Riding the strength of The North Face and Vans brands, VF Corp. raised its 2010 guidance on Thursday after posting third-quarter results that easily beat Wall Street’s expectations.
This story first appeared in the October 22, 2010 issue of WWD. Subscribe Today.
The company forecast earnings per share of $6.25 to $6.30, compared with its previous guidance of $6.10.
For the three months ended Oct. 2, income rose 11.4 percent to $242.8 million, or $2.22 a diluted share, from $217.9 million, or $1.94, in the year-ago quarter. Analysts anticipated EPS of $2.11, according to Yahoo Finance. Total revenues gained 6.6 percent to $2.23 billion from $2.09 billion, which included a 6.6 percent increase in sales to $2.21 billion and a 5 percent climb in royalty income to $19.2 million.
“Many of our brands have very good momentum, and we’re committed to keeping this momentum going,” Eric Wiseman, president and chief executive officer, said on the company conference call. “We’re fortunate that we have the financial resources to do so and still deliver such strong improvements in profitability and earnings per share.”
Wiseman said VF’s outdoor and action-sports business, which registered operating margins of almost 20 percent, have strong growth prospects in both the wholesale and direct-to-consumer channels in the U.S., Europe and Asia.
Sales at VF’s outdoor and action-sports division, which includes The North Face and Vans, spiked 14.4 percent to $1.04 billion. Sales in the firm’s jeanswear business, including the Lee and Wrangler brands, inched up 0.9 percent to $671 million. Sales in the contemporary division, featuring Ella Moss, John Varvatos and Seven For All Mankind, increased 0.9 percent to $113.3 million. VF’s imagewear business, including licensed sports apparel such as Major League Baseball, rose 11.2 percent to $243.1 million.
Sportswear sales fell 13.4 percent to $129 million, which was attributed to a shift in timing of Nautica shipments for special programs, the company said.
After hitting a new 52-week high of $89.30, shares of VF on Thursday closed at $85.19, off $2.27, or 2.6 percent, from its previous close. Profit-taking accounted for much of the decline.
Cash and equivalents were $403 million at the end of the quarter, up from $379.1 million at the same point last year, and cash flow generation for the year is expected at $850 million.
For the nine months, income rose 31.1 percent to $517.1 million, or $4.68 a diluted share, from $394.4 million, or $3.54, last year. Total revenues advanced 5.1 percent to $5.58 billion from $5.3 billion.