VF's sportswear Kipling brand sales up 22% in North America
22 Jul '05
7 min read
Sportswear
Sales of their Sportswear businesses, which include the Nautica and John Varvatos brands, as well as Kipling brand sales in North America, increased 22 percent in the quarter, to $127 million from $105 million. Each Nautica business unit - Men's Sportswear, Jeans, Furnishings and Retail - experienced solid gains in the quarter.
The John Varvatos men's luxury sportswear business also continued its rapid sales growth in the quarter. Operating income increased sharply to $19 million, or 15.1 percent of sales, compared to $1 million in last year's second quarter. Both sales and operating income in the 2004 quarter included the negative impact of an acquisition-related adjustment of $7 million.
Overall gross margins for VF increased by two full percentage points in the quarter, to 41.4 percent from 39.4 percent, with the improvement coming primarily from growth in their higher margin businesses. Operating margins declined to 11.1 percent from 11.8 percent in the prior year period, primarily due to the lower margins in our Intimates business in the current quarter. The tax rate for the 2005 period declined to 29.6 percent from 32.1 percent due to the net impact of the income tax settlements and repatriation of foreign earnings.
Company balance sheet remains in excellent shape, and they ended the quarter with $250 million in cash. Inventories were up 8 percent over June 2004 levels, with $23 million of the total increase of $82 million due to the 2005 acquisitions. Debt as a percent of total capital was 29.9 percent at the end of the quarter, or 24.9 percent net of cash. During the quarter we repaid $100 million of long-term debt and will repay another $300 million that becomes due on October 1, 2005. During the quarter we repurchased one million shares of common stock, bringing the total shares repurchased year-to-date to two million. They expect to repurchase an additional two million shares over the balance of the year.
marketing@alchempro.com
