The also-rans in the VF Corp. portfolio came through in a big way in the fourth quarter.
Strength in the sportswear and contemporary coalitions — outside its five billion-dollar brands — helped VF Corp. increase its fourth-quarter earnings nearly 30 percent, pushing past analysts’ estimates.
The performance also contributed to a better than 200-basis-point increase in both gross and operating margins for the quarter and VF’s passing the $10 billion mark in revenues for the year, which came in at $10.88 billion.
“We had one billion-dollar brand five years ago — Wrangler — and today we have five,” Eric Wiseman, chairman and chief executive officer, told WWD. “We have smaller brands, like Kipling, that are today growing at the same rate that The North Face and Vans were a few years ago. Kipling was a 50 million euro business when we bought it [in 2004] and it will hit $300 million this year.
“These growth rates weren’t by accident,” he added. “The brands took off because we invested in them.”
In addition to Wrangler, North Face and Vans, Lee and Timberland have sales in excess of $1 billion each.
Wiseman noted that VF’s acquisition strategy — which has favored multiple acquisitions of smaller companies with sharply focused consumer franchises — has been criticized by Wall Street as being spread out across “so many brands in so many markets. I think we’re proving that it may have been too complex for some people to follow, but it’s not too complex for us to manage.”
The strategy continued to generate strong results in the fourth quarter ended Dec. 31, when net income jumped 29.9 percent to $334.2 million, or $2.98 a diluted share, from $257.3 million, or $2.28. On an adjusted basis, EPS was $3.07, 4 cents better than analysts’ consensus estimates.
Revenues were up 4.2 percent to $3.03 billion in the quarter from $2.91 billion in the fourth quarter of 2011. In constant dollars, revenues were up 5 percent. Aided by a decline in cotton prices, gross margin rose to 47.4 percent of sales from 45.2 percent a year ago, and operating margin hit 15.1 percent, up from 12.3 percent.
Wiseman noted that the strongest performance in the quarter came from the sportswear coalition, made up of Nautica and Kipling, which generated a 14.5 percent gain in revenues, to $182.7 million, and a 70.5 percent rise in operating income, to $32.3 million.
The contemporary brands unit — comprising Seven For All Mankind, Splendid and Ella Moss — improved operating profitability 20 percent, to $8.9 million, while revenues dropped 17.1 percent, to $106.9 million. Excluding results from John Varvatos, which was sold in March, revenues increased 4 percent.
“The sportswear and contemporary businesses” — headed respectively by Karen Murray and Susan Kellogg — “had been growing more slowly than the rest of VF,” Wiseman pointed out, “but now, after a couple of years of hard work, they’re right back in the mix. Seven For All Mankind’s jeans business in Europe is nearly as big as its wholesale business in North America.”
Unseasonably warm weather limited sales gains at The North Face and pushed Timberland to lower sales despite strong growth in Asia. Still, the ceo pointed out, quarterly revenue growth at North Face came in at 10 percent and was one point higher at constant currency. “That means we’re gaining market share,” he said.
Wiseman said he expects further growth from the brand as it moves to become less seasonal with more activity-based products tied to interests like yoga and fitness and with properties like moisture wicking.
“We need to be more relevant in markets where there isn’t much of a winter,” he said.
VF initiated 2013 guidance for EPS of $10.70 and revenues of $11.5 billion, both below previous estimates by analysts.
For the full year, profits rose 22.3 percent to $1.09 billion, or $9.70 a diluted share, as revenues rose 15 percent to $10.88 billion.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye