Outdoor financials: Q4 profit drops 42 percent for VF, plus Amer Sports, Wolverine

VF Corp. (NYSE: VFC), parent of The North Face, JanSport and Eagle Creek, among others, reported a 42 percent slid in profit hurt by weak sales and a large one-time charge. Plus, FY ’09 sales for Amer Sports’ winter/outdoor segment flat and Wolverine plans share repurchase program.
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Q4 profit drops 42 percent for VF

VF Corp. (NYSE: VFC), parent of The North Face, JanSport and Eagle Creek, among others, reported a 42 percent slid in profit hurt by weak sales and a large one-time charge.

Quarterly profit fell to $66.9 million, or $0.60 per share, from $115.9 million, or $1.05 per share last year. Excluding a charge for impairment of goodwill and intangible assets, net income was $1.62 per share.

VF took a charge because brands it has acquired in recent years, Nautica, Reef and Lucy brands, have not done as well as expected.

"While we continue to believe that each brand has opportunities for improved performance, we concluded that the fair value of our investments in these businesses has declined," said CEO Eric Wiseman in a statement.

Revenue was nearly flat at $1.89 billion.

The company noted it has cut costs and inventories and that has helped to offset slow sales during the economic downturn.

Fourth-quarter revenues for the outdoor and action sports coalition grew 8 percent, with operating income and margins each reaching record levels for the period.

Global revenues of The North Face and Vans brands grew 7 percent and 14 percent, respectively. Total coalition revenues in its Americas businesses rose 4 percent, while international revenues were up 9 percent in constant dollars, led by strong growth in Asia. Total direct-to-consumer revenues for the outdoor and action sports coalition rose 21 percent in the quarter.

Operating margins for outdoor and action sports were 20 percent in the quarter. Prior year results included $8.2 million in expenses related to cost reduction actions, VF said.

For the year, net income fell 24 percent to $461.3 million, or $4.13 per share, from $602.7 million, or $5.42 per share a year ago. Revenue dropped nearly 6 percent to $7.14 billion from $7.56 billion last year.

The company expects 2010 earnings to be $5.60 to $5.70 per share, excluding impairment charges. VF expects sales to rise 2 percent to 3 percent during the year, implying sales of $7.29 billion and $7.36 billion.

The board of directors also declared a quarterly cash dividend of $0.60 per share, payable on March 19 to shareholders of record on March 9.

FY ’09 sales for Amer Sports’ winter/outdoor segment flat

As a whole, Amer Sports said 2009 was a challenging year due to the recessionary environment, leading the company to have its weakest results of the past decade. Sales for its winter and outdoor segment were flat in local currencies for the year.

For the fourth quarter, net sales fell 3 percent to EUR 482.8 million (USD $657.8 million) versus EUR 495.3 million (USD $674.9 million) in the same period the year before. In local currencies, net sales were at last year's level. Net sales fell by 6 percent in the Americas, increased by 8 percent in the EMEA region and fell by 4 percent in Asia Pacific in local currency terms.

EBIT was up 12 percent to EUR 39.4 million (USD $53.6 million) compared to EUR 35.2 million (USD $47.9 million) last year. Earnings per share were EUR 0.37 (USD $0.50) versus 2008’s EUR 0.20 (USD $0.27).

In the winter and outdoor category, quarterly net sales were relatively status quo: EUR 329.2 million (USD $448.5 million) up 1 percent from EUR 326.6 million (USD $445.0 million) in the same period last year. In local currencies, net sales were up 3 percent.

For the quarter, the category’s EBIT grew to EUR 42.5 million (USD $57.9 million) up 16 percent from last year’s EUR 36.6 million (USD $49.8 million).

For the FY ’09, Amer Sports reported net sales of EUR 1.53 billion (USD $2.08 billion) -- down 3 percent from 2008’s EUR 1.57 billion (USD $2.13 billion). In local currencies, net sales fell by 4 percent. Net sales fell by 12 percent in the Americas, increased by 3 percent in the EMEA region and fell by 3 percent in Asia Pacific in local currency terms.

EBIT plummeted 44 percent to EUR 43.8 million (USD $59.6 million) versus EUR 78.9 million (USD $107.5 million) in 2008. The company said the result reflects the challenging operating environment in North America, as well as a one-time charge of EUR 5 million (USD $6.8 million). Earnings per share were EUR 0.28 (USD $0.38) versus last year’s EUR 0.37 (USD $0.50).

For FY 2009, winter and outdoor's net sales of EUR 862.6 million (USD $1.12 billion) versus EUR 860.8 million (USD $1.17 billion) were at last year's level in local currency terms. The breakdown of net sales by business area were: winter sports equipment, 43 percent; apparel and footwear, 35 percent; cycling, 12 percent; and sports instruments, 10 percent. In 2009, the EMEA accounted for 68 percent of net sales, the Americas for 21 percent, and Asia Pacific for 11 percent.

The EBIT increased by 17 percent in local currency terms to EUR 46.5 million (USD $63.3 million) compared to EUR 41.1 million (USD $56.0 million).

In 2009, winter sports equipment's net sales of EUR 371.7 million (USD $506.4 million) compared to EUR 378.9 (USD $516.3 million) were at last year's level in local currencies.

The biggest product categories were alpine ski equipment, representing 78 percent of net sales, cross country 12 percent, and snowboards 10 percent. Net sales of alpine ski equipment fell in local currency terms by 3 percent, snowboards fell by 10 percent and cross country increased by 22 percent.

Net sales in apparel and footwear increased by 11 percent in local currency terms to EUR 304.7 million (USD $415.1 million) versus EUR 277.9 million (USD $378.6 million). Net sales by product categories were: footwear 55 percent and apparel and gear 45 percent. Net sales of footwear increased in local currency terms by 15 percent, and apparel and gear by 6 percent.

Even though it was the toughest market in 2009, Amer Sports estimates that its apparel and footwear business area's market share increased in the United States. The outdoor trend remained strong and trail running as a category continued to gain popularity, it added. The company said Arc'Teryx managed to increase its sales.

Net sales of sports instruments' net sales fell by 5 percent in local currency terms to EUR 85.8 million (USD $116.9 million) versus EUR 89.8 million (USD $122.3 million).

Looking ahead, Amer Sports said the winter and outdoor segment is well positioned to continue to improve its profitability. The apparel and footwear business area continues to extend its direct-to-consumer program and its profitability is expected to remain at a good level, it noted. Within winter sports equipment, cycling and sports instruments the focus is on improving gross margins while maintaining tight cost control, it added.

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of Feb. 12.)

Wolverine plans share repurchase program

Wolverine World Wide (NYSE: WWW), parent of Merrell and Chaco, said it is beginning a plan to buy up to $200 million of its stock over the next four years.

Over the past 10 years the company has bought back $450 million worth of its stock, Wolverine said.

It also declared a regular quarterly cash dividend of $0.11, which is payable on May 3 to stockholders of record as of April 1.

--Compiled by Wendy Geister

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