VF Corp raises annual profit forecast on Vans, North Face demand

(Reuters) - VF Corp VFC.N raised its full-year profit forecast on Wednesday after reporting better-than-expected quarterly revenue and earnings, powered by demand for the apparel maker's Vans and North Face brands.

Shares of the company, which reported its first results since spinning off of its less-profitable jeans business in May, rose as much as 3.7% in morning trade.

VF has been introducing new collections under its high-margin Vans and North Face brands as well as investing in its digital capabilities and new store openings.

Vans, in particular, has been creating buzz with its new Harry Potter collection, sneaker lines inspired by Mexican artist Frida Kahlo and late rock singer David Bowie.

The efforts helped Vans revenue jump 20% in the first quarter. Revenue at North Face also rose 9%.

Bernstein analyst Jamie Merriman said that first-quarter results will be reassuring for VFC bulls, given the growth in Vans and the uptick in North Face.

The company now projects 2020 fiscal revenue from North Face to grow by 8% to 9%, and that from Vans by 11% to 13%.

“We are confident in Vans’ ability to sustain its trajectory above our long-term target,” said Chief Executive officer Steve Rendle in a conference call with analysts.

Rendle said VF would invest $20 million more this fiscal year in launching North Face’s new waterproof outerwear called FutureLight in fall.

VF forecast full-year adjusted profit from continuing operations to be in the range of $3.32 to $3.37 per share, compared with its previous forecast of $3.30 to $3.35.

Net revenue rose 6.3% to $2.27 billion in the quarter, beating analysts’ estimate of $2.24 billion, according to IBES data from Refinitiv.

Net income fell to $49.2 million, or 12 cents per share, in the quarter ended June 29, from $160.4 million, or 40 cents per share, a year earlier, primarily due to its jeans business spinoff.

Excluding items, the company earned 30 cents per share, beating analysts’ estimate by a cent.

Reporting by Soundarya J in Bengaluru; Editing by Maju Samuel and Shinjini Ganguli