Executives at VF Corp. and Levi Strauss & Co. anticipate a steep uphill battle to grow their businesses this year because of the sharp decline in consumer spending.
As the two apparel giants reported fourth-quarter and year-end results on Tuesday, both companies acknowledged that the advantages of size and diversified brand portfolios were tempered by withering economies around the world.
“We expect 2009 to be a very difficult year,” said Eric Wiseman, VF’s chairman and chief executive officer. “We don’t expect any improvement from the conditions we saw on the fourth quarter.”
John Anderson, president and ceo of Levi’s, said, “The outlook remains uncertain and we face stiff headwinds.”
Despite the difficulties, both firms managed to grow annual revenues and are focusing on investing in proven strategies while reducing costs.
However, VF’s broad portfolio wasn’t enough to save it from a 29.5 percent drop in fourth-quarter earnings and a flat outlook for 2009. Net income for the quarter ended Jan. 3 slid to $115.9 million, or $1.05 a diluted share, as consumers refused to buy at full price. Year-ago profits weighed in at $164.4 million, or $1.46. Revenues dipped 2.2 percent to $1.91 billion from $1.96 billion.
VF, based in Greensboro, N.C., wielded the cost-cutting scalpel and trimmed $100 million in annual expenses beginning this year. Along with the lowered costs came $41 million in charges during the quarter.