VF Trounces Analysts' Third-Quarter Earnings Predictions

By Sam Lewis

Apparel conglomerate credits Van, the North Face, Wrangler, and others for strong quarter

VF, the US owner of brands like The North Face, Wrangler, Timberland, and Vans reported gains in both sales and profits according to the company’s third-quarter earnings report, released Monday, Oct 21. The company is crediting its successful quarter to lowered costs in materials, and a lower-than-expected tax rate, accompanied by shifting its focus to more profitable business.

For the quarter ending Sept 28, the company posted earnings of $433.8 million, or $3.89 per share. During the same quarter a year ago, VF reported $381.3 million, or $3.42 per share. The significant boost in earnings beat FactSet analysts’ predictions of $3.78 per share. Revenue for the company also increased by 5 percent, up to $3.37 billion from 2012’s $3.12 billion. This, however, fell short of Wall Street’s expectations of $3.34 billion in revenue. Neither earnings nor revenue has affected VF’s outlook for the full-year, with the company maintaining its forecast for a “strong finish” to 2013, ending the year with $11.5 billion in revenue.

Vans brand continues to perform strongly in all areas of the globe. The brand saw revenue rise 16 percent in North America and 25 percent in Europe. Globally, Vans saw mid-teen percentage increases in both wholesale and direct-to-customer revenue channels. The North Face brand, as expected, also performed well. The brand saw revenue grow 3 percent globally, which was guided by a more than 25 percent increase in direct-to-customer sales.

VF’s jeanswear unit saw a 4 percent rise in revenue which was driven by North American sales. Wrangler sales climbed 8 percent, and Lee sales saw an increase of 3 percent. Revenue also increased for Timberland in the third-quarter. Totaling a 2 percent global increase in revenue, the America’s region drove the strongest sales, marking a mid-single-digit percentage increase with equal growth in both wholesale and direct-to-customer sales.

The Greensboro, NC-based company also informed stock holders that its board has approved a four-for-one stock split. Shareholders currently holding stock will receive three additional shares for each share now owned. This will raise the company’s shares from the current 110 million, to 440 million on Dec 10, and the dividend will become payable on Dec 20.

Revenue seems to be steadily increasing for VF as almost all of its brands reported increases. In fact, the company didn’t report any losses in revenue across its brand portfolio, and only one line, imagewear, reported flat growth. VF has gathered itself a hodgepodge of winning apparel brands and should experience a strong end of the year, despite modest predictions for this year’s holiday shopping season.