The North Face, Vans propel VF Corp.’s 2Q results

VF Corp. reported a 15-percent rise in revenue and stronger profit for the second quarter 2011, led by a 23-percent sales rise of its outdoor and action sports brands, including the The North Face, Vans and Jansport. The company expects to close a deal to acquire Timberland during the third quarter.
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VF Corp. (NYSE: VFC) reported a 15-percent rise in revenue and stronger profit for the second quarter 2011, led by a 23-percent sales rise of its outdoor and action sports brands, including the The North Face, Vans and Jansport.

The Greensboro, N.C.-based apparel, footwear and equipment maker said its second-quarter revenue reached $1,840.1 million – up 15 percent from $1,594.1 million during the same period in 2010.

Net income for the second quarter rose to $129.4 million, or $1.17 per diluted share, compared to $110.8 million, or $1 per diluted share a year ago. The earnings were 17 percent stronger than officials expected, and included costs of approximately $0.02 per diluted share related to VF’s pending acquisition of The Timberland Co., which it expects to close during the third quarter.

The 23-precent rise in VF Outdoor & Action Sports revenue to $717.9 million for the second quarter was a record for the segment, fueled primarily by 21-percent and 22-percent growth in the The North Face and Vans brands.

By region, sales in the segment rose 14 percent in the Americas, and 42 percent on the international basis, fueled in part by favorable exchange rates, as the latter rose 29 percent on a constant-currency basis.

Total direct-to-consumer revenues for VF Outdoor & Action Sports rose 22 percent in the quarter, with a 34-percent increase in The North Face direct-to-consumer revenues and a 19-percent increase in Vans direct-to-consumer revenues.

In VF’s other segments, Jeanswear and Sportswear second-quarter revenue each grew 10 percent to $613.4 million, and $120.3 million respectively, Imagewear revenues rose 16 percent to $244.1 million, and Contemporary Brands revenues were up 11 percent to $118.1 million.

Despite all the positive figures, VF’s gross margin declined, as officials said they anticipated, to 45.9 percent, compared to 47.1 percent a year ago, reflecting the impact of higher product costs.

Looking ahead, VF officials increased the company’s full-year 2011 revenue guidance to an estimated 12-13 percent growth, up from previous guidance of about 10 percent. Full-year earnings are expected to rise to $7.50 per diluted share, up from previous guidance of $7.25 per diluted share.

The updated guidance does not include the intended acquisition of Timberland, which is expected to add revenues of $700 million and earnings of $0.25 per share.

"With double-digit revenue growth in all coalitions, and in both our international and direct-to-consumer businesses, VF is firing on all cylinders," VF Chairman and CEO Eric Wiseman said in a statement. "Our marketing investments continue to fuel outstanding growth, our brands are gaining momentum - and we are confident that this momentum is sustainable."

In addition to the earnings release, VF’s board of directors declared a quarterly cash dividend of $0.63 per share, payable on September 19, 2011 to shareholders of record as of the close of business on September 9, 2011.

-- Compiled by David Clucas


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