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Tiffany Montgomery
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VF Corp: Q4 stronger than expected

By Tiffany Montgomery
February 06, 2008 6:41 AM

While others struggle, VF Corp. continues to do well even in a tough economy.


VF owns a multitude of brands, including Vans, Reef, The North Face, Wrangler, Nautica and 7 For All Mankind.


On a conference call yesterday, the company talked quite a bit about plans for Vans and The North Face. Details are below.


Fourth quarter


Revenues grew 22 percent to $1.96 billion


Earnings per share rose 18 percent to $1.46


Full year


Revenues grew 16 percent to $7.2 billion


Earnings per share rose 14 percent to $5.41


Outdoor coalition


VF's outdoor coalition includes Vans, Reef, The North Face, JanSport, Eagle Creek and Eastpak.


Dave Gatto, president of the Outdoor Americas, said:


Revenues for the group grew 24 percent for the year and operating income grew even higher


Fourth quarter revenue grew over 30 percent


VF is "particularly delighted" by strength of The North Face and Vans.


The North Face achieved revenue growth higher than the 24 percent average for the group. The North Face opened five full price retail stores that have exceeded plans. The North Face will launch an e-commerce Website this fall.


The North Face's growth is coming from the same distribution footprint.


Vans' wholesale and retail businesses grew more than 20 percent with stronger increases in wholesale footwear and wholesale apparel.


VF is "pleased" with Vans momentum in apparel and will add to its apparel breadth in 2008.


Vans opened 24 full price stores and two outlet stores in 2007 and plans to exceed those numbers in 2008.


Vans current backlog is comparable to last year, reflecting the more challenging environment.


Revenues are expected to grow double digits in 2008.


VF remains "encouraged" by the future potential of Reef and JanSport which "continue to drive success with their core consumers."


International outdoor


Total revenue increased 35 percent for the year.


Revenues should grow double digits in 2008


The North Face is the primary revenue growth driver


Vans international revenues grew 50 percent in 2007. Growth in 2008 will come from expanding apparel, and retail store openings in new geographies. Vans will launch in China this fall.


Apparel lines for Eastpak and Reef will be further developed and enhanced.


Cash

VF had $322 million in cash on its balance sheet at year end. You have to wonder what they are going to do with all that money. Perhaps more acquisitions in the action sports world are in store?


Current environment

CEO Eric Wiseman said he expects the economy to continue to be challenging. He said customers are planning cautiously for 2008, but VF is not seeing unusual amounts of order delays or cancellations.


VF does not believe there will be a big recovery in 2008.


The international business has not been effected by trends in the U.S.


Guidance

Despite the tough economy, VF expects 9 percent revenue growth and 10 percent profit growth in 2008. The company says that's possible because of its diversified business model, including its diversity of brands, products, channels and distribution and geographies.


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