VF Corporation is also stained red. The company closed the first quarter of its fiscal year (between April and June) with losses of $ 285.6 million, compared to the $ 49 million it earned in the same quarter of 2019. Gross margin fell by 340 basis points , up to 52.9%, due to promotions to release excess inventory.
The group's turnover, meanwhile, shrank 48% despite the strong boost from online. The company, owner of Vans and The North Face, among other brands, billed 1,076 million of dollars, compared to 2,050 million dollars in the same period of the previous year. The data corresponds to the continued operations, so they exclude the workwear division (which includes Red Kap, Kodiak and Terra, among other brands, as well as part of Dickies), which is for sale.
The group's four main brands closed the quarter with double-digit falls. Vans was the worst performer, with a 52% slump despite the fact that in Asia Pacific it closed almost in line with 2019. The North Face, meanwhile, posted a 45% decline and Timberland fell 43%. Dickies was the one that best withstood the blow, with a decrease of 16%. Ecommerce was the group's lifeline, with an increase in sales of 78% in the period.
VF closed the quarter flat in China, the first country where stores reopened
By markets, only China managed to avoid the fall and closed the quarter flat (with a growth of 3% discounting the currency effect). In the United States, the collapse reached 54% and in the rest of America it was almost a lost quarter, with a failure of 71%. In Europe, the Middle East and Africa, the decline was 48%.
At the end of the period, VF had $ 2.8 billion in cash and equivalents and 2,230 million dollars without having their line of credit. The company increased its inventory by 2% during the period.
"VF is built for this moment, which gives us confidence and optimism," says Steve Rendle, president and CEO of VF, in the presentation of results. "Our financial and operational rigor, the affinity of consumers with our brands and the progress we have made in the digital transformation position us to manage the complexities of the current moment but also to drive growth in the long term," added the executive.
In what remains of the year, the company will focus its efforts on maintaining its liquidity and accelerating the digital business worldwide, especially in China. In parallel, the company stresses that the uncertainty continues and anticipates "more disruptions in operations" by Covid-19.