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In the quarter, gross margins rose almost 2 full percentage points to 37.5 percent of sales while operating margins improved to 12.2 percent from 11.3 percent last year. Last year’s results included the impact of restructuring charges. Excluding the charges, operating margins in the 2002 quarter were 11.8 percent.
The company also issued second-quarter guidance of earnings per share that will be flat to down 5 percent, excluding restructuring charges, from last year’s 77 cent performance. Wall Street’s expectations were 85 cents. Because of its dependence on the back-to-school season and other seasonal factors, VF typically posts stronger results in the second half of the year than in the first half.
In spite of Wall Street’s second-quarter expectations, McDonald said during the call, "Our second quarter is on plan."