VF Corp. is padding the fourth-quarter marketing budgets of its The North Face and Vans brands as it looks to finish the year on a high note.

This story first appeared in the October 21, 2014 issue of WWD. Subscribe Today.

The brands, two of five in the VF portfolio with annual sales in excess of $1 billion, will receive $10 million in additional marketing spending during the fourth quarter as the company’s Outdoor and Action Sports coalition, responsible for about 58 percent of VF’s year-to-date revenues, zeroes in on a double-digit increase for the year. OAS, which also includes Timberland and other brands, grew 10.6 percent to $2.18 billion in the third quarter, and the unit’s 12.9 percent increase in operating income helped offset profitability declines in the Jeanswear, Sportswear and Contemporary units.

While The North Face, Vans and Timberland tallied strong revenue growth of 9, 12 and 15 percent, respectively, those figures represented a sequential decline from the stronger results — increases of 11, 21 and 19 percent — reported for the second quarter.

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Eric Wiseman, chairman, president and chief executive officer of VF, explained that much of the decline was attributable to wholesale orders being pushed into the fourth quarter from the third, while direct-to-consumer revenues rose 32 percent at The North Face, 18 percent at Vans and 6 percent at Timberland.

“This might concern me if I saw weakness in our stores,” he told WWD, “but this is clearly about our wholesale partners.”

Still, VF is taking no chances. “When people see the North Face TV commercial we’re running this fall, it will touch them,” he said. “We’re focusing on creating fewer, more compelling products and telling our stories in more compelling ways through consumer-facing media.”

Overall, VF’s net income for the quarter ended Sept. 27 was up 8.5 percent to $470.5 million, or $1.08 a diluted share, from $433.8 million, or 97 cents, in the prior-year period. Revenues rose 6.8 percent to $3.52 billion from $3.3 billion a year ago. The bottom- and top-line figures were slightly below analysts’ consensus estimates for earnings per share of $1.10 and revenues of $3.57 billion, but investors were untroubled by the shortfall, taking note of increased full-year guidance, an increase in gross margin to 48.3 percent of sales from 47.6 percent a year ago and an increase in inventories — 4 percent to $1.82 billion — that was smaller than its revenue increase.

Shares, down on the initial disclosure of results, ended the day up 0.3 percent at $63.96.

VF has said throughout 2014 that it expected to see second-half improvement in its jeanswear business, revenues for which declined 2.5 percent to $1.3 billion in the first six months of the year. Jeanswear revenues were up 0.4 percent to $750.4 million, and ahead 2 percent at constant currency, in the third quarter, although segment profit dropped 0.8 percent. While Wrangler revenues, derived principally from men and in the mass channel, rose 3 percent, the Lee brand, more reliant on females and midtier stores, saw revenues contract 1 percent, with a “low-double-digit decline in the Americas region partially offset by 30 percent growth in Asia Pacific and a low-single-digit increase in European sales,” the company said.

“The Lee business is anchored in the midtier channel and its three biggest customers are Kohl’s, J.C. Penney and Sears, all of which have their challenges,” Wiseman said. “We’ve been combatting that with innovative new products, like the Modern Series [for men] and the Curvy Fit series [for women] launched earlier this year and the Heavenly Touch line just coming out now. The business isn’t promotional where we have new, innovative products — and these are selling at full price.”

Wiseman noted that VF does about 11 percent of its volume through the mass channel and 4.5 percent each in department stores and midtier retailers. “The rest is elsewhere,” he said. Direct-to-consumer sales rose to 22 percent of total revenues in the quarter, from 19 percent a year ago, while international sales, helped by 19 percent growth in China, accounted for 41 percent of revenues, up 1 point from a year ago.

VF continues to expect fourth-quarter year-on-year comparisons in jeanswear to be the best of the year. It lifted full-year EPS estimates 2 cents to $3.08 a share, 2 cents higher than earlier projected despite an expected 2-cent negative impact from foreign exchange.

Year-to-date net income rose 9.8 percent, to $925.4 million or $2.10, while revenues were up 7 percent to $8.61 billion.

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