Greensboro, NC—Reporting “little evidence” that the global economic situation is hurting sales at its North Face, Nautica and Wrangler brands etc., VF raised its full year forecast as its third quarter profit jumped.
For the quarter ended Sept. 23, VF said Monday that its income rose 24% to $300.7 million, or $2.69 a share, from $242.8 million, or $2.22 a share, a year ago. Excluding one-time items, earnings amounted to $2.87 a share.
Thanks to increases across all its divisions (excluding Timberland), total revenue was up 23% to $2.75 billion from $2.23 billion last year. Timberland, which VF bought for $2.3 billion in September, added $163.6 million in sales.
The results beat analysts’ average expectations of $2.57 a share profit on sales of $2.61 billion.
Outdoor Brands Post 37% Sales Gain
“These results — in this environment — clearly demonstrate that VF has the right brands and strategies for strong and sustainable long-term growth,” said Eric Wiseman, chairman/ceo. “Our businesses continue to post healthy and very profitable organic growth, and the acquisition of Timberland further strengthens our portfolio with the addition of two outstanding outdoor brands.”
By division, the company’s outdoor and action sports group, where the company aims to hit 60% of its sales by 2015, posted a 37% sales gain, reflecting a 22% organic growth and the addition of Timberland and Smartwool. Also the two largest brands in the outdoor group, North Face and Vans both grew more than 20%. Sales grew in the Americas 13% and internationally businesses 28% on constant currency exchange rate.
Its Jeanswear division, including Wrangler and Lee, saw sales increase 8%. Its sportswear unit, which includes Nautica and Kipling, had an 18% increase, and its contemporary brands division, which includes 7 For All Mankind and John Varvatos, had an 11% increase. “New stores, comp store growth and higher e-commerce revenue drove 30%-plus growth in contemporary brands’ direct-to-consumer revenues,” the company said.
Gross margin to 45.3% from its previous high of 46.5% a year ago as a result of increased cotton and production costs. But the company said it expects better gross margins by mid-2012.
International sales were up 37% excluding currency fluctuations with sales in Greater China up 50%.
Wiseman remains optimistic about the future, too: “We are unlikely to be immune to a significant economic downturn. But our experience has shown that as consumers become more cautious they gravitate toward brands they know and trust.”
Looking ahead, VF raised its full year guidance to organic growth of 22% to 23% on the heels of an organic growth of 13.5%. VF earlier expected an organic growth in the range of 12% to 13%.
The company has also raised its earnings guidance to $8.15 a share from its earlier forecast of $7.50 a share.