VF Corp. Q3 Profit Up 14%, Beating Estimates

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Helena Christensen collection for Kipling, one of VF's brands

Helena Christensen collection for Kipling, one of VF’s brands

Greensboro, NC—VF Corp., parent to Timberland, North Face, Vans etc., reported today that its third quarter net income rose 14% helped by improved gross margins and lower product costs.

For the quarter ended Sept. 28, VF posted net income of $433.8 million, or $3.89 a share, compared with income of $381.3 million, or $3.42 a share, in the 2012 third quarter. Excluding a 2 cents a share costs relating to its Timberland acquisition, adjusted earnings were $3.91. That’s ahead of analysts’ average estimate for $3.78 a share.

In its net sales, VF saw a 4.7% increase to $3,119 billion thanks to strong growth in its outdoor/action, jeanswear and international divisions. Still the increase was about 2.4% less than analysts’ estimate for $3.348 billion.

‘Improved Contributions from Vans, Nautica, Kipling’

Gross margin widened to 47.6% from 46.7% in the year-ago quarter due to improvement in higher margin businesses and lower product costs. Moreover, adjusted operating margin expanded to 17.7% as the benefit of higher gross margin was partially offset by increased selling, general & administrative expenses as a percentage of sales.

By division, revenues at Outdoor & Action Sports rose 6.5% to $1.97 billion. “Consistent growth momentum at the company’s The North Face, Timberland and Vans brands contributed to increased revenues.” Vans posted a 16% increase internationally, while North Face sales increased 3%. Sales for the Timberland edged up 2%.In the jeanswear unit, Wrangler sales rose 8% and Lee sales was up 3%. Both sportswear and contemporary brands revenue rose 1%, while imagewear revenue was flat.

International revenue, which comprised 40% of total revenue, increased 7%. The company reported strong growth in Europe and the Americas, (excluding USA) Asia Pacific revenue gained 2%.

VF’s direct-to-consumer sales rose 14% boosted by the addition of 55 new stores and improved contributions from The North Face, Vans, Nautica and Kipling brands. The company’s total owned retail stores were 1,202 at the end of the reported quarter. Direct-to-consumer revenues accounted for 19% of total revenue in the third quarter.

While VF’s third quarter sales missed estimates, the company reaffirmed its 2013 forecast for adjusted earnings of $10.85 a share on sales of $11.5 billion.

Analysts’ consensus expects full year earnings of $10.96 a share, on revenue of $11.51 billion.

“While we faced some headwinds associated with the challenging economic environment and consumer buying behavior that was a little inconsistent market to market, I have great confidence that we’ll finish 2013 strong,” CEO Eric Wiseman said.

In addition, VF said that its board approved a four-for-one stock split. Shareholders of record on Dec. 10 will receive three additional shares for each share they own, payable on Dec. 20.


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