US: VF Corp books 14% hike in Q3 profit
- Q3 net income rose 13.8% to $433.8m
- Revenues rose 5% during the quarter to $3.3bn
- Gross margin improved 90 basis points to 47.6%
Apparel giant VF Corporation has booked a 13.8% hike in third-quarter profit, boosted by strong sales in its outdoor & action sports and jeanswear businesses.
Net income rose to $433.8m in the three months to 28 September, the company said today (21 October), up from $381.3m a year earlier. Adjusted to exclude items related to its Timberland acquisition, net income was 11% higher at $436m.
Revenues rose 5% during the quarter to $3.3bn, with strong gains also seen by the international and direct-to-consumer businesses.
And gross margin improved 90 basis points to 47.6%, up from 46.7% a year ago, thanks to improvements in almost all units, the continuing shift in revenue mix toward higher margin businesses, and lower year-on-year product costs.
"VF is at its best when we empower our brands to deliver innovative products, connect with consumers, and operate with efficiency and discipline," said Eric Wiseman, VF chairman and CEO.
"Our third quarter results validate our growth strategy and our ability to deliver strong results in a challenging economic environment."
The outdoor & action sports unit saw revenues rise 6% in the quarter to $2bn. This was largely thanks to The North Face, which posted revenues up 3%, driven by 25% growth in direct-to-consumer sales; and the Vans brand, where global revenues were up 16%. Timberland saw sales grew 2%, weighed down by "challenging" conditions in Europe.
Jeanswear revenues were up 4% to $747m, driven by a mid single-digit percent increase in the Americas region and a low double-digit rate rise in Europe. However, in the Asia Pacific region, revenues declined at a high single-digit rate as the Lee brand continues to work through an industry-wide build-up in inventories in China that began during the latter part of 2012.
Global revenues for the Wrangler brand were up 8%, and rose 3% for Lee.
In contrast, imagewear revenues were flat in the third quarter at $284m, while sportswear revenues grew 1% to $155m as more than 25% growth in direct-to-consumer sales was offset by a mid-teen rate decline in the wholesale business, which the company blamed on the retailer calendar shift.
Adjusted for this shift, global sportswear revenues would have been up at a high single-digit rate, with the Kipling brand growing 22%.
And despite a "challenging business environment," third quarter revenues for the contemporary brands coalition were up 1% to $105m.
By region, international revenues jumped 7%, up 4% on a constant currency basis - accounting for 40% of the total.
Non-US Americas revenues increased 13%, with strong performances from the Vans, JanSport and Reef brands. Revenues in Europe rose 7%, with positive results from Vans, Wrangler, 7 For All Mankind, Eastpak, Lee, Kipling, Napapijri, and SmartWool brands.
In Asia Pacific, revenues were up 2%, driven by 10% growth in China which included strong results by the Vans, The North Face, and Timberland brands, offset by continued weakness from Lee.
Direct-to-consumer revenues surged 14% in the third quarter, including a 28% increase at The North Face, an 18% rise at Vans, a 16% jump at Nautica and a 50% hike at Kipling. Adding 55 stores over the period brought the company-owned total to 1,202.
The company reiterated its guidance for full-year revenues of $11.5bn, with adjusted earnings per share of $10.85.
Click on the following link for more insight into VF Corp's results: In the money: VF Corp buoyant about long-term growth
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