VF Earnings Grow 20% As Jeans Sales Decline And Firm Seeks Brands

Strong growth across most of core businesses — except jeans — allowed VF Corp. to post a 20.2 percent earnings gain in its second quarter.

VF Corp said its jeans sales were off 57 percent in the second quarter

VF Corp. said its jeans sales were off 5.7 percent in the second quarter.

Photo By WWD Staff

NEW YORK — VF Corp. on Wednesday reported a 20.2 percent rise in second-quarter earnings, driven by recently acquired brands and strong sales across most of its core businesses, with the notable exception of jeans.

The company remains on the acquisition trail, but chairman and chief executive Mackey McDonald said that Dockers isn’t “at the top” of the firm’s shopping list.

There has been extensive market speculation that VF was a leading contender to buy that business, which Levi Strauss & Co. has been shopping since May.

“We’re primarily looking not for category brands, but for lifestyle brands,” McDonald said on a conference call with Wall Street analysts.

Acquisitions — including Nautica, Vans, Kipling and Napapijri — have helped to drive much of Greensboro, N.C.-based VF’s recent growth, adding $1 billion in new sales over the past 12 months.

For the three months ended July 3, VF posted net income of $90.1 million, or 80 cents a diluted share, up from $74.9 million, or 68 cents a share, a year earlier. Sales increased 11.9 percent to $1.27 billion.

Executives said they foresee a strong pace through the third and fourth quarters, projecting that VF will record an 8 percent increase in earnings per share and a 12 to 15 percent rise in sales for the year. Last year, VF earned $397.9 million on sales of $5.21 billion. The projected 15 percent rise would bring its sales to $5.99 billion, which could make it the largest publicly traded apparel manufacturer in the world.

By way of comparison, Hong Kong-based sourcing powerhouse Li & Fung Ltd. last year posted revenues of $5.47 billion, and this year has been aggressively signing licensing deals that may bring in additional sales. Beaverton, Ore.-based Nike Inc., in its most recent fiscal year, ended in May, posted sales of $12.25 billion, but apparel represented only $3.55 billion of its business.

Sales at VF’s core jeans unit, including the Wrangler and Lee brands, were off 5.7 percent in the quarter.

“We definitely saw a weakening overall in denim,” said Terry Lay, corporate vice president and chairman of the jeanswear coalition. “The market was definitely down.”
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