For the quarter ended Sept. 29, VF posted net income rose of $381.32 million, or $3.42 a share, from $300.70 million, or $2.69 a share, in the year-ago period. Adjusted earnings for the quarter were $392.64 million, or $3.52 a share, compared to $321 million, or $2.87 a share, in the prior-year period.
Analysts’ average estimate, which typically excludes one-time items, expected earnings per share of $3.49 for the quarter.
Total revenues for the quarter were up 14% to $3.15 billion from $2.75 billion in the prior-year period, but missed analysts’ consensus estimate of $3.17 billion.
International revenues rose 28% in the quarter, helped by 20 percentage points of the growth attributable to Timberland. Direct-to-consumer revenues also increased 28% with 19 percentage points of the growth due to Timberland.
By brand division, Outdoor & Action Sports revenue grew 29% with the addition of Timberland and Smartwool brands contributing $499 million to revenues.
The North Face brand posted 5% increase (or 8% in constant dollars) as high single-digit growth in the Americas and exceptionally strong growth in Asia were offset by a mid-single digit constant dollar decline in Europe.
Vans achieved a 21% (26% in constant dollars) increase in global revenues in the quarter, with double-digit revenue growth in the Americas, Europe and Asia regions. On a full quarter basis, Timberland constant dollar revenues declined slightly in the third quarter. On a full year basis, Timberland should achieve a modest increase in revenues on a constant dollar basis.
Full Year Revenue Forecast Up 15%
However, Contemporary Brands revenues declined 17%, or 15% in constant dollars, primarily due to the sale of John Varvatos in April 2012.
Excluding John Varvatos in both the 2011 and 2012 periods, revenues decreased 1% (increased 2% in constant dollars). The revenue comparisons were negatively impacted by a reduction in sales of excess inventories for the 7 For All Mankind brand. The Splendid and Ella Moss brands, on a combined basis, achieved a high teen rate of revenue growth in the quarter.
Due to the John Varvatos sale, total Contemporary Brands revenues are expected to decline at a high single-digit rate in 2012. Excluding John Varvatos, Contemporary Brands coalition revenues should increase at a high single-digit rate in 2012.
Gross margin rose by 140 basis points from last year to 46.7%, thanks to improvements in nearly every business. The higher gross margin also reflects the continued shift in the company’s revenue mix towards higher margin businesses.
Looking ahead, VF Corp. raised its earnings outlook for fiscal year 2012 and also boosted its quarterly dividend by 21%. The company now forecasts adjusted earnings of $9.60 a share, up from the prior guidance of $9.50 a share.
Nonetheless, VF Corp. maintained its full-year revenue forecast of $10.9 billion, up about 15%, or 17% in constant dollars, with Timberland accounting for just under $1 billion of the growth. Excluding Timberland, the company projects full-year revenues to rise by nearly 6%, or 8% in constant dollars.
Analysts’ estimate expects the company to earn $9.54 a share for the year on revenues of $10.96 billion.
, “We are confident in our ability to deliver a very strong fourth quarter across our businesses, supported by higher levels of strategic investments in key brands and markets that are proven drivers of both top and bottom line growth,” said Eric Wiseman, chairman/ceo.
Additionally, VF Corp.’s board declared a quarterly dividend of 87 cents a share, reflecting 15 cents or 21% increase over the prior quarter’s dividend. The dividend is payable Dec. 20 to shareholders of record on Dec. 10.
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