VF Corp. (VFC) reported first-quarter profits on Friday that beat analyst expectations, fueled by an increase in direct-to-consumer sales. The company, which owns famous brands like The North Face, Timberland and Wrangler among others, also maintained its guidance on 2013 revenue, but upped its forecast on adjusted earnings per share.
For the three-month period ended March 30, Greensboro, North Carolina-based VF Corp. recorded revenues of $2.61 billion, up 2 percent from $2.56 billion in Q1 2012. On a GAAP basis, net income during the quarter totaled $270.4 million, or $2.41 per share, compared to $215.2 million, or $1.91 per share, in the year prior quarter. On an adjusted basis, which excludes costs associated with the acquisition of Timberland, net income climbed to $272.7 million, or $2.43 per share, from $218.5 million, or $1.94 per share, in last year’s first quarter.
Wall Street was expecting the company to report earnings of $2.19 per share on revenue of $2.63 billion.
VF announced in June 2011 that it was buying Timberland for $2 billion, with the acquisition completed in September 2011.
The company’s outdoor and action sports segment saw a 10 percent rise in sales to $1.38 billion, led by a 25 percent increase in the Vans brand, including a 30 percent rise in sales in Europe. Sales of The North Face brand rose 6 percent. Direct-to-consumer sales of the brand posted double-digit increases.
Overall direct-to-consumer sales rose 12 percent in the quarter, paced by a 25-percent spike in The North Face items and 18 percent more sales of Timberland products.
Gross margin for the company improved 240 basis points to 48.1 percent.
Offsetting some of the overall sales gains were decreases in jeanswear, including a 2 percent decline in sales of the Wrangler brand and 6 percent drop in Lee sales. Operating income in the segment, however, increased 29 percent to $143 million.
“VF’s first quarter performance is a great example of our strong business model, disciplined execution and our ability to leverage all aspects of our portfolio,” said Eric Wiseman, chairman and chief executive at VF Corp.
For the full year, VF Corp kept its revenue guidance at a 6 percent increase to $11.5 billion. Regarding profits, the company now sees 2013 adjusted EPS at $10.75, up from the $10.70 that it guided it February. On a GAAP basis, which includes about 10 cents per share in costs related to the Timberland acquisition, EPS is expected at $10.65.
Shares of VF have been steadily trekking upward for years, regularly making new all-time highs, including hitting $178.91 on Thursday. Whether its profit-taking from the high levels or disappointment that VF didn’t beat analyst revenue predictions for the quarter, shares are sliding in early trading on Friday, down more than 3 percent around $173.
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