VF's Q3 revenues and income set new records
Third-quarter revenues for VF Corp. (NYSE: VFC) rose a record 12 percent, while net income was up a record 10 percent. VF's numerous brand portfolio includes The North Face, Eastpak, JanSport and Napapijri.
Revenues for the current quarter were $2.03 billion versus $1.82 billion last year. Net income increased to $197.7 million, or $1.75 per share, from $179.6 million, or $1.57 per share, a year ago. The company said that foreign currency translation benefited revenues and earnings per share by $24 million and $0.03, respectively, in the quarter.
The results beat analyst expectations for profit of $1.68 per share on sales of $1.97 billion.
VF said its outdoor segment "continues to have tremendous momentum," with total revenues up 25 percent to $659 million and strong gains across nearly every brand. Domestic revenues grew 20 percent in the quarter, while international revenues rose 37 percent. The North Face, Vans, Napapijri and Eastpak brands each posted revenue gains in excess of 20 percent, while its Reef and Kipling brands also posted solid growth in the quarter. It added that operating income rose 25 percent in the quarter, while operating margins remained strong and stable.
Looking ahead, VF forecast "a very strong fourth quarter," and raised full-year guidance. The company now expects full-year revenue to rise 8 percent year-over-year to surpass the $7 billion mark. Earnings per share are now expected to rise 11 percent to about $5.05, compared with analysts' $5.01 consensus estimate.
Additionally, the board of directors declared a cash dividend of $0.55 per share, payable on Dec. 18, 2006, to shareholders of record on Dec. 8, 2006.
In other company news: Eric Wiseman, VF's president and chief operating officer was elected to the company's board of directors, bringing the number of board directors to 13.
NRF survey gauges holiday spending
The National Retail Federation's 2006 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, found that the average consumer plans to spend $791.10 this holiday season, up from $738.11 last year. Additionally, shoppers will take advantage of sales and discounts during the holiday season to spend an additional $99.22 on themselves.
Consumers this year will shop at a variety of destinations for holiday gifts. While discount stores -- 70.3 percent -- continue to be the most popular holiday shopping location, 48.4 percent of people said they will also be shopping at specialty stores. And, 47.1 percent of consumers said they plan to shop online this year, up from 36 percent three years ago.
Among the survey's findings:
>> Most holiday budgets will be allocated to gifts, with the average person spending $451.34 on family, $85.60 on friends, $22.40 on coworkers, and $44.52 on other people like clergy, teachers and babysitters.
>> 40.4 percent of consumers will begin their holiday shopping this year before Halloween.
>> 52.8 percent of consumers would like to receive a gift card this year.
>> After low prices (14.2 percent) and sales (36.5 percent), more shoppers this year said that factors like customer service (4.4 percent), product quality (12.4 percent), and merchandise selection (24.3 percent) are the most important when determining where to shop.
NRF continues to forecast that holiday sales will increase 5.0 percent this year to $457.4 billion.
The NRF 2006 Holiday Consumer Intentions and Actions Survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey, which polled 7,623 consumers, was conducted for NRF by BIGresearch from Oct. 4-11.
Analyst initiates coverage on five industry footwear makers
Robert W. Baird & Co. initiated coverage of five outdoor footwear makers: Columbia Sportswear, Crocs, Deckers Outdoor, Timberland and Wolverine World Wide. All received "neutral" ratings because of their limited upside, except for Wolverine which was given an "outperform" rating.
Analyst Mitch Kummetz started Wolverine (NYSE: WWW) with $35 price target, saying the company's largest brand, Merrell, is expected to continue to be its primary growth driver, especially with the upcoming launch of apparel. He forecasts that Merrell apparel could grow to be as large as footwear, which will help offset limited growth opportunity for Wolverine's other existing brands.
The analyst initiated Columbia Sportswear (Nasdaq: COLM) with a $57 price target. Kummetz wrote in a research note that sportswear and footwear have continued to grow for the company, but these segments have been overshadowed by weakness in outerwear. He added that outerwear is poised to improve next year, but doesn't "see much reason to pay a big premium to the apparel group at this juncture."
Giving it a $40 price target, Kummetz said Crocs (Nasdaq: CROX) has "hit a home run" with its Beach and Cayman footwear, and thinks the company has room to grow through product extension, expanded wholesale distribution and new company-owned retail. He warned, though, that results remain fairly concentrated in Crocs' two main styles, and fiscal 2007 visibility for them is somewhat limited. Kummetz expects apparel and accessories to eventually become a more meaningful business for Crocs, especially with the recent acquisition of Jibbitz.
Kummetz started Deckers Outdoor (Nasdaq: DECK) with a $53 price target, saying Deckers' strong portfolio, which consists of Teva, Uggs and Simple, is well positioned to grow over the next several years, but he doesn't see the overall business moving much above recent performance.
Finally, Kummetz initiated Timberland (NYSE: TBL) with a $31 price target, saying weakness in footwear is likely to continue into the second half of the year. Although the company is reducing supply of its iconic yellow boot to protect the long-term health of its brand, Kummetz doesn't expect results to improve until the second half of 2007. The analyst said Timberland's boot business is also struggling due to weak sell-through on new product launches, and the company is only now investing resources to get its boot business back on trend.
Stride Rite names two new VPs at Saucony
Saucony, a subsidiary of Stride Rite (NYSE: SRR), has appointed two new vice presidents to the brand's division. Susan Dooley was named vice president of marketing, while Sharon Barbano was promoted to vice president of public relations.
Both Dooley and Barbano will also oversee marketing and public relations, respectively, for technical apparel brand Hind, also a subsidiary of Stride Rite. Dooley will oversee the strategy and execution for all brand-related marketing programs for Saucony and Hind.
Outdoor Channel names CEO
Outdoor Channel Holdings (Nasdaq: OUTD) said that cable industry pioneer Roger Werner Jr. has joined the management team of the company and its national television network, The Outdoor Channel. Werner was named president of the company and CEO of the Channel. In addition, he was appointed as a director of the company, increasing the board to eight members. Effective Nov. 10, Werner will also assume the role of CEO of the company. Perry Massie, who had been serving as president, CEO and chairman of the board of the company and co-president of The Outdoor Channel, will continue to serve as chairman of the board.
Liz Claiborne's incoming CEO to get paid $1.3 million salary
Liz Claiborne (NYSE: LIZ), parent of Prana, set the minimum salary of new CEO William McComb at $1.3 million. He will also receive a $400,000 signing bonus when he takes over the top job Nov. 6 from Paul Charron, who is retiring. McComb will also receive 185,200 options, 63,150 "premium-priced" options and 138,855 shares of restricted stock, according to the company's filing with the SEC. Liz Claiborne's employment agreement with McComb also contained a termination provision in which McComb will receive $4 million and accelerated vesting of his equity awards if he is fired.
Amer Sports exercises 2002 warrants
Amer Sports said that 96,750 its shares have been subscribed for as a result of an exercise of its 2002 warrants. The corresponding increase in the company's share capital was Euro 387,000 (USD $486,246) and registered on Oct. 19. As a result of this increase, Amer's share capital now totals about Euro 286.5 million (USD $360 million) and the total number of shares in issue is 71,626,260. The new shares were listed on the Helsinki Exchanges on Oct. 20. The subscription period of Amer Sport's 2002 warrant scheme will end on Dec. 31, 2007.
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