) reported third-quarter 2013 adjusted earnings per share of
$3.91, which came above $3.52 earned in the year-ago quarter as
well as the Zacks Consensus Estimate of $3.77. On a reported
basis, earnings per share for the quarter came at $3.89 compared
with the year-ago comparable quarter earnings of $3.42.
Quarter in Detail
V.F. Corp.'s total revenue of $3,266.7 million grew 4.7% from
$3,119.6 million in the year-ago period, on the back of robust
growth in Outdoor & Action Sports, Jeanswear and
International as well as Direct-to-Consumer revenues. However, it
fell short of the Zacks Consensus Estimate of $3,348.0 million by
Gross margin in the quarter increased 90 basis points (bps) to
47.6% from 46.7% in the comparable year-ago quarter, due to
improvement in higher margin businesses and lower product costs.
Moreover, adjusted operating margin expanded 20 bps year over
year to 17.7% as the benefit of higher gross margin was partially
offset by increased selling, general & administrative
(SG&A) expenses as a percentage of sales.
Revenues at Outdoor & Action Sports rose 6.5% from the
year-ago quarter to $1,972.0 million. Consistent growth momentum
at the company's The North Face, Timberland and Vans brands
contributed to increased revenues. Segment operating income rose
nearly 2% year over year to $421.2 million. However, operating
margin contracted 90 bps year over year to 21.4%.
Jeanswear revenues rose about 4.0% to $747.2 million, driven
by improved sales in the Americas region and Europe, partly
offset by weaker sales in the Asia-Pacific region. Also, the
company witnessed significant growth in the segment's operating
income and margin, mainly due to strong international performance
and lower product costs. Segment operating income rose 20.5% to
$158.3 million while operating margin increased 290 bps 21.2% in
Imagewear revenues were almost flat at $284.5 million in the
quarter. Moreover, operating income increased 8.6% to $40.7
million and operating margin at the segment increased 110 bps to
14.3% due to lower year-over-year product costs. The company
anticipates revenues in the segment to grow at a low double-digit
percentage rate in the fourth quarter.
Revenues at Sportswear inched up 0.7% to $155.2 million,
driven by over 25% growth registered in direct-to-consumer sales,
partially offset by mid-teen rate decline in the wholesale
business. Segment operating income increased 29.7% to $24.0
million, primarily due to higher gross profit. Operating margin
came in at 15.5%, expanding 350 bps.
Contemporary Brands' revenues inched up 0.8% year over year to
$105.0 million. Operating income decreased 29.6% to $9.5 million
during the quarter, while operating margin came in at 9.0%,
contracting 390 bps. The company expects the segment's revenues
to improve in the fourth quarter.
The company's International revenues increased 7%. The growth
was largely driven by strong performance of V.F. Corp.'s renowned
brands in the Americas, Asia and Europe. International revenues
constituted 40% of V.F. Corp.'s total revenue in the reported
Direct-to-Consumer revenues increased 14%, driven by the
addition of 55 new stores and improved contributions from The
North Face, Vans, Nautica and Kipling brands. The company's total
owned retail stores were 1,202 at the end of the reported
quarter. Direct-to-consumer revenues accounted for 19% of V.F.
Corp.'s total revenue in the said quarter.
V.F. Corp. ended the quarter with cash and cash equivalents of
$315.7 million and long-term debt of $1,427.1 million. The
company's shareholders equity came in at $5,628.9 million at the
end of third-quarter 2013.
Stock Split and Dividend
The board of directors of this Zacks Rank #2 (Buy) company has
approved a four-for-one stock split to be payable on Dec 20, 2013
to shareholders of record date as of Dec 10, 2013. Apart from
this, the company announced a 21% hike in quarterly cash
dividend. V. F. Corp. will pay a dividend of $1.05 per share on a
pre-split basis on Dec 20 this year to shareholders of record
date as of Dec 10.
The company continues to expect its fiscal 2013 revenues to
increase 6% to $11.5 billion. Gross margins are anticipated to
expand by 150 bps to 48%, given the company's strong performance
in the first three quarters of 2013.
Despite expecting gross margin expansion, the company has
retained its adjusted earnings guidance for fiscal 2013 of $10.85
per share due to anticipation of an impact of 25 cents per share
owing to incremental investments toward long-term growth
Other Stocks to Consider
Other stocks in the apparel industry that are worth a look
Michael Kors Holdings Ltd.
Ralph Lauren Corp.
). Hanesbrands carries a Zacks Rank #1 (Strong Buy), while
Michael Kors and Ralph Lauren both have a Zacks Rank #2
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
RALPH LAUREN CP (RL): Free Stock Analysis
V F CORP (VFC): Free Stock Analysis Report
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