VF Corp. saw lower fourth-quarter profits, despite its revenues climbing overall and in all operating segments but its contemporary unit.
This story first appeared in the February 23, 2011 issue of WWD. Subscribe Today.
The Greensboro, N.C.-based apparel giant also said Tuesday it expects 2011 earnings to grow more than 35 percent, helping to lift its shares 7.5 percent to $96.52 even as the S&P Retail Index fell 2.1 percent to 515.68.
For the three months ended Jan. 1, profits fell 18.9 percent to $54.2 million, or 49 cents a diluted share, from $66.9 million, or 60 cents, in the year-ago quarter.
Total revenues rose 11 percent to $2.13 billion from $1.92 billion as sales gained 11.1 percent to $2.10 billion. By category, outdoor and action sports revenues grew 19.9 percent to $896.5 million; jeanswear rose 6.8 percent to $688.5 million; imagewear gained 5.2 percent to $233.8 million, and sportswear increased 11.4 percent to $157.5 million. Contemporary brands, which include Seven For All Mankind, John Varvatos, Splendid and Ella Moss, was the only category that saw a decline, falling 8.7 percent to $115.3 million. The company said that the U.S. premium denim market remains soft, which contributed to a decline in revenues for Seven For All Mankind, while its other contemporary brands saw gains in the quarter.
Eric Wiseman, chairman and chief executive officer, told Wall Street analysts during a conference call that select price increases will be “taken across our brand portfolio to help offset product cost inflation. We’re aware we’re entering a new environment here in terms of consumer reaction to broadly higher apparel prices and that some trade-off in unit volume is likely. I’m confident our plans for 2011 take that into account….[W]e believe we have the most competitive business model in the industry, giving us confidence in our ability to continue the momentum established in the latter part of 2010 and navigating through the challenges and uncertainties created by cost inflation.”
He noted that the firm’s diversified base of contractors allows it to “adjust our sourcing strategies fairly quickly given the strength of the global supply chain to ensure we’re taking advantage of the best value in the market at any point in time.”
The firm projected revenues in 2011 to increase by 8 percent to 9 percent and earnings per share to improve 35 percent to 37 percent, to between $7 and $7.10. VF’s 2011 outlook includes 15 percent growth in international revenues and 10 percent to 15 percent gains in the direct-to-consumer business.
For the year, income rose 23.9 percent to $571.4 million, or $5.18 a diluted share, from $461.3 million, or $4.13, in 2009. Total revenues rose 6.7 percent to $7.70 billion from $7.22 billion.