJX Companies, Shoe Carnival, Ralph Lauren

Just Style takes a look at the latest quarter (Q2) filings from US apparel and footwear brands and retailers.

By Beth Wright

Here are the latest Q2 filings from US footwear and apparel firms:

TJX Companies

TJX Companies has revealed a mixed third-quarter as sales declined but earnings improved. For the quarter ended 29 October, revenues amounted to US$12.2bn, a drop of 3% on the prior year. US comp store sales were also down, by 2%. Earnings in the period climbed to $1.06bn from $1.02bn a year earlier, while gross margin narrowed 0.4 percentage points to 29.1%.

CEO Ernie Herrman said: “I am very pleased with our third quarter performance. US comparable store sales exceeded our expectations, and overall pretax margin, merchandise margin, and earnings per share were strong. We remain focused on our long-term vision to become an increasingly profitable, $60-billion-plus revenue company.”

Shoe Carnival

Given the volatility experienced during 2020 and 2021, Shoe Carnival believes the most relevant comparison for the quarter is to the third quarter 2019, prior to the onset of the pandemic and related government stimulus and supply chain disruption. Net sales grew 24.4% to $341.7m, while net income amounted to $32.7m from $13.7m in 2019. Gross profit margin increased 740 basis points to 38.3%.

CEO Mark Worden said: “Despite the challenging inflationary environment our customers face, Q3 sales results were the second highest quarterly result in the company’s history and year-to-date EPS more than doubled any full year of earnings in our 44 years of operation except for government stimulus influenced 2021.”

Ralph Lauren

High-end fashion brand Ralph Lauren has reported a drop in second-quarter earnings as the company battled higher freight costs and global supply chain delays for the period. Net income dropped to US$151m from $193m a year earlier, while adjusted gross margin was at 64.6%, 270 basis points below the prior year. Net revenues were up 5% to $1.6bn on a reported basis, negatively impacted by foreign currency. CEO Patrice Louvet, said: “Our multiple engines of growth helped drive solid second quarter results with outperformance on both the top- and bottom-line as we continue to navigate a highly dynamic global operating environment with agility and a relentless focus on building our brand momentum.”

Deckers Brands

Deckers Brands, the owner of footwear brand UGG has recorded a 21.3% increase in revenue to US875.6m compared to the same period last year when it was $721.9m and 24.8% on a constant currency basis. Gross margin was 48.2% compared to 50.9% last year. Wholesale revenue increased 16.7% to $636.5m compared to $545.2m, meanwhile direct-to-consumer (DTC) revenue increased 35.3% to $239.1m compared to $176.7m. Domestic revenue increased 20.0% to $617.7m compared to $514.6m and international revenue increased 24.4% to $257.9m compared to $207.3m. The UGG brand’s revenue increased 6.3% to $476.5m; the HOKA brand’s revenue increased 58.3% to $333m; Teva brand’s revenue was up 4.3% to $30.1m, however Sanuk’s revenue was down 25.2% to $7.5m compared to $10.1m in the comparable period last year. Deckers’ other brands, primarily composed of Koolaburra had an increase in revenue of 17.9% to $28.5m compared to $24.2m.

Deckers Brands still expects its full fiscal year 2023 outlook for the 12-month period ending 31 March 2023 to have revenue in the range of $3.45bn to $3.5bn. Gross margin is now expected to be approximately 50.5% and operating margin is still expected to be in the range of 17.5% to 18.0%.

“Deckers’ strong performance in the first half of fiscal year 2023 is a testament to our team’s execution, despite a challenging macroeconomic backdrop,” said Deckers Brands president and CEO Dave Powers.

He continued: “As we head into the UGG brand’s peak selling season and continue to fuel expanding demand for HOKA performance footwear, we are confident in our ability to deliver our maintained full year guidance.”

VF Corporation

US retail giant VF Corp has swung to a loss in its second-quarter as sales and gross margin both declined. Revenues were down 4% to US$3.1bn with its four big brands reporting declines, including Vans, which saw sales fall 13% to $1bn. Sales increases were recorded in the EMEA and APAC regions, but these were partially offset by lower sales in the Americas. Gross margin was at 51.4%, down 230 basis points. Net losses amounted to $118.4m from earnings of $464m a year ago.

VF is maintaining its constant dollar revenue outlook but revising its earnings outlook to reflect increased negative impacts from foreign currency fluctuations as well as heightened inventory levels and increased promotional activity in the marketplace. Adjusted EPS is expected in the range of $2.40 to $2.50.

TJX Co

TJX Co., the owner of the TK Maxx brands, announced sales and operating results for Q2 ending 30 July in which it said net sales fell 2% to US$11.8bn. US comp store sales fell 5% versus a 21% increase against the same period last year. Net income rose to $809.3m up from $785.7m.

On a half-year basis, sales rose to $23.2bn from 22.2bn a year earlier. Net income rose to $1.4bn from $1.3bn a year earlier.

Ernie Herrman, CEO and president of The TJX Companies, Inc., said: “I am very pleased that our second quarter pretax profit margin exceeded our plan and earnings per share were at the high end of our guidance. We believe our strong profitability speaks to the strength and flexibility of our off-price business model, sharp execution of our teams, and expense discipline. As to the top-line, US comp sales for the second quarter came in lighter than we expected as we believe historically high inflation impacted consumer discretionary spending. While we saw more softness in our home categories, we were very pleased that comp sales in our overall apparel business at Marmaxx were slightly positive every month of the quarter. In addition, it was good to see the improved profitability of our international divisions. 

“Looking ahead, while we are not immune to macro factors, we are convinced that the flexibility of our off-price business model and the value proposition we offer to a wide range of consumers will continue to serve us well, as we have seen throughout our 46-year history. We see a marketplace flush with off-price buying opportunities for branded, high quality product. We are excited about our many initiatives to drive customer traffic and sales for the fall and holiday selling season, and will be emphasizing our value leadership in our marketing. We remain focused on our long-term vision to become an increasingly profitable, $60bn-plus revenue company.”

American Eagle Outfitters

Total net revenue of $1.2bn, flat to the second quarter of 2021. Supply chain business, Quiet Platforms, contributed approximately 2 percentage points to revenue growth. Brand revenue declined 2%. Selling, general and administrative (SGA) expense of $308m increased 5% primarily due to increased store wages, corporate compensation, professional services and advertising, partially offset by lower incentive compensation accruals.

Operating income of $14m included an approximately $30m impact from higher end-of-season selloffs, $25m from higher freight costs and a $9m loss from Quiet Platforms, and compared to operating income of $168m in the second quarter of 2021. Net loss of $42.5m compared with net income of 121.5m the same period last year.

“This is an unprecedented time in retail. As we cycle exceptional demand from last year, a tougher macro environment is impacting consumer spending behaviour. Second quarter performance reflected these challenges, constraining revenue and amplifying margin pressure as we fully cleared through excess spring and summer goods,” commented Jay Schottenstein, AEO’s executive chairman of the board and CEO.

“In a shifting macro environment, we are focused on controlling the controllables. We entered the second half with inventory levels in a much better position and an assortment that is current for the Fall season. Given ongoing external uncertainties, we have taken additional actions to improve financial performance. We have made more expansive expense reductions and are pulling back further on capital expenditures. As an additional cautionary move, we have paused our quarterly cash dividend to strengthen our cash position. Our brands and products remain highly relevant and sought after by our customers. I am confident we will successfully navigate current challenges, and set AEO up for a stronger future.”

Vince Holding Corp

The business reported a US$15m loss compared with the same period a year earlier. Loss from operations was $5.2m compared to income from operations of $2.6m in the same period last year. Net sales increased 13.4% to $89.2m as compared to $78.7m in the same period last year reflecting a 20.5% increase in Vince brand sales and a 27.9% decrease in Rebecca Taylor and Parker sales, combined.

Vince Holding also confirmed it is to close its Rebecca Taylor business.

CEO Jack Schwefel said: “During the second quarter we saw momentum in Vince across both our women’s and men’s businesses as customers have returned to more normalised activities and events and are gravitating to the versatility of our sophisticated high-quality assortment. While we are operating in a challenging macro environment with increased pressure on profitability, we remain focused on executing against our strategic initiatives for Vince, including the upcoming relaunch of the brand’s e-commerce platform.”

Burlington Stores

Total sales at Burlington Stores in the second quarter to 30 July decreased 10% compared to the second quarter of Fiscal 2021 to US$1.98m, while comparable store sales decreased 17%. Net income was $11.97m, compared to $102.55m a year prior, while gross margin rate as a percentage of net sales was 38.9% versus 42.2% for the second quarter of Fiscal 2021, a decrease of 320 basis points.

CEO Michael O’Sullivan said the company believes the external factors – economic pressure on lower-to-moderate income shoppers, and very high levels of promotional activity – will continue well into the second half of the year. Accordingly, he added Burlington Stores is taking down its full year sales and earnings outlook. Comparable store sales are now expected to decrease in the range of down 15-13% for Fiscal 2022, on top of the 15% increase during Fiscal 2021.

Nordstrom

For the second quarter ended 30 July, Nordstrom said net sales increased 12% versus the same period in fiscal 2021, exceeding pre-pandemic sales levels, and gross merchandise value (GMV) increased 12.2%. Anniversary Sale timing, with one week shifting from the third quarter to the second quarter, had a positive impact of approximately 200 basis points on net sales compared with 2021. Men’s apparel had the strongest growth versus 2021, and shoes, women’s apparel and beauty also had double-digit growth, as customers updated their wardrobes and returned to occasions. Second-quarter net earnings of $126m increased from $80m last year.

J.Jill

For the second quarter ended 30 July, J.Jill said total net sales were up 0.7% to US$160.3m compared to $159.2m for the 13-week comparable period last year. Total company comparable sales, which includes comparable store and direct-to-consumer (DTC) sales, increased by 0.8%, while DTC net sales were down 0.7% and represented 45.7% of sales. Net Income was $17.8m compared to a net loss of $24.6m last time which included $39m related to the fair value adjustment of the warrants and the Priming Loan embedded derivative. Gross margin widened to 70.1% from 68.7% with the increase driven by strong full-price selling and reduced promotions which more than offset approximately 140bps of freight expense due to supply chain disruption which began in the third quarter of fiscal 2021.

Tilly’s

Tilly’s reported total net sales of US$168.3m for the three months ended 30 July, a decrease of $33.6m or 16.7%, compared to $202m last year. Total comparable net sales, including both physical stores and e-commerce, decreased by 16.4%. Net income fell to $3.8m from $20.4m in the prior year period, while gross margin narrowed to 30.9% from 37% last time.

“We believe our second quarter operating results were negatively affected by the impact on our customers of the highest inflationary environment in 40 years, which we expect will also adversely impact our third quarter results,” said CEO Ed Thomas. “At its peak, the back-to-school season produced an improved comparative trend in late July and early August. However, this trend has since declined and we believe the remainder of the third quarter will be challenging as we anniversary last year’s early holiday shopping patterns, though this may give us an opportunity to have a better performance trend in the fourth quarter if the holiday season follows more traditional patterns.”

PVH Corp

PVH Corp said revenue decreased 8% to US$2.13bn in the second quarter compared to the prior year period, inclusive of a 6% negative impact related to a 4% reduction resulting from the Heritage Brands transaction and the exit from the Heritage Brands Retail business, and a 2% reduction resulting from the war in Ukraine. Revenue was flat on a constant currency basis. Direct-to-consumer revenue decreased 5% compared to the prior year period, while total digital revenue was down 7% on last year. By brand, Tommy Hilfiger revenue decreased 5% compared to the prior year period (increased 4% on a constant currency basis), while that at Calvin Klein decreased 1% (increased 6% on a constant currency basis). Net income fell to $115.3m from $181.9m. Gross Margin was 57.2% as compared to 57.7% in the prior year period and included a negative impact of foreign currency translation of approximately 40 basis points.

CEO Stefan Larsson said: “Our Calvin Klein and Tommy Hilfiger businesses continued to exhibit underlying strength in the second quarter, despite the increasingly challenging macroeconomic environment as the quarter progressed. We continued to execute very well in Europe and Asia, where countries not currently impacted by Covid are performing significantly above pre-pandemic levels, while in North America we continue to be impacted by ongoing supply chain pressures.”

For the full year, PVH now expects revenue to decrease by 4-3% as compared to 2021, or by 3-4% on a constant currency basis.

Abercrombie & Fitch Co

Abercrombie & Fitch reported net sales of US$805m for the second quarter ended 30 July, down 7% as compared to last year on a reported basis and down 4% on a constant currency basis. The company moved to a net loss of $16.8m from a net profit of $108.5m in the prior year period, while gross profit rate of 57.9% was down approximately 730 basis points as compared to last year. The year-over-year decrease was primarily driven by higher product costs, which contributed 750 basis points, and the adverse impact of exchange rates, which accounted for 30 basis points. These impacts where partially offset by higher average unit retail (AUR) at Abercrombie.

For the full year, net sales are expected to be down mid-single-digits from $3.7bn in 2021 compared to previous outlook of flat to up 2%, driven by an assumed ongoing inflationary impact on consumer demand. The outlook also includes an estimated adverse impact of approximately 200 basis points from foreign currency.

Shoe Carnival 

Shoe Carnival said net sales for the second quarter ended 30 July decreased US$20m to $312.3m compared to the same period in 2021, with a comparable store decline of 13.8% partially offset by sales from Shoe Station stores. The comparable store decline was primarily driven by lower athletic sales. Net income amounted to $28.9m, compared to $44.2m a year prior. Gross profit margin decreased 470 basis points compared to last year, primarily due to higher costs, including higher freight and fuel costs, and the de-leveraging effect of lower sales on buying, distribution and occupancy costs.

Net sales for the full year are expected to be between $1.29-$1.34bn. Gross profit margin is expected to be in a range of 36.6-36.7%.

Urban Outfitters

Urban Outfitters, Inc said total company net sales for the three months ended 31 July increased 2.2% over the same period last year to a record US$1.18bn. Total retail segment net sales increased 1%, with comparable retail segment net sales also increasing 1%. The increase in retail segment comparable net sales was driven by low single-digit positive digital channel sales, while retail store sales were flat. By brand, comparable retail segment net sales increased 8% at the Free People Group and 7% at the Anthropologie Group and decreased 9% at Urban Outfitters. Net income of $59m compared to $127m in the prior year period, while gross profit rate decreased by 595 basis points on last year. The decline was primarily due to higher markdowns at all three brands as compared to record low markdown rates in the comparable prior-year quarter.

Caleres 

Caleres reported a 9.3% increase in net sales to US$738.3m for the second quarter ended 30 July from the prior year period. The company saw a 3.8% sales decline in the Famous Footwear segment, while those in the Brand Portfolio segment increased by 35.6%. Direct-to-consumer sales represented about 72% of total net sales. Net earnings of $51.2m compared to net earnings of $37.4m in the second quarter of fiscal 2021.

Caleres is reiterating its fiscal year 2022 financial outlook. Specifically, the company is raising and tightening its consolidated sales levels from up between 2-5% to up between 4-6% when compared to fiscal year 2021.

Guess

Guess, Inc CEO Carlos Alberini said the company is pleased with its second-quarter results that exceeded its revenue expectations in a challenging retail environment.

Total net revenue for the second quarter of fiscal 2023 increased 2% to US$642.7m from $628.6m in the same prior-year quarter. In constant currency, net revenue increased by 12%. Guess recorded GAAP net earnings of $24m, a 60.8% decrease from $61.1m for the same prior-year quarter. Adjusted net earnings were $22.9m, a 64.3% fall from $64.1m last time.

For the full fiscal year 2023, Guess expects revenues to be up around 1.5% in US dollars (9.5% in constant currency) versus fiscal 2022.

Macy’s

“During the second quarter, we delivered solid results, despite the challenging environment,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc.

Net sales for the period amounted to US$5.6bn, compared to $5.65bn in the prior year quarter. Comparable sales were down 1.5% on an owned basis and down 1.6% on an owned-plus-licensed basis. Digital sales decreased 5% year-over-year, while digital penetration was 30% of net sales, a 2-percentage point decline from the second quarter of 2021. Gross margin for the quarter was 38.9%, down from 40.6% in the second quarter of 2021. Net income, meanwhile, was $275m, compared to $345m last time.

For the full year, Macy’s expects net sales to range between $24.34bn and $24.58bn.

Victoria’s Secret & Co

Victoria’s Secret & Co reported net sales of US$1.52bn for the second quarter of 2022, a decrease of 6% compared to net sales of $1.61bn in the prior year second quarter. The company said the result was below its previously communicated guidance as customer traffic trends decelerated across the retail environment throughout the quarter. Total comparable sales for the second quarter of 2022 decreased 8% compared to the second quarter of 2021. Net income of $70m was down from $151m in the prior year period. Victoria’s Secret & Co said second quarter 2022 reported results include a pre-tax charge of $29m, principally severance, related to the previously announced restructuring actions to reorganise, streamline and improve its leadership structure. Excluding this special item, adjusted net income was $92m.

The company is forecasting full-year 2022 net sales to decrease in the mid to high single-digit range compared to last year’s full-year net sales of $6.79bn.

Foot Locker

Foot Locker has announced its second-quarter results which indicated a fall in net income to US$94m from $430m year-on-year. For the 13 weeks ended 30 July, comparable-store sales decreased by 10.3% versus record sales levels from last year. Total sales decreased by 9.2%, to $2.1bn, compared with sales of $2.3bn in the second quarter of 2021. Excluding the effect of foreign exchange rate fluctuations, total sales for the second quarter decreased by 6.1%.

“Despite an increasingly challenging macroeconomic backdrop, we delivered a solid quarter against the favourable fiscal stimulus and promotional environment from last year,” said Richard Johnson, chairman and chief executive officer. “Driven by strong execution from our team and ongoing progress against our key objectives, we grew our sales 16.4% above levels from 2019.”

“Our strategy of diversifying our brand portfolio and offering more choice continues to resonate with consumers and is enabling us to expand our customer base. We are confident that our operational excellence, our improving ability to fuel our customer’s desire for self-expression, and the secular trends driving our categories, put us in a strong position to navigate the expected ongoing macroeconomic headwinds in the back half of 2022.”

Ross Stores

Ross Stores CEO, Barbara Rentler, said: “We are disappointed with our sales results, which were impacted by the mounting inflationary pressures our customers faced as well as an increasingly promotional retail environment. Earnings came in above our guidance range primarily due to lower incentive costs resulting from the below plan topline performance.”

For the 13 weeks ended 31 July, sales were US$4.6bn versus $4.8bn in the prior year period. Comparable store sales were down 7% on top of a15% gain in the second quarter of 2021, which was the strongest period of last year. Net income of $385m, compared to $494m in the prior year period.

“We are facing a very difficult and uncertain macro-economic environment that we expect will continue to strain our customers’ discretionary spending. Though 2022 will likely remain a challenging year for our company, we believe our value-focused business model and our strong financial position will enable us to manage through these economic pressures and rebound over time,” Rentler added.

Target Corporation

“I’m really pleased with the underlying performance of our business, which continues to grow traffic and sales while delivering broad-based unit-share gains in a very challenging environment,” says Brian Cornell, chairman and CEO of Target Corporation.

For the second quarter ended 30 July, total revenue of US$26bn grew 3.5% compared with last year, reflecting total sales growth of 3.3% and a 14.8% increase in other revenue. Comparable sales grew 2.6%, reflecting comparable store sales growth of 1.3% and comparable digital sales growth of 9%.  Net earnings fell to $183m from $1.8bn a year earlier, while gross margin rate was 21.5%, compared with 30.4% in 2021. This year’s gross margin rate reflected higher markdown rates, driven primarily by inventory impairments and actions taken to address lower-than-expected sales in discretionary categories, as well as higher merchandise, inventory shrink, and freight costs.  Additionally, gross margin rate was pressured by increased compensation and headcount in distribution centres, the costs of managing excess inventory, and higher per-unit last-mile shipping costs. 

Target said while it is planning cautiously for the remainder of the year, current trends support the company’s prior guidance for full-year revenue growth in the low- to mid-single digit range, and an operating margin rate in a range around 6% in the back half of the year.

Walmart

Walmart delivered what it called strong top-line growth globally, partially driven by inflation. Total revenue for the three months ended 31 July was US$152.9bn, up 8.4%, or 9.1% in constant currency. Walmart US net sales were $105.1m, an increase of $6.9m or 7.1% on last year, while comp sales grew 6.5% and 11.7% on a two-year stack, while e-commerce growth was 12% and 18% on a two-year stack. Walmart International net sales were $24.4bn, an increase of $1.3bn, or 5.7%, negatively affected by $1bn from currency fluctuations. Double-digit comps in three largest markets of Mexico, Canada, and China. Consolidated net income attributable to Walmart, meanwhile, was $5.1bn, compared to $4.3bn a year earlier.

Walmart updates its guidance for the fiscal year to reflect second-quarter performance and maintains its outlook for the back-half of the year. Consolidated net sales growth is expected to be about 4.5%. Excluding divestitures, consolidated net sales growth is expected to be about 5.5%. Based on current exchange rates, the company expects a headwind of about $2.1bn in the second half of the year.

Hanesbrands

Net sales were down 14% to US$1.5bn, while net income amounted to $92.1m versus $128.7m for the second quarter ending 3 July 2021.

“Our second quarter results fell below our expectations as a result of unexpected events and the difficult global operating environment,” said Steve Bratspies, CEO, HanesBrands. “Despite the challenges, we continue to make progress on our Full Potential plan. We are in the early stages of our strategic supply chain initiatives. Our innovation pipeline is more robust than it has been in years, and we continue to invest in building our global brands. I want to thank our associates around the globe for their ongoing commitment to serving our consumers and customers.”

Wolverine World Wide

“Despite a slowdown in June shipments, we are pleased with delivering record organic revenue in the quarter,” said CEO Brendan Hoffman.

The company reported revenue of US$713.6m for the second quarter ended 2 July, representing growth of 12.9% versus the prior year. Excluding Sweaty Betty, revenue was $666.2m, a record for the quarter. International business was especially strong, up 45.3% to $295.2m including Sweaty Betty and up 26.4% to $256.8m excluding Sweaty Betty. Direct-to-Consumer revenue including Sweaty Betty was up 21.1% to $166.2m, and excluding Sweaty Betty was down 8.2% to $125.9m. Net earnings, meanwhile, grew to $124.5m from $44.4m, while gross margin of 43% was above expectations mostly due to lower-than-expected closeout sales.

Revenue for the full year is expected to be in the range of $2.74bn- $2.79bn, representing growth of approximately 14-16%.

Crocs

Casual footwear specialist Crocs reported consolidated revenues of US$964.6m for the three months to 30 June, marking a 50.5% rise, or 55.6% on a constant currency basis, as compared to 2021. Direct-to-consumer (DTC), which includes retail and e-commerce, grew 22.8%, and wholesale grew 80.6%. The company’s namesake Crocs brand posted record quarterly revenues of $732.2m, representing a 14.3% increase, or 19.4% on a constant currency basis, compared to last year. HeyDude brand revenues were $232.4m, up about 96% compared to 2021. Net income, meanwhile, declined to $160.3m from $318.9m a year prior, while gross margin was 51.6% compared to 61.7%. Adjusted gross margin was 55.2% compared to 61.8% in the same period last year.

With respect to 2022, Crocs expects consolidated revenues to be approximately $3.39- $3.50bn, representing growth between 47-52% compared to 2021.

Kontoor Brands

“In a highly dynamic macroeconomic environment, supply chain challenges and inflationary pressures accelerated during the quarter. While these factors tempered our top line a bit sooner than expected, we were still able to deliver strong 27% revenue growth and 57% adjusted earnings growth, on a constant currency basis, in line with our EPS guidance,” said Kontoor Brands CEO, Scott Baxter.

Revenue amounted to US$614m, a 25% increase on a reported basis, and 27% in constant currency, over the same period in the prior year. Revenue increases were primarily driven by strength in the US, in both the digital and wholesale channels. Despite international headwinds, reported global own.com revenue increased 8%, or 10% in constant currency, and digital wholesale was up 43%, or 46% in constant currency, compared to second quarter 2021. US revenue was $510m, increasing 40% over last year, while international revenue was $103m, an 18% decrease over the same period in the prior year on a reported basis and down 11% in constant currency. Wrangler brand global revenue was $418m, a 34% rise over the same period in the prior year on a reported basis and was up 36% in constant currency. Lee brand global revenue was $193m, a 10% rise on last year on a reported basis and up 12% in constant currency. Net income, meanwhile, grew to $62m from $23.6m last year, while gross margin decreased 260 basis points to 43.5%.

For the full year, revenue is now expected to increase about 6% compared to 2021, compared to prior guidance of up approximately 10%.

Rocky Brands

Rocky Brands said second-quarter net sales for the three months ended 30 June increased 23.1% to US$162m from $131.6m in the second quarter of 2021. Retail sales were up 16.4% on last year to $26m from $22.3m. The company reported second-quarter 2022 net income of $0.9m compared to $3.9m a year earlier, while adjusted net income was $2.5m compared to $7.4m. Gross margin narrowed to 33.2% from 37.4% last year, while adjusted gross margin, which excluded a $2.3 million inventory purchase accounting adjustment, was 39.1%. The decrease in gross margin was mainly attributable to increases in product costs, inbound freight costs, and other shipping and logistics costs compared with the year-ago period.

“We continued to experience solid demand for our portfolio of leading brands during the second quarter,” said CEO Jason Brooks. “Our focus on developing innovative, functional footwear at accessible price points is driving share gains across multiple markets led by work, western and outdoor. While we didn’t experience any noticeable sales slowdown due to growing inflation and general economic uncertainty during the first half of 2022, our results were negatively impacted by higher-than-expected costs throughout our supply chain. We took actions early in the year to address certain cost pressures, and recently enacted price increases to help offset additional margin headwinds that emerged over the past couple of months. We are confident these steps will yield improvements in the coming quarters, which along with our previously announced expense synergy savings, positions the company to deliver sustained, profitable growth over the long-term.”

Carters

“After a strong start to the year, our sales slowed in the second quarter,” Michael Casey, Chairman and CEO of Carter’s said.

For the three months ended 2 July, net sales decreased US$45.7m, or 6.1%, to $700.7m, driven by declines in the company’s US retail and US wholesale sales, partially offset by growth in its international sales. US retail and US wholesale net sales declined by 11% and 3%, respectively. International net sales grew 7%, while US retail comparable net sales declined 8%. Changes in foreign currency exchange rates used for translation in the second quarter of fiscal 2022, as compared to the second quarter of fiscal 2021, had an unfavourable effect on consolidated net sales of about $2.3m, or 0.3%. Net income was $37m, compared to $71.6m in the second quarter of fiscal 2021. Adjusted net income was $52.1m, compared to $73.7m last time.

Casey added Carter’s has revised its outlook for the balance of the year to reflect the trends in the business, and market risks related to inflation and related impact on consumer demand. For fiscal year 2022, the company projects net sales of approximately $3.25-$3.3bn, and adjusted operating income of about $415-$440m, compared to $500.8m in fiscal 2021.

Columbia Sportswear Company

Columbia Sportswear Company said net sales increased 2%, or 4% in constant currency, to a record US$578.1m for the second quarter ended 30 June from $566.4m in the same period last year. The increase in net sales primarily reflects growth across the US, Canada, Europe-direct, Japan, and Korea, partially offset by substantially lower Russia-based distributor and China net sales. Net income, meanwhile, tumbled 82% to $7.2m from $40.7m last time. Gross margin contracted 240 basis points to 49.2% from 51.6% for the comparable period in 2021. Gross margin contraction was primarily driven by higher inbound freight costs and lower wholesale margins, partially offset by favourable channel and regional sales mix.

The company’s 2022 financial outlook expects net sales to increase 10-12% to $3.44-$3.5bn. Prior guidance expected a 16-18% increase to $3.63-$3.69bn. Net income is now forecast at between $315m and $340m, compared to prior guidance of $363-$382m.

Skechers

Skechers has reported record quarterly sales of US$1.87bn for the three months ended 30 June, marking a year-over-year increase of 12.4%. The increase was a result of a 15.4% rise in domestic sales and a 10% hike in international sales, primarily driven by strength in wholesale sales. All segments experienced growth, with wholesale increasing 18.3% and Direct-to-Consumer increasing 4.3%. On a constant currency basis, sales increased 16.4%. Net earnings were $90.4m, compared to $137.4m last time. Gross margin was 48.1%, a decrease of 330 basis points, primarily driven by higher per unit freight costs partially offset by average selling price increases.

Skechers believes that for the fiscal year 2022, it will achieve sales between $7.2-$7.4bn.

Levi Strauss & Co

Reporting its results for the three months to 29 May, Levi Strauss & Co said net revenues of US$1.5bn increased 15% on a reported basis, and 20% on a constant-currency basis, excluding $47m in unfavourable currency impacts. Direct-to-Consumer (DTC) net revenues were up by 16%, driven by company-operated stores. Net income, meanwhile, fell to $49.7m from $64.7m in the same quarter of the prior year, primarily due to a decline in operating income to $76m from $107m a year earlier. Levi Strauss attributed the fall in operating income to $60m of charges related to the Russia-Ukraine crisis. Adjusted net income was $117m compared to $93m in the same quarter of the prior year. Gross margin was 58.1% of net revenues, as compared to 58.8% last time.

The company reaffirmed expectations for fiscal 2022 with net revenue growth of 11-13% compared to FY 2021, between $6.4-$6.5bn.

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