) reported first-quarter 2013 adjusted earnings of $2.43 per
share, speeding ahead of the year-ago earnings of $1.94 and Zacks
Consensus Estimate of $2.17. The year-over-year increase was
primarily driven by strong top-line growth and improved margins.
Quarter in Detail
V.F. Corp.'s first-quarter revenue of $2,611.9 million fell short
of the Zacks Consensus Estimate of $2,652 million. However, it
grew 2.2% compared with the year-ago period, on the back of
robust growth in Outdoor & Action Sports, international and
direct-to-consumer revenues. However, the sale of John Varvatos
in Apr 2012 had a negative impact of 1 percentage point on
Gross margin in the quarter increased 240 basis points to 48.1%
from 45.7% in the comparable year-ago quarter, resulting from an
improvement in higher margin businesses and lower product costs.
Moreover, adjusted operating margin expanded 130 basis points to
13.8%, reflecting higher gross margin.
Outdoor & Action Sports
surged 10% from the year-ago quarter to $1.384 billion. Continued
growth momentum at the company's The North Face, Vans brands and
at Timberland brand contributed to the revenue growth. Segment
operating income increased 12% year over year, while operating
margin expanded 40 basis points to 16.4%.
revenue declined 3% to $718 million. The decline was attributed
to lower sales in the Americas region, difficult conditions in
the mid-tier channel as well as weak performance in Europe and
Asia. However, the company witnessed significant growth in the
segment's operating income and margin, mainly on lower product
costs and improved operating efficiencies. Segment operating
income rose 29% year over year to $143 million.
revenue dipped 9% in the quarter to $253 million. Moreover,
operating income and margin at the segment declined 12.5% due to
increased 4% to $128 million driven by increased Nautica and
Kipling brands revenue. Segment operating income increased 13.9%
primarily due to robust revenue growth and operational
revenue slumped 18% to $104 million due to the sale of John
Varvatos. Operating income decreased 15% during the quarter,
while adjusted operating margin expanded 40 basis points on the
back of increased direct-to-consumer business.
revenues increased 6%. The growth was largely driven by strength
across the biggest brands in America, Asia and Europe.
revenue increased 12%, driven by the addition of 20 new stores
and improved contributions from The North Face, Vans and
Timberland brands. The company's total owned retail stores were
1,132 at the end of first quarter. Direct-to-consumer revenues
reached 20% of VF's first quarter total revenues.
V.F. Corp. ended the quarter with cash and cash equivalents of
$300.4 million and long-term debt of $1.428.5 million. The
company's shareholders' equity came in at $5.089 billion at the
end of first-quarter 2013.
The board of directors at this Zacks Rank #3 (Hold) company
declared a quarterly cash dividend of 87 cents per share.
Dividend will be paid on Jun 20, 2013 to shareholders of record
as of Jun 10, 2013.
Looking into 2013
The company expects fiscal 2013 revenue to increase 6% to $11.5
billion. Gross and operating margins are anticipated to expand by
100 basis points.
Based on the better-than-expected first quarter results, V.F.
Corp. projects its adjusted earnings for fiscal 2013 to rise by 5
cents to $10.75 per share, compared to the previous forecast of
$10.70 per share.
Other Stocks to Consider
Other stocks in the apparel industry that are worth considering
G-III Apparel Group Ltd.
Ralph Lauren Corporation
Under Armour Inc.
), all of which carry a Zacks Rank #2 (Buy).
G-III APPAREL (GIII): Free Stock Analysis
RALPH LAUREN CP (RL): Free Stock Analysis
UNDER ARMOUR-A (UA): Free Stock Analysis
V F CORP (VFC): Free Stock Analysis Report
To read this article on Zacks.com click here.