VF Corp. Q2 Profit Up 14%, Backs 2014 Outlook

(RTTNews) - Branded lifestyle apparel maker VF Corp. (VFC) on Friday reported a 14 percent increase in profit for the second quarter from last year, led by strong revenue growth in the Outdoor & Action Sports segment. Revenue for the quarter beat analysts' expectations. Looking ahead, the company maintained its financial outlook for fiscal 2014.

Eric Wiseman, Chairman, President and Chief Executive Officer of VF Corp. said, "Our strong second quarter results, led by our Outdoor & Action Sports coalition, put us right in line with our full-year outlook and long-term growth commitments. Looking toward the second half of 2014, our powerful brands and platforms have us well-positioned to continue our momentum and deliver another record year for VF and its shareholders."

The Greensboro, North Carolina-based makers of Wrangler and Lee jeans reported net income for the second quarter of $157.68 million or $0.36 per share, up from $138.27 million or $0.31 per share in the prior-year quarter.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude one-time items.

Total revenues for the quarter grew 8 percent to $2.40 billion from $2.22 billion in the same quarter last year, and topped analysts' consensus estimate of $2.36 billion.

The net sales growth was driven by double-digit growth of 16 percent in outdoor & action sports, 18 percent in direct-to-consumer businesses and 14 percent in the international segment.

Outdoor & Action Sports revenue growth for the quarter includes an 11 percent increase in North Face brand revenues, 21 percent increase in Vans brand revenues, and 19 percent increase in Timberland brand revenues.

Jeanswear revenues for the quarter declined 1 percent, while imagewear revenue grew 3 percent from the same period last year. Sportswear revenue increased 5 percent, while revenues for the contemporary brands were down 2 percent from last year.

The Direct-to-consumer revenue increase was aided by strong results from nearly every brand and double-digit growth in every region. Growth in international revenues reflect double-digit growth in Europe and Asia Pacific.

Gross margin declined 10 basis points from last year to 48.4 percent, as continued benefit from the shift of the company's revenue mix toward higher margin businesses was offset by foreign currency impact and efforts to aggressively manage inventories especially in the Jeanswear business.

Meanwhile, operating margin for the quarter expanded 10 basis points to 9.2 percent.

On July 15, VF Corp.'s board of directors declared a quarterly dividend of $0.2625 per share, payable on September 19 to shareholders of record on September 9, 2014.

Looking ahead to the third quarter, VF Corp. forecasts revenues to increase at a rate similar to the second quarter, driven by strength within the Outdoor & Action Sports coalition, international operations and continued strength in the direct-to-consumer businesses.

Street expects the company to report earnings of $1.10 per share for the third quarter on revenues of $3.60 billion.

The company anticipates the strongest growth and profit comparisons in the year to be in the fourth quarter, when direct-to-consumer represents the most significant contribution of the year.

For fiscal 2014, VF Corp. maintained its outlook for earnings to increase 16 percent to $3.06 per share and revenues to increase 8 percent. Analysts expect the company to report earnings of $3.09 per share for the year on revenues of $12.33 billion.

VFC closed Thursday's trading at $61.60, down $1.07 or 1.71 percent on a volume of 2.55 million shares.