VF QUARTER NET FUELED BY JEANS, FLEECE SALES
Byline: Thomas J. Ryan
WYOMISSING, Pa. — Despite weaknesses in some scattered areas, VF Corp. continued to do a lot of things right in 1994.
Led by stellar performances in jeans, fleece and children’s wear, VF Corp. reported earnings rose 23 percent in the fourth quarter on a 17 percent sales gain.
In the quarter ended Dec. 31, earnings rose to $74.9 million, or $1.15 a share, from $61.1 million, or 94 cents, a year earlier. The 1993 results includes a 13 cents a share provision related to writedown and reserves for Marithe & Francois Girbaud jeans. Per-share earnings were a penny higher than Wall Street estimates, and the market responded moderately. On the New York Stock Exchange, the stock rose 1/8 to close at 50 5/8 on Tuesday.
Sales increased to $1.29 billion from $1.1 billion.
In the year, earnings rose 11.4 percent to $274.5 million, or $4.20 a share, from $246.4 million, or $3.80, in 1993. Sales increased 15 percent to $4.97 billion from $4.32 billion.
Lawrence R. Pugh, chairman and chief executive officer, said the record performances of both the year and the quarter came in “right on target.”
“The combination of aggressive growth strategies and conservative financial management has enabled us to demonstrate steady progress in sales and earnings over the past several years despite the ups and downs of our industry,” he said.
The firm’s Wrangler, Lee, Vanity Fair, Bassett-Walker, Healthtex, and Red Kap businesses all racked up record sales in the year, Pugh noted. Strength in these areas offset weakness in other areas, including sports licensing products, Jantzen casualwear, Girbaud jeans, and some international lines in the intimate apparel division.
In the jeanswear segment, operating profits rose 40 percent in the quarter, to $96.3 million while sales moved ahead 7.5 percent to $647 million. For the year, jeanswear profits rose 20 percent to $372.4 million with sales ahead 5.3 percent to $2.5 billion.
Pugh said jeanswear’s performance was driven by the global expansion of Lee and Wrangler and growing distribution for the Riders brand with discounters.
Decorated knitwear operating profits surged 90.9 percent in the quarter to $19.9 million, with sales ahead 41.2 percent to $175.4 million. Operating profits in the full year catapulted to $32.4 million from $3.9 million, with sales climbing 59 percent to $623.3 million. The sales gains partly represent the acquisition of Nutmeg Industries and the addition of sports licensing products from H.H. Cutler. Both firms were acquired in January 1994.
Pugh said the decorated sportswear business benefited from improved demand and better capacity utilization at Bassett Walker, its T-shirt and fleecewear division. This offset weakness in the sports licensing group.
“The licensed sports part of our business remains a concern of us, particularly through the first half of 1995, but a greater emphasis on our branded programs and state-of-the art service capabilities should enable us to remain one of the strongest players in the industry,” Pugh said.
In the intimate apparel segment, which includes Vanity Fair, Vassarette, and Barbizon, operating profits gained 17.9 percent in the quarter, to $13.5 million with sales ahead 13.6 percent to $192.8 million. Operating profits in the year improved 5.3 percent to $60.3 million with sales ahead 8.3 percent to $724.5 million. Pugh cited “tremendous momentum” at Vanity Fair Mills and said intimate apparel is seeing gradual improvement in international markets.
In playwear, operating profits more than doubled in the quarter, to $10.3 million from $4.3 million, with sales surging 130 percent to $100.8 million. For the year, profits gained 98.7 percent to $36.5 million with sales ahead 87.2 percent to $367.5 million. The sales gains reflect the acquisition of the children’s wear products from H.H. Cutler acquisition. Pugh said Healthtex and Cutler are working together on rollout of the Fisher-Price brand license this year.
Meanwhile, specialty apparel’s operating profits declined 51 percent to $10.7 million with sales ahead 9.9 percent to $173.2 million. For the year, earnings fell 5.4 percent to $75.9 million with sales rising 10 percent to $709.3 million.
Pugh said Red Kap and JanSport “had an outstanding year” but Jantzen’s non-swimwear businesses, including casualwear and men’s sweaters, were a drag on earnings, particularly in the fourth quarter.
“Our financial position continues to be very solid,” Pugh said. “Cash flow from operations reached an all-time high while yearend debt as a percent of total capital declined to 33 percent, the second lowest level in six years.”
He said the financial position “gives us the flexibility to fund the growth of our business, continue our share buyback program, pay dividends, and reduce debt.”
Looking ahead, Pugh said he expects 1995 earnings to increase approximately 8 to 10 percent, which he noted was in line with the company’s long-term goals: “We will be concentrating heavily this year on the turnaround of several underperforming divisions, the continued growth of our core businesses and cost reduction programs.”
— Fairchild News Service