2nd UPDATE: VF Corp 3Q Profit Down 6.8%; Co Sees '09 EPS At High
End
(Adds conference call detail.)
By Jay Miller and Veronica Dagher
Of DOW JONES NEWSWIRES
VF Corp.'s (VFC) third-quarter profit fell 6.8% as the world's largest
clothing maker by revenue faced headwinds from pension expenses and currency
translation, missing analysts' expectations. Still, the company said conditions
stabilized from a rough first half of the year.
"Our third-quarter results are a clear signal that the worst effects of the
recession may be behind us," said Chief Executive Eric Wiseman on a conference
call.
The earnings miss likely sent shares down as much as 7% after the close of
trading.
"It's the immediate impression investors get when they see a miss and when
they compare results to some of the company's competition that has beat
estimates," said Christopher Svezia analyst at Susquehanna Financial Group.
And although the firm also sounded an optimistic note on the year, saying it
now expects earnings of $4.85 to $5 a share - the upper half of its previous
guidance, investors may have been disappointed the company wasn't more bullish
with its view. VF also said it expects revenue to fall 6%, the midpoint of its
earlier expectation of a 5% to 7% decline. Wiseman noted the company remains
cautious given continued challenges for economy. "We're going to continue to
adopt a cautious approach to pointing our business," said Wiseman. "We don't
believe the economy is out of the woods just yet," he said.
VF said it expects stronger revenue comparisons in the fourth quarter, with
earnings up sharply. The company cited growth in its direct-to-consumer
business, improved efficiencies and the absence of 30 cents in restructuring
charges.
The stock, having doubled from its lows a year ago, hit a 52-week high earlier
Monday.
Outperforming its rivals during the economic downturn, the company vowed
earlier this year to maintain its five-year plan to diversify through
acquisitions and new boutiques.
The company posted a profit of $217.9 million, or $1.94 a share, compared with
$233.9 million, or $2.10 a share, a year earlier. The latest quarter was hurt by
17 cents a share from a higher pension expense and currency translation, and the
year-ago got a 7-cent lift from unusual items.
Revenue fell 5.1%, to $2.09 billion.
A survey of analysts by Thomson Reuters expected earnings of $1.95 a share on
$2.1 billion in revenue.
Gross margin ticked down to 44.3% from 44.4%.
International revenue dropped 2% on a constant-currency basis, hurt by
weakness in the European jeanswear market.
Sales of outdoor apparel were roughly flat, or up 3% on a constant-currency
basis. By that measure, sales of the North Face brand rose 10% and Vans rose 4%.
VF also raised its quarterly dividend by a penny, to 60 cents.
-By Jay Miller and Veronica Dagher, Dow Jones Newswires; 212-416-2261;
jay.miller@dowjones.com
(END) Dow Jones Newswires
10-26-091730ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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