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VF Net Leaps 51.4 Percent

VF Corp. delivered a fourth-quarter earnings gain of 51.4 percent, which is against a tough macroeconomic backdrop that contributed to weakness in its...

VF Corp. delivered a fourth-quarter earnings gain of 51.4 percent, which is against a tough macroeconomic backdrop that contributed to weakness in its Nautica sportswear business.

This story first appeared in the February 6, 2008 issue of WWD.  Subscribe Today.

Net income, driven by the firm’s jeanswear and outdoor businesses, weighed in at $164.4 million, or $1.46 a diluted share, which compared with $108.6 million, or 95 cents, a year earlier. Revenues for the three months ended Dec. 31 jumped 22.3 percent to $2 billion from $1.6 billion.

Despite the profit boost, which outpaced the $1.42 a share Wall Street had penciled in for the quarter, the Greensboro, N.C.-based firm is treading cautiously into 2008.

“There is no question that the current environment is very challenging,” said president and chief executive officer Eric Wiseman on a conference call with investors and analysts Tuesday after the market closed. “We are coming off a highly promotional holiday season and our customers are planning very cautiously for 2008.”

The company has not seen any unusual delay in orders, nor has skittishness sullied VF’s international businesses.

In the jeanswear division, home to the Lee and Wrangler brands, quarterly profits increased 12.7 percent to $112.8 million, which is on a 3.1 percent boost in sales to $722 million. U.S. revenues were flat in the division, though the mass market business saw a 5 percent top-line increase for the quarter.

Earnings in the outdoor division leapt 42.6 percent to $94.6 million, on a 31.6 percent increase in sales to $595.5 million. Profits in the imagewear division rose 5.9 percent to $43.8 million as sales gained 20.1 percent to $277.3 million.

In VF’s sportswear division, price promotions, particularly in its Nautica outlet stores, ate into profits, which fell 28.8 percent to $20 million as sales rose 5.7 percent to $208.5 million.

The new contemporary brands unit, which includes Seven For All Mankind and Lucy, drew profits of $20 million out of $109.6 million in sales.

For the full year, VF posted a 10.9 percent rise in net income to $591.6 million, or $5.22 a share, versus $533.5 million, or $4.72, in 2006. Sales hit $7.2 billion, a 16.1 percent jump from $6.2 billion a year earlier.

“We are not planning any big recovery in 2008,” said Wiseman. “We have taken into account the difficult environment and planned accordingly.”

The company is looking for 9 percent sales growth this year, without taking into account any possible acquisitions, as well as a 10 percent bump in earnings per share from continuing operations.