Based in Greensboro, North Carolina,
V. F. Corporation
), one of the world's largest apparel companies, is scheduled to
release its second-quarter 2012 financial results on Thursday, July
The current Zacks Consensus Estimate for the quarter stands at
95 cents per share, indicating an estimated year-over-year decrease
of 15.2%. Revenue, as per the Zacks Consensus Estimate, is $2,177
First-Quarter 2012 Recap
V.F. Corp. reported first-quarter 2012 adjusted earnings of
$1.94 per share, striding ahead of the Zacks Consensus Estimate of
$1.88 as well as the adjusted earnings of $1.82 per share in the
prior-year quarter. The earnings beat was primarily attributable to
strong top-line growth and a contribution of 12 cents per share
from the Timberland acquisition.
V.F. Corp.'s first-quarter revenue of $2,556 million also
exceeded the Zacks Consensus Estimate of $2,448 million. Revenues
eclipsed the year-ago figure by 31%, with Timberland contributing
significantly to the total revenue.
(For full report on earnings study:
V.F. Corp. Beats Yet Again
Bolstered by the better-than-expected March quarter results, the
company now expects earnings of approximately $9.45 per share in
fiscal 2012, up from $9.30 per share guided earlier. However,
V.F. Corp. retained the expected earnings contribution from
Timberland at $1.10 per share.
The company expects revenues to increase approximately 15% year
over year to $10.9 billion in fiscal 2012, of which Timberland is
expected to contribute about $1 billion.
However, V.F. Corp. expects earnings per share comparisons for
the second quarter of 2012 to be challenging, due to the seasonal
nature of Timberland business (which has historically posted losses
in the second quarter), a negative impact from foreign currency
translation and higher pension expense, partly offset by gains from
Agreement of Estimate Revision
For the to-be-reported quarter, the earnings estimates have
remained almost unchanged with only one out of 17 analysts raising
and lowering the estimate over the past 7 and 30 days,
respectively. Moreover, for fiscal 2012, the estimates witnessed
minimal revision, as only one analyst (out of 17) moved upwards in
the last 30 days.
Magnitude of Estimate Revisions
Due to the lack of catalysts impacting the estimates directly or
indirectly, most of the analysts maintained their view.
Consequently, the Zacks Consensus Estimate remains unchanged for
the second-quarter of 2012 over the last 7 or 30 days.
With respect to earnings surprises, V. F. Corp has topped the
Zacks Consensus Estimate over the last four quarters in the range
of 0.87% to 12.55%, with the average at 6.6%.
V. F. Corp Stays Neutral
We remain impressed by the company's consecutive positive
earnings surprise trend, strong organic revenue growth, as well as
the raised management guidance. However, stiff competition from
private label brands and currency fluctuation still remain causes
of concern, thus keeping us on the sidelines.
As one of the world's largest apparel companies with over 30
brands, V. F. Corp is well positioned to generate above average
industry growth and sustain itself in the current challenging
However, skepticism still remain as the company derives about
34% of its sales from international business, which exposes it to
risks of foreign laws and regulations that could negatively affect
operations, foreign consumer preferences, disruptions or delays in
shipments, and currency fluctuations.
V. F. Corp, which faces stiff competition from well established
apparel industry players like
Polo Ralph Lauren Corp.
Sears Holdings Corp.
The Gap Inc.
), carries a Zacks #3 Rank implying a short-term Hold rating. This
correlates with our long-term Neutral recommendation.
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