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Tiffany Montgomery
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Vans and North Face help lift VF results

By Tiffany Montgomery
July 16, 2008 6:42 AM

VF Corp. recorded strong second quarter results, beating earnings estimates despite the tough economic climate and rising costs. The company credited its business model, which includes diversity in brands, geographies and distribution channels.


"Well-managed companies with strong brands can perform well, even in difficult conditions," CEO Eric Wiseman said.


Revenues increased 11 percent to $1.7 billion. Income from continuing operations was $104 million compared with $105.8 million in the same period last year. Earnings per share reached 94 cents vs. 93 cents last year.


The company raised its profit outlook for the year from 10 percent to 12 percent growth. The company is watching costs and inventory closely to offset inflationary pressures.


VF's Outdoor Coalition, led by former Reef President Dave Gatto, was a large factor in VF's strong second quarter performance.


Outdoor Coalition


Revenues rose 17 percent. Higher than expected volume helped offset increased investment to support the growing brands in the group. That investment was expected to dampen overall company profits for the second quarter more than it did.


The North Face revenues grew 40 percent


Vans revenues rose 14 percent, with double-digit increases both domestically and internationally.


Revenues from Vans retail stores grew 20 percent driven by store growth and "healthy" comp increases. In North America, Vans retail stores now account for over 50 percent of the business, VF executives said.


For the second half of the year, Outdoor revenues are expected to grow about 15 percent, with solid gains domestically and internationally.


Results for Reef, also part of the Outdoor Coalition, were not discussed.


International

Revenues grew 23 percent. In constant currency terms, international sales grew 8 percent.


International revenue in the Outdoor Coalition grew 29 percent.


The Western Europe economic climate has become more challenging, but emerging markets of Asia, Russia and South America are performing well. VF anticipates the soft conditions in Western Europe will persist, but expects international revenue to grow 17 percent in second half and 19 percent for the year.


Retail

Revenues increased 15 percent, with the North Face, Vans, Kipling, Napapijri, John Varvatos and Lee growing at double-digit rates.


At the end of the quarter, VF owned 655 stores and are on track to open 90 this year. Retail revenues are expected to grow 20 percent for the year.

 


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