NEW YORK — VF Corp.’s third-quarter profits jumped 24.1 percent as flat jeanswear sales were more than offset by strength throughout the rest of the company’s core portfolio and a solid boost from acquisitions.
The robust quarterly results led VF to offer investors a bullish five-year growth plan.
“We believe we have established a platform that will enable us to generate sales growth of 8 percent annually,” said chief executive officer Mackey McDonald in a statement. “Our position has never been stronger. Our great performance was very much balanced between our core businesses and our acquisitions,” he added on a conference call with analysts and investors.
McDonald said the quarter’s results were especially gratifying in light of generalized softness at retail during the period. He added that the company will continue to seek acquisitions to fill the “white spaces” in the company’s portfolio. VF said the recent acquisitions of the Vans, Napapijri and Kipling brands added 12 cents to earnings per share and $183.6 million to net sales in the quarter.
The Greensboro, N.C.-based apparel manufacturer on Thursday reported net income of $155.4 million, or $1.38 a diluted share, for the three months ended October 2, which beat Wall Street’s estimate by 9 cents. Last year, by comparison, VF had profits of $125.3 million, or $1.14. As expected, VF’s current results included a pretax charge of 8 cents for the disposition of its Playwear business.
Net sales for the quarter advanced 24.9 percent to $1.79 billion from $1.44 billion a year ago.
By division, jeanswear and related apparel, which is VF’s biggest business, saw sales dip fractionally to $709.8 million from $716 million a year ago. The company said in a statement that domestic jeans sales decreased partly due to lower sales of distressed products, but expects an increase in the fourth quarter based on the recent rollout of new lines, including Riders Coppercollection, Buddy Lee Registered and One True Fit.
VF’s other divisions more than took up the slack in jeanswear, however. Sportswear sales shot up 131.1 percent to $167.4 million from $72.4 million last year, thanks to a full-quarter’s inclusion of results from the Nautica, Earl Jean and John Varvatos brands. Last year, those newly acquired brands’ sales were only booked for part of the third quarter, VF said.
Meanwhile, among its other businesses, VF’s global intimates category recorded an 11.9 percent sales increase to $234.6 million from $209.7 million last year, while the outdoor products segment contributed $457.1 million to net sales, a 116 percent gain over the year-ago period.
For the first nine months of the fiscal year, VF recorded a 19.5 percent increase in net income to $349.4 million, or $3.11 a diluted share, against last year’s earnings of $292.3 million, or $2.65.
Net sales for the period grew 17.7 percent to $4.49 billion from $3.82 billion a year ago.
In guidance, VF said fourth-quarter earnings are expected to be flat with last year’s result of 93 cents a share even as sales are forecast to grow approximately 8 percent. Earnings are expected to remain unchanged due partly to increased spending on brand marketing, supply chain projects and other initiatives, as well as a one-time gain of 7 cents for a favorable tax settlement in last year’s quarter.
For the full fiscal year, earnings are forecast to grow about 12 percent over last year’s profits of $3.47 a share. Sales are expected to near the $6 billion mark, a 15 percent increase over 2003 levels. VF said its acquisitions should contribute about 14 cents a share to earnings and $285 million to sales.