READING, Pa. — VF Corp. reported earnings were flat in the first quarter, but shareholders at the annual meeting here Tuesday heard better news about the rest of the year, when gains are expected to be in double digits.
In the quarter ended April 2, the company earned $52.9 million, or 81 cents a share, against $52.7 million, or 83 cents, a year ago on fewer shares. Operating profit rose 7.2 percent, to $108.7 million from $101.4 million, but the gain was offset by higher interest expense associated with the recent acquisitions of H. Cutler and Nutmeg Industries, and to a slightly higher tax rate.
Sales in the three months were up 10.5 percent, to $1.1 billion from $1 billion.
Lawrence R. Pugh, chairman and chief executive officer, said the results are on target and comparisons should improve as the year progresses. He said sales and earnings are expected to post double-digit increases in the second half.
“We remain highly optimistic that we will be able to achieve full-year earnings growth in the 8 to 10 percent range,” he said.
He further stated that sales this year are expected to reach $5 billion. He also was bullish about the firm’s overseas business and said it will account for 25 to 30 percent of total sales within two to three years.
In 1993, VF earned $246.4 million on sales of $4.3 billion.
The forecast appeared to satisfy the several hundred shareholders who packed a ballroom of the Reading Motor Inn and asked not a single question during the session, which lasted about an hour, including a fashion show.
Turning to new products, the officials expressed enthusiasm for the seamless light control bras and panties called Seamless Body Sleeks introduced in March by VF’s Vanity Fair Mills unit. They said it generated a greater reception from retailers than any other item ever produced by Vanity Fair.
Breaking out results by categories for the quarter, VF also reported it has been reorganized into five new business groups: jeanswear, decorated knitwear, intimate apparel, playwear and specialty apparel. Year-ago results have been restated to conform with the new groups.
Jeanswear, which includes domestic and international jeans operations, posted flat sales at $589 million. Operating earnings at the division rose 4.8 percent, to $80.5 million. Pugh said the results reflected robust international demand for the Lee and Wrangler brands, as well as improved operating margins in Lee and Wrangler’s domestic business. With the exception of Girbaud, all jeanswear divisions posted healthy profit increases, he noted.
Girbaud has been suffering from product and cost problems.
Boosted by the acquisitions of Nutmeg and H.H. Cutler, sales at the decorated knitwear division jumped 86.3 percent, to $116.9 million. Operating losses widened to $5.4 million from $3.3 million, but should improve beginning in the second quarter, Pugh said. Decorated knitwear includes licensed, branded and private label fleece and T-shirts. Units are Bassett-Walker, JanSport College, Nutmeg Mills and Cutler-CSA. Intimate apparel, including Vanity Fair Mills, Barbizon, Vivesa and Intimates-France, posted a 3 percent sales gain, to $174.9 million, and margins improved. Operating profit rose 10.4 percent, to $17.5 million Playwear, a new category, comprises the children’s businesses at Healthtex, Cutler, Lee and Wrangler. Playwear sales came to $77.8 million, up from $45 million. Margins improved and operating profits more than doubled to $6.1 million. At the specialty apparel unit, which includes Red Kap, JanSport equipment and Jantzen, sales rose 6.9 percent, to $164.4 million, and operating profit was up 7.2 percent, to $19.7 million.