VF Corp. on Monday posted lower third-quarter profits and earnings missed Wall Streets’ estimates by 1 cent.
For the three months ended Oct. 3, income was down 6.8 percent to $217.9 million, or $1.94 a diluted share, from $233.9 million, or $2.10, in the year-ago quarter. The current quarter’s results were affected partly by higher pension expenses.
Including a 5 percent sales decline to $2.08 billion, total revenues fell 5.1 percent to $2.09 billion from $2.21 billion. Sales at VF’s largest unit, outdoor and action sports, declined 0.2 percent to $904.6 million, and jeanswear revenues dropped 10.5 percent to $664.8 million. Sportswear gained 3.7 percent to $149.1 million, and contemporary brands rose 2.9 percent to $124 million. Imagewear felt the sharpest sales sting, sliding 14.9 percent to $221.2 million.
“Our relentless drive to control costs, reduce inventories and focus on investments on our highest return opportunities has served us very well during these difficult and volatile times,” said Eric Wiseman, chairman, president and chief executive officer of the Greensboro, N.C.-based company. “We will continue this disciplined approach through the balance of the year and into 2010 to maximize opportunities for both top- and bottom-line growth.”
Wiseman said the firm’s four largest brands — Wrangler, Lee, North Face and Vans, representing about 60 percent of total revenues — “are strong and healthy and continue to gain share in most markets.”
VF’s fifth largest brand, Nautica, grew revenues and “achieved a significant improvement in profitability in the quarter with a return to double-digit margins,” he said.
The sportswear group, of which Nautica is a part, reached an operating margin of 15.8 percent of sales, a 400 basis-point improvement, Wiseman said.
He cited North Face and Vans as continuing to show good momentum during the slowest period of consumer spending in recent history.
In a conference call with Wall Street analysts after the stock markets closed, Wiseman said the company’s results “clearly signal that the worst effects of the recession may be behind us.”
Without providing specifics, Wiseman added, “Our retail revenues continued to rise in the quarter as we continue to selectively add new stores across our strongest brand concepts.”
VF believes that revenue growth in its outdoor and action sports category should accelerate in the fourth quarter because of an increase in company-owned stores.
The firm adjusted its full-year earnings guidance toward the higher end, between $4.85 and $5, including the impact of a one-time charge of 70 cents per share. Previously, VF had projected $4.70 to $5. Wall Street was expecting earnings per share of $4.96 for the year.
For the nine months, income was down 19 percent to $394.4 million, or $3.54 a diluted share, from $486.9 million, or $4.37, a year ago. Total revenues were down 7.4 percent to $5.3 billion from $5.73 billion.
Shares rose 17 cents, or 0.2 percent, to $78.49 in New York Stock Exchange trading Monday, but fell 5.7 percent in early after-hours transactions following the earnings release.
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