Global exchange hurdles: Why The North Face, Timberland 1Q sales don’t look so hot

Unfavorable exchange rates result in minimal gains for some of the outdoor industry's largest, global brands.
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That strengthening dollar you’ve been hearing about — giving Americans more buying power of foreign goods, from cheaper oil to electronics — it has a flip side to it.

The strong dollar effectively weakens foreign currencies, meaning when U.S. businesses sell more overseas, they see less bang for their yen, yuan and eruo.

We’ll leave it to Janet Yellen for what’s ultimately better for the U.S. economy, but the reality is global outdoor brands like VF Corp’s The North Face and Timberland are beginning to feel the pinch.

VF Corp’s (NYSE:VFC) Outdoor Group, which includes The North Face, Timberland, Vans, Jansport, Eagle Creek SmartWool and others, reported sales up just 2 percent to $1.6 billion during the first quarter 2015. On a currency neutral basis — if there were no exchange rates — sales would have been up 10 percent, officials said.

By brand, The North Face sales inched up 1 percent (7 percent on a currency-neutral basis) and Timberland sales remained flat (or up 10 percent currency neutral), officials said. Strength came from the U.S. — at home, a stronger dollar can help — plus double-digit growth in direct-to-consumer sales.

Overall, VF Corp., which also sells jeans and contemporary wear, saw its first-quarter 2015 revenue rise 2 percent to $2.8 billion.

--David Clucas

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