NEW YORK — VF Corp.'s sale of its intimates segment hampered fourth-quarter earnings, but failed to slow the revenue-generating momentum of the company's growing portfolio of lifestyle brands.
"Certainly, we're in a very different position today than we were several years ago," Mackey McDonald, chairman and chief executive officer, said during a conference call with analysts. "Our growth plan is working."
For the fourth quarter ended Dec. 31, the Greensboro, N.C., manufacturing giant reported a 14.8 percent earnings decline, to $108.6 million, or 95 cents a diluted share, compared with earnings of $127.5 million, or $1.13 a share, in the same period a year ago. However, excluding charges related to the sale of its intimates division, the company would have reported an earnings gain of 12.5 percent.
Revenues for the three months grew 9.3 percent, to $1.6 billion from $1.46 billion in the year-ago period. Sales grew 9.3 percent, to $1.58 billion from $1.44 billion, and royalty income rose 13.4 percent, to $21.9 million from $19.3 million.
McDonald assured analysts that the company would continue to add lifestyle brands to its portfolio through acquisitions. VF was largely dormant on the acquisition front throughout the year, acquiring only the Eagle Creek brand in late December. Still, McDonald believes the results continue to support management's concentration on investing in its current brand stable.
"Organic growth has picked up sharply, validating our decision to invest more in our brands," said McDonald.
Brands such as The North Face, Vans and JanSport continued to fuel the company's outdoor segment, which again posted the largest gains for the quarter and year-end period. Outdoor revenues rose 31.6 percent, to $452.6 million from $343.9 million during the quarter, with The North Face, Vans, Kipling and JanSport all reporting double-digit revenue gains. According to the company, domestic revenues rose 34 percent and international revenues spiked 28 percent.
The North Face stands out as perhaps the strongest example of the type of lifestyle brands VF is looking to acquire. The brand has consistently turned in double-digit revenue gains, and during the fourth quarter, in particular, consumers were willing to keep spending on the brand despite the weather. During the call, Dave Gatto, president of the outdoor segment, noted that The North Face managed to generate double-digit gains despite the unseasonably warm temperatures during the quarter.In contrast, Angelo LaGrega, president of VF's jeanswear coalition in the Americas, said, "The dynamics of the [jeanswear] business shifted during the fourth quarter," as several major customers experienced lagging same-store sales due to warm weather. "We will still be working down inventories in the first quarter in the mass channel" as a result, said LaGrega.
Despite the problems caused by warmer weather, the jeanswear segment, the company's largest and oldest division, posted noteworthy gains. Overall jeanswear revenues rose 1.9 percent, to $700 million from $686.8 million. The bulk of gains was attributable to a 7 percent rise in international revenues. Domestic revenues were flat, with the exception of the Lee brand, which had a 16 percent jump in revenues.
The sportswear division's revenues increased 7.8 percent, to $197.2 million from $182.9 million, driven by double-digit gains in the Kipling and John Varvatos brands.
Imagewear, which includes Harley Davidson apparel and industrial apparel, had a 2 percent decline in revenues, to $230 million, owing to a planned exit from a commodity fleece business.
For the full year, VF reported a 5.3 percent rise in earnings, to $533.5 million, or $4.72 a share, compared with earnings of $506.7 million, or $4.44, last year. Revenues increased 9.9 percent, to $6.21 billion from $5.65 billion. Sales rose 10 percent, to $6.14 billion from $5.58 billion, and income royalty increased 7.8 percent, to $77.7 million from $72.1 million.
All business segments posted revenue gains for the year. Jeanswear revenues rose 3.1 percent, to $2.78 billion from $2.7 billion.
The outdoor segment's revenues ballooned 28.4 percent, to $1.87 billion from $1.45 billion. Imagewear rose 2.8 percent, to $828.2 million from $805.8 million, and sportswear revenues expanded 5.3 percent, to $685.5 million from $650.8 million.
Retail expansion continues to be a focus of the company's growth strategy; 24 stores opened during the quarter and 62 opened during the year. The company finished the year with 538 stores. Retail revenues rose 19 percent for the quarter and 17 percent for the year.
Given the momentum heading into 2007, management expects revenues to rise 8 percent in 2007 and expects earnings per share to increase 10 percent.
My character, Dinah Madani, is just the coolest, [most] badass woman imaginable," says @amberroserevah. The actress stars in @marvel's newest series on @netflix, @thepunisher. To prepare for her role, Revah sat down with Homeland agents to get a real sense of with Dinah's day-to-day life is really like. Read our full interview on WWD.com. #wwdeye (📷: @jilliansollazzo)
A scene from the 91st annual @macys Thanksgiving Day Parade. The parade, which boasts 50 million TV viewers and 3.5 million on-site spectators, is considered one of the largest and most watched parades in the world. (📷: Jason Szenes/EPA-REX)
The circus came to @bloomingdales 59th Street on Tuesday night and lit up Lexington Avenue with acrobatic dancers, death-defying knife throwing, sword swallowing and aerial acts with no net. The 45 minutes of theatrics built up to unveiling the holiday windows depicting @swarovski crystal-encrusted circus pieces and scenes from “The Greatest Showman” – songs from the soundtrack included. See the rest of the photos on WWD.com #wwdfashion (📷: Joshua Scott)
The psychedelic fashion that pervaded the ’60s is back with an exhibit at the @museumofcityny. “Mode New York: Fashion Takes a Trip” chronicles the changing styles from 1960 through 1973 and features designers such as @ysl, @oscardelarenta and more. The exhibition, which is on display through April 1, is organized into four periods: First Lady Fasion, Youthquake, New Bohemia and New Nonchalance. Pictured here is model Pat Bardonella during the Garvey Day Parade in 1968. (📷: @kwamebphoto) #wwdeye #wwdfashion
“People should be a lot more honest in expressing both the dark and light of themselves. We need to give each other the space to do that because it’s the only way we can grow and evolve,” says @noelwells of her new film “Mr. Roosevelt,” which is largely based on her own struggles. Unexpectedly leaving @nbcsnl in 2014 after just one season, Wells felt set back in her self-esteem and career trajectory. She quickly refocused her energy to more personal projects, which led to the completion of “Mr. Roosevelt.” Read the rest of WWD’s interview with the “Master of None” actress on WWD.com #wwdeye (📷: @jilliansollazzo)
@barbrastreisand is giving fans a chance to see her perform up close in a new concert series, which makes its debut on @Netflix today. From behind-the-scenes takes to her concert performance in Miami last December, the two-hour streaming special captures Streisand in her element. Pictured here is the singer/actress photographed for WWD in 1963. (📷: Palmieri Tony) #wwdeye #wwdarchive
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)