VF Corp. acquisitions contribute significantly to Q2 bottom line
VF Corp. (NYSE: VFC) said in its second-quarter earnings call that most of its core businesses grew and acquisitions added $126 million in sales. A 12 percent increase in sales pushed earnings in the latest quarter beyond analysts' expectations.
"This was a terrific quarter on all accounts, with growth coming from both our core businesses as well as newly acquired brands," Chairman and CEO Mackey McDonald said during the company's conference call. "We now have more diversification in our business mix, more brands with strong growth potential and more opportunities to invest in our future."
Part of its future includes more acquisitions of "lifestyle brands," he said, rather than category brand acquisitions.
Second quarter sales rose 12 percent to $1,269.5 million from $1,134.7 million in the prior year's second quarter, with growth in most of the company's core businesses. Net income increased 20 percent to $90.1 million from $74.9 million, with earnings per share rising 18 percent to $0.80 from $0.68. The acquisition of Nautica contributed $115 million to sales and as expected was dilutive to earnings per share by $.04. The acquisitions of the Vans, Napapijri and Kipling brands added $11 million to sales in the quarter and $.01 to earnings per share.
Sales in the VF's Outdoor businesses, which include The North Face, Vans, JanSport, Eastpak, Napapijri and Kipling, jumped 21 percent in the quarter to $146 million from $121 million. The North Face brand continued its strong growth in the quarter, with sales up 52 percent. Two new stores, in Amsterdam and Hong Kong, were added during the quarter, and additional stores in Boston, Milan and Helsinki will open in the third quarter. Fall bookings for the brand remain robust, up 47 percent in the United States and 28 percent internationally. Sales in its packs business declined slightly in the quarter but are expected to increase for the year, with growth driven by travel and apparel products, according to the company.
The board of directors declared a regular quarterly cash dividend of $0.26 per share, payable on Sept. 20, 2004, to shareholders of record as of the close of business on Sept. 10, 2004.
Deckers reports record Q2 results across the board
Deckers Outdoor Corp. (Nasdaq: DECK) had record results for the second quarter of 2004 driven by "meaningful sales increases" across all of its brands -- Teva, Ugg and Simple.
For the second quarter, ended June 30, 2004, net sales increased 67 percent to $40.5 million compared to $24.3 million in the same period last year. Net earnings for the quarter increased 154 percent to $5.1 million, compared to net earnings of $2.0 million last year, and diluted earnings per share increased 153 percent to $0.43 compared to diluted earnings per share of $0.17 in the second quarter of 2003. Net sales increased 40 percent to $84.8 million compared to $60.4 million in 2003. Net earnings for the first half of fiscal 2004 increased 69 percent to $10.5 million, compared to net earnings of $6.2 million last year. Diluted earnings per share increased 69 percent to $0.91 compared to diluted earnings per share of $0.54 in the first half of fiscal 2003.
Based on these results, Chairman and CEO Doug Otto said the company is increasing its guidance for the remainder of the year. Deckers now anticipates net sales for fiscal year 2004 to range from $182 million to $190 million and expects diluted earnings per share to range from $1.70 to $1.75, up from the previous guidance of $1.42 to $1.51 per share. It expects third quarter 2004 net sales to range from $45 million to $49 million and diluted earnings per share to range from $0.33 to $0.36 per share.
Teva sales for the second quarter increased 21 percent to $27.1 million from $22.4 million in the same period a year ago, while UGG sales were up dramatically to $11.7 million versus $0.4 million last year. And for the first time in four years, Simple had its strongest quarterly increase with sales up 21 percent to $1.8 million compared to $1.5 million a year ago.
During the quarter, Deckers completed a follow-on public stock offering, raising approximately $36 million. It used a portion of the money to repay all of the outstanding debt incurred when purchasing the worldwide rights to Teva in November 2002. Decker's balance sheet now reflects no outstanding long-term debt and approximately $24 million in cash.
Spring sportswear shipments drive Columbia Sportswear's strong Q2
Columbia Sportswear's (NasdaqNM: COLM) second-quarter net income rose to $10.7 million, or 26 cents per share, from $9.4 million, or 23 cents per share, a year earlier, driven by strong shipments of spring sportswear in the United States.
Global sales increased 12.5 percent to $171.1 million. U.S. sales rose 17 percent to $105.9 million, and Canadian sales rose 14 percent to $12.5 million. European sales jumped 20 percent to $24.5 million, but excluding changes in currency exchange rates, they rose only 10 percent. Other international sales declined 6.6 percent to $28.2 million, and fell 10 percent before currency changes.
For the full year, Columbia said it slightly raised its net income outlook to between 10 percent and 11 percent growth over 2003, based on a sales increase of 12 percent to 13 percent. Columbia also said it expects third-quarter net income growth of 3 percent to 5 percent, with revenue up 9 percent to 10 percent.
Timberland's Q2 earnings exceed analysts' predictions
The Timberland Co. (NYSE: TBL) beat analysts' predictions when its second-quarter earnings rose $7.9 million, or 22 cents per share, from last year's $5.8 million, or 16 cents per share. Analysts had low-balled earnings to 18 cents per share. The strong showing was attributed to cost controls and strong sales to footwear retailers.
Revenue increased 8.7 percent to $230.2 million, driven by solid gains in both domestic and international markets. U.S. revenues grew 7.6 percent, reflecting balanced growth from footwear and apparel offerings and continued gains in Timberland's consumer direct business. Global apparel and accessories revenue grew 17.1 percent to $54.7 million, benefiting from double-digit growth in U.S. and Asian apparel and moderate gains in European apparel sales.
"We believe that we are on track for solid performance in 2004 and are targeting mid to high single-digit revenue growth for the balance of this year," said President and CEO Jeffrey Swartz in a statement.
K2 appoints senior staff, reports Q2 earnings
K2 Inc. (NYSE: KTO) was busy last week, announcing high-level staff appointments on July 20 and reporting its second-quarter earnings results the following day.
John Rangel, a 20-year K2 veteran and most recently senior vice president and CFO, was named president of K2 Inc.'s European operations, responsible for integration of all current and future operations in the region. He will relocate to Europe. Christoph Bronder, the president of the Volkl Group since 1996 and the managing partner of Marker International, has been appointed as president of Volkl and Marker's worldwide operations. Mike Noonan is now president of Volkl Sport America, while Dudley Mendenhall, senior vice president of finance, will assume the additional finance duties of K2 Inc.'s CFO.
Chairman and CEO Richard Heckmann said in a conference call to analysts that Rangel's appointment and move to Europe to oversee the company's European wintersport brands is part of the company's philosophy to integrate its new acquisitions -- Volkl and Marker especially -- "thoroughly and thoughtfully." He added that K2 is actively pursuing acquisitions and is presently eyeing some companies.
K2 reported sales for the second quarter ended June 30, 2004, of $251.0 million, an increase of 25.7 percent from $199.7 million in the prior year, and diluted earnings per share were $0.16 for the quarter. Operating income in the second quarter was $12.4 million, a 23.3 percent increase from the 2003 comparable period, and net income was $6.2 million, a 28.8 percent increase from the 2003 second quarter excluding the gain on divestitures in that quarter.
Stellar showings continued from Shakespeare and Stearns, which continued their growth path, and ski and snowboard preseasons were up 20 percent. The skate category, on the other hand, is a "crappy business" right now, said Heckmann and if the category's poor sales weren't in the numbers, store earnings would have been up 9 percent.
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