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VF Net Reaches $100 Million in Second Quarter

Aided by an uptick in June sales and strong results in its outdoor segment, VF Corp's second-quarter earnings rose 11 percent.

NEW YORK — VF Corp. on Thursday reported an 11 percent increase in second-quarter earnings to $100 million, propelled by a pickup in June sales and continued strong performance from its outdoor segment.

The Greensboro, N.C.-based manufacturer reported earnings of 88 cents a diluted share, compared with Wall Street analysts’ consensus estimate of 74 cents. Earnings per share got a boost of 7 cents from several onetime events, including the settlement of income tax issues in foreign countries. The company had earnings of $90.1 million, or 80 cents, in the same period a year ago.

“Sales of summer products got off to a slow start this year, but we saw a nice pickup in June, which helped drive our results above our previous expectations,” Mackey McDonald, president and chief executive officer, said during a conference call with analysts.

Sales for the period rose 13.1 percent to $1.44 billion from $1.27 billion, driven by gains from the company’s outdoor and sportswear segments. Recent acquisitions caused sales for the outdoor division to more than double during the quarter, to $297 million from $146 million. Four of the acquired brands — Vans, Kipling, Reef and Napapijri — accounted for $138 million in sales. The North Face and JanSport also posted strong sales results for the outdoor segment.

Eric Wiseman, executive vice president of global brands, said that even though summer is the slowest season for The North Face, the brand continues to grow organically. “Our growth continued to come from expansion in our core sport and sports specialty customer base, driven by our focus on providing the most technical and innovative product in the market,” Wiseman said during the call.

The other standout for the quarter was the company’s sportswear segment, which includes Nautica, John Varvatos and Kipling. Sportswear sales rose 22 percent to $127 million from $105 million.

Jeanswear, the company’s largest segment, posted a 2 percent sales increase to $597 million from $586 million. Wiseman indicated the warmer June weather had its greatest impact on jeans sales in the mass channel.

“We’ve seen very strong growth in our Wrangler jeans company initiative, where shipments are running up about 20 percent year to date,” Wiseman said.

It’s a different story for Lee, however, where sales declined during the quarter, although exact figures were not broken out. “Our Lee business has been softer than expected this year, particularly on the women’s side,” Wiseman said.

He dismissed any inventory concerns heading into what analysts believe will be a denim-heavy back-to-school season. “We know that our jeans inventory [at retail] is in great shape in every channel,” Wiseman said.

Harley-Davidson branded apparel helped the company’s imagewear division post a 4 percent sales gain to $181 million from $173 million.

Intimate Apparel sales fell 5 percent to $223 million from $235 million. “We are confident in improvement in comparisons in the second half of this year,” McDonald said.

For the six months to date, earnings rose 14.9 percent to $222.9 million, or $1.95 a share, from $194 million, or $1.73 a share. Sales grew 11 percent to $3 billion from $2.7 billion.

Both McDonald and Wiseman said China’s currency revaluation would not likely affect the company’s sourcing costs. Thirty-five to 40 percent VF’s product is sourced from Asia, and China accounts for about half of that.

Management expects a record year for sales and earnings, and now expects earnings per share to rise about 10 percent for the year.