VF Corp. is just three quarters into a five-year strategic growth plan, but early results already have the company raising 2017 guidance.The group on Monday posted third-quarter results that bested Wall Street’s estimates, and the company is committing another $25 million to accelerate its growth strategy.For the period ended Sept. 30, the company posted adjusted earnings per share of $1.23 on total revenues of $3.51 billion. Wall Street was expecting adjusted EPS at $1.12 on revenues of $3.39 billion.The company said that gross margin from continuing operations rose 100 basis points to 50.1 percent in the quarter. The Vans brand saw revenue up 28 percent, while international revenues gained 13 percent. Direct-to-consumer revenues rose 18 percent and digital revenues were up 38 percent.J.P. Morgan analyst Matthew R. Boss, said VF ended the quarter with $1.5 billion of cash on hand and clean inventories that were up 1 percent year-over-year.In a telephone interview, Steven Rendle, president and chief executive officer, said that as the company is working on its strategic plan, it is still keeping tabs on acquisition opportunities. While some on Wall Street may think a big transaction that can move the proverbial needle forward is what is needed at a company expected to do $12 billion in annual volume, VF’s ceo disagreed.According to Rendle, the top consideration is the brand component, and it is looking for brands that “will help us connect even more intimately with consumers today.” And it doesn’t have to be a new brand added to the existing portfolio. The company is also open to brands that can help VF grow its existing portfolio organically. The Williamson-Dickie transaction in August helped the firm expand its workwear business.There are two other components of its mergers and acquisitions strategy that also are important. He said companies that provide capabilities, such as digital, could play a role provided the asset can “put us in a more advantageous opportunity for growth.” The last criteria he noted had to do with “catalysts, or ideas, that bring in accelerated growth of a current brand.” And it’s that component, which suggests that even a small company if it can provide the right kind of momentum could be an acquisition, that goes contrary to the mega-deal theory. Rendle said the company is “absolutely able to act” if it can find the right brand, capability or catalyst that can help it grow a product offering and connect with the consumer base.As for where the company is at currently in its strategic growth plan that was disclosed in March, Rendle said VF is still in the “early stages” of a 20-quarter journey. He noted that strength was seen in the quarter from its diversified portfolio, and he cited direct-to-consumer, international, Vans and the workwear businesses as drivers of growth in the quarter.The ceo also noted that some brands, such as The North Face and Timberland, still need more work to bring them back to their historic growth levels. He said the company is working on that through new collections at The North Face and collaborations on the urban exploration theme. There’s also new lifestyle fleece product, as well as high-end down outerwear for men and women. At Timberland, the focus has been on diversifying the product line, and having weather appropriate product. Rendle said the initiatives will result in a stronger Fall 2018, and expectations are the two will be back to historic growth by Fall 2019.As for the fourth quarter and holiday sales, Rendle said the overall market for outerwear is good, and cleaner “than in the last 24 months. There’s not a lot of back stock of inventory that we need to compete against.”For 2017, the company said it expects GAAP EPS to be $2.73, and $3.01 on an adjusted basis, compared with the previous forecast of $2.96. Revenues were guided to be up 6 percent to $12.1 billion, compared with prior guidance of $11.85 billion.As for the additional $25 million to fuel growth – that’s on top of the $40 million disclosed in July, which brings the total to $65 million – the company’s chief financial officer Scott Roe said half of the funding is earmarked for demand creation such as advertising, and the balance for areas such as data analytics and advances in manufacturing. He gave customization as one example in the Vans business, where the brand’s site allows for the ability to customize user content.Separately, executive chairman Eric Wiseman is slated to retire on Oct. 28. Rendle will succeed him as chairman of the board of directors, and retain his current role as ceo.Shares of VF on Monday were up 5.4 percent to close at $69.95 in Big Board trading.
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