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VF Earnings Rise 10.1%

Revenue growth across all divisions pushed VF Corp. to its 12th consecutive quarter of earnings gains.

NEW YORK — Revenue growth across all divisions pushed VF Corp. to its 12th consecutive quarter of earnings gains.

“Certainly, the retail environment remains as challenging as ever, so our performance this quarter, and indeed this year, serves as a testament to our efforts,” Mackey McDonald, chairman and chief executive officer, said during a company conference call with analysts.

For the third quarter ended Sept. 30, earnings increased 10.1 percent, to $197.7 million, or $1.75 a share, surpassing Wall Street analysts’ consensus estimate of $1.67. Earnings for the same period a year ago were $179.6 million, or $1.57 a share.

Revenues rose 11.6 percent, to $2.03 billion, compared with revenues of $1.82 billion in the year-ago period. Sales rose 11.8 percent, to $2.01 billion from $1.8 billion. McDonald attributed gains to a larger-than-expected surge in September sales.

The company’s outdoor segment, which includes The North Face, Vans and Napapijri brands, again led all divisions in revenue gains, posting a 25.5 percent increase, to $659 million from $525.2 million. Domestic revenues for the segment were up 20 percent while international revenues expanded 27 percent.

“The good news is, we believe there’s much more to come,” Eric Wiseman, president and chief operating officer, who was named to the company’s board last week, said during the call. He said The North Face brand bookings for spring were already up more than 20 percent in North America and Europe.

“We’re seeing a similar story at Vans,” said Wiseman, noting that spring bookings for the brand were up 47 percent in the U.S. and more than 20 percent in Europe.

The company’s jeanswear segment, its largest and oldest division, reported growth across all retail channels, including a rebound in the Lee business. Jeanswear revenues increased 6.3 percent, to $738.2 million from $694.7 million. Domestic revenues grew 5 percent. Asked about one of its competitors losing space in the mass channel, likely a reference to falling sales of the Levi Strauss Signature brand at Wal-Mart, Wiseman said VF was seeing growth in mass channel space.

VF’s struggling intimates business also rebounded during the quarter. A strong performance by the Vanity Fair and Lily of France brands spurred a 4.6 percent revenue increase, to $223.7 million from $213.8 million. Imagewear revenues rose 6.3 percent, to $215.7 million from $203 million, and sportswear revenues went up 5.8 percent, to $184 million from $173.9 million.

This story first appeared in the October 23, 2006 issue of WWD.  Subscribe Today.

The company’s retail operations are also gaining momentum. The company opened 21 stores for a total of 560 at the end of the quarter. Retail sales increased 17 percent, and the company expects to open 20 to 25 stores during the fourth quarter.

“We are obviously more aggressive about rolling out concepts that are proving to deliver good return to our shareholders,” said Wiseman, pointing to Vans as an example of stores the company is working to open “as quickly as we can find the right real estate.” Napapijri stores, on the other hand, will be slower to bow as the company works on the correct retail concept and product assortment.

For the nine months, earnings rose 12 percent, to $424.9 million, or $3.77 a share, compared with earnings of $379.2 million, or $3.32 a share, in the same period a year ago. Revenues increased 8.4 percent, to $5.276 billion from $4.86 billion.

The outdoor segment posted a 27.4 percent revenue gain, coming in at $1.42 billion compared with $1.11 billion a year ago. Jeanswear revenues rose 3.5 percent, to $2.08 billion from $2.01 billion. The intimate apparel segment slid 2.3 percent, to $649.3 million from $664.7 million. Imagewear was up 4.7 percent, to $598.2 million from $571.2 million, and sportswear revenues increased 4.3 percent, to $488.2 million from $467.9 million.

The strong results moved management to raise its guidance for the third time this year. Executives expect revenues will make an 8 percent improvement over last year, to a record $8 billion.

“This is particularly significant when you consider that our last milestone, $6 billion, was reached just two years ago,” McDonald said.