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Financial Roundup: Unifi Spins Solid Quarter, VF Sees Ups and Downs, Asos Drives On

Value-added yarns like Repreve boost Unifi, VF raises outlook even as jeanswear stalls and Asos delivers record growth.

Unifi Inc.

In a Nutshell: Unifi Inc., the Greensboro, North Carolina-based manufacturer of synthetic and recycled yarns, saw revenue driven by strength in Brazil and Asia and the ongoing ramp-up of its recycling operations, which contributed to sales of Repreve products, partially offset by challenging domestic market conditions for its traditional fiber portfolio.

Unifi said it expects volume growth to continue in the remainder of the fiscal year, assuming a stable raw material pricing environment, with revenue growth in the low-single digit percentage range.

Sales: Net sales increased 2.7% to $164.2 million in the first quarter ended Sept. 4, compared to $160 million for the year-ago quarter of fiscal 2017. Revenues from premium value-added products grew 5.5% compared to the first quarter last year and represented more than 40 percent of consolidated net sales.

Earnings: Net income dipped 4.3% to $9 million in the quarter from $9.4 million a year earlier. Net income benefited from higher earnings from Parkdale America and a lower effective tax rate, but was unfavorably impacted by higher administrative expenses and higher interest rates.

Operating income fell to $10.2 million from $12.6 million for the prior-year quarter, while gross profit as a percentage of sales was 14.2% for the first quarter of fiscal 2018, compared to 14.7% for the first quarter of fiscal 2017, reflecting higher costs and increased sales of lower-margin products in its international businesses.

CEO’s Take: Kevin Hall, CEO of Unifi, said, “We are pleased with the first quarter results, as we grew domestic and international sales despite continued market pressures. Our PVA brands, like Repreve, continue to take hold within the marketplace and exhibit our strong and growing partnerships with global brands and retailers. We remain focused on recycling and innovation to fuel our growth, and are proud to maintain the portfolio diversity we believe is necessary to succeed over the long term.”

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“We continue to expect growth in both revenue and earnings during fiscal 2018…as we remain focused on combining recycling, innovation and technology with our superior supply chain capabilities.”

VF Corp.

In a Nutshell: The sportswear giant, which saw revenue rise but income fall in the third quarter, raised its outlook for the rest of the year. Revenue is now expected to increase about 6 percent to $12.1 billion, compared to the previous expectation of $11.85 billion, a 3.5% increase. Both estimates include about a $200 million contribution from the previously announced Williamson-Dickie acquisition.

Revenue for Outdoor & Action Sports is now expected to increase about 7 percent versus the previous expectation of a 5 percent gain, while revenue for Jeanswear is now expected to decline slightly versus the previous expectation of flat revenue compared to 2016. Direct-to-consumer revenue is now expected to increase about 13 percent versus the previous expectation of a 10 percent to 11 percent gain. Digital revenue is now expected to increase about 30 percent versus the previous estimate of a more than 25 percent rise.

[Read more about VF Corp.: VF to Acquire Williamson-Dickie in $820 million Cash Deal]

Sales: Net sales for the third quarter ended Sept. 30 increased 5 percent to $3.48 billion from $3.3 billion a year earlier, driven by broad-based strength across VF’s international and direct-to-consumer platforms, its Outdoor & Action Sports coalition, and most notably its Van brand and Workwear businesses.

International revenue increased 13 percent, including 18 percent growth in Europe and 9 percent growth in China. Direct-to-consumer revenue increased 18 percent, with digital revenue up 38 percent.

Earnings: Net income in the first quarter fell 23 percent to $386.14 million compared to $498.49 million in the year-ago period. Operating income was down 20 percent to $484 million from $608.25 million compared to the same period of 2016.

Gross margin improved 100 basis points to 50.1%, as benefits from pricing and a mix shift toward higher margin businesses were partially offset by changes in foreign currency and an increase in product costs. Changes in foreign currency negatively affected reported gross margin by 80 basis points during the quarter.

CEO’s Take: Steve Rendle, president and CEO, said, “VF’s third quarter results were strong, fueled by accelerated momentum across the company’s international and direct-to-consumer platforms and our Outdoor and Action Sports and Workwear businesses. Based on the strength of our third quarter performance and the stronger growth trajectory we see for the remainder of 2017, we are again increasing our full year outlook and making additional growth-focused investments aimed at accelerating growth and value creation into 2018 and beyond.”


In a Nutshell: Asos reported record sales and profit for the year ended Aug. 31, in line to marginally ahead of expectations. Retail sales growth for the direct marketer was once again driven by strong product, proposition improvements and further price investments across major markets. The company said its new agile technology platform is allowing it to accelerate the pace of innovation with great benefits for customers, including new payment methods and additional language sites to come. The investments will see lay the foundations for a 60 percent increase in unit capacity and 4 billion pounds ($5.28 billion) in net sales.

Sales: Group revenues rose 33 percent in the year to 1.9 billion pounds ($2.51 billion) driven by strong product, proposition improvements and further price investments across major markets.

Earnings: Profit before tax and exceptional items grew 26 percent to 80 million pounds ($105.63 million), as price investments in the U.S. and Europe were offset by a higher full price mix. Delivery receipts grew 18 percent, aided by higher next-day delivery usage and the expansion of Premier globally.

CEO’s Take: CEO Nick Beighton, said, “It’s been a great year for ASOS, with continued growth in sales and profits. Our international performance was excellent, as we reinvested FX tailwinds and benefitted from our continually improving customer proposition. In a competitive U.K. market, we achieved strong full price performance whilst further increasing market share. At the same time, we ramped up our investment in building the increasingly strong and differentiated ASOS proposition.”

“The new financial year shows continuing momentum in the business. The potential for our company remains huge. We are confident we are positioning ASOS to be the world’s number one destination for fashion loving Twenty somethings.”