Driven by strong growth in its outdoor & action sports portfolio and its direct-to-consumer business, revenues at apparel marketer – VF Corp rose 7 percent from a year earlier quarter to $3.5 billion in the third fiscal quarter ending September 27, 2014.
Outdoor & action sports revenues went up 11 percent from the prior year quarter, including a 9 percent increase in The North Face brand, a 12 percent hike in Vans and a 15 percent surge in Timberland.
VF Corp said its direct-to-consumer revenues shot up by 16 percent with growth coming from every brand and double-digit growth in every region in the reporting quarter, while global sales rose 9 percent driven by strong growth in Europe and Asia Pacific.
In the third quarter of 2014, gross margin improved 70 basis points to 48.3 percent, which VF Corp attributed to continuing shift of its revenue mix toward higher margin businesses. In the same quarter SG&A as a percent of revenues was up 40 basis points to 30.4 percent.
Operating income increased 9 percent year-on-year to $633 million in the third quarter of 2014, compared with $580 million in the same period of 2013, while operating margin stood at 18 percent against 17.6 percent in the third quarter of 2013.
Third quarter of 2013 earnings per share hiked in double-digits to 11 percent to $1.08 per share compared with $0.97 per share during the same period last year. Resultantly, VF hiked quarterly dividend by 22 percent to $0.32 per share.
In its outlook for the full fiscal year, VF Corp expects turnover to reach $12.3 billion, growing 8 percent over the previous fiscal year, with outdoor & action sports revenues expected to increase by 13 percent.
It also revised upwards Timberland brand’s annual growth outlook to 13 percent versus the previously anticipated 12 percent. Gross margin is also expected to expand to around 49 percent and operating margin is forecast to touch 15 percent.
Earnings per share are now expected to reach $3.08 per share, an increase of $0.02 over the previous outlook, representing a 14 percent increase over the previous fiscal year and slightly ahead of its long-term financial target.
“Our third quarter results validate our growth strategy and demonstrate our ability to manage our powerful portfolio in ways that ensure we deliver solid results,” Eric Wiseman, Chairman at VF Corp said elatedly.
He added, “Led by another outstanding performance from our outdoor & action sports business, we delivered strong growth in revenue and earnings and we are squarely on track to deliver another record year for VF and our shareholders.”
