VF 3Q profit soars, lifts 2012 adj. profit outlook
GREENSBORO, N.C. (AP) — Clothing company VF Corp.'s third-quarter net income climbed 27 percent as it continued to benefit from its Timberland acquisition and ongoing strength at its other well-known brands.
The company boosted its full-year adjusted earnings forecast on Monday because of its strong year-to-date performance, and increased its quarterly dividend by 21 percent. But VF's quarterly revenue performance missed Wall Street's view and its shares fall on the news.
For the three months ended Sept. 29, VF earned $381.3 million, or $3.42 per share. That's up from $300.7 million, or $2.69 per share, a year ago.
"Uncertainty around world economic conditions will persist, but we've demonstrated that the VF model built around diversity and brands, products, channels and geographies is ideally suited to succeed regardless of the environment," Eric Wiseman, chairman, president and CEO, told investors during a conference call following the earnings release.
VF, whose brands include Wrangler, Nautica and The North Face, said that it earned $3.52 per share when stripping out Timberland acquisition-related expenses and a gain on the sale of John Varvatos Enterprises Inc.
Analysts surveyed by FactSet, on average, expected profit of $3.49 per share.
VF said in March that it was selling its majority stake in men's fashion designer John Varvatos' brand to private equity firm Lion Capital LLP. Financial terms were not disclosed.
Revenue rose 14 percent to $3.12 billion from $2.73 billion, falling short of Wall Street's prediction for $3.16 billion.
VF's stock fell $6.87, or 4.1 percent, to $159.90 in mid-day trading. The stock closed Friday at $166.77, up 31 percent since the start of the year.
The Greensboro, N.C. company's results received a significant lift from Timberland, which it acquired last year. Quarterly revenue from Timberland was $499 million, compared with $164 million a year earlier.
Revenue continued to strengthen at the outdoor and action sports division, thanks to contributions from Timberland footwear and clothing and the Smartwool brand, which includes socks and underwear. Sales for The North Face rose 5 percent, while Vans' sales climbed 21 percent.
Sportswear revenue climbed 2 percent on solid results from its Nautica and Kipling brands.
Revenue for the contemporary brands unit dropped 17 percent mostly because of the sale of John Varvatos Enterprises. Jeanswear revenue dipped 1 percent, burdened by softness in Europe.
Overseas revenue rose 28 percent primarily because of Timberland.
Gross margin improved on strength across most segments and VF's strategy of shifting to higher-margin businesses.
The company lifted its quarterly dividend to 87 cents per share from 72 cents per share. The dividend will be paid on Dec. 20 to shareholders of record on Dec. 10.
VF now foresees full-year adjusted earnings about $9.60 per share. It previously predicted $9.50 per share. The company still expects 2012 revenue of $10.9 billion.
Analysts forecast earnings of $9.55 per share on revenue of $10.97 billion.