Sunday, February 17, 2013

VFC 4Q12 Earnings

V.F. Corporation released 4Q12 earnings pre-market on Friday, February 15 and the stock is up 3.3% since the release. VFC reported adjusted EPS of $3.07 for the quarter, up ~32% year-over-year and ahead of street expectations of $3.03. This was driven by strong top-line growth and improved margins. Sales missed estimates, however it grew 4% compared to 4Q11, to $3.003 billion. The sale of John Varvatos during the year had a 1% negative impact on revenues. Gross margin was up 220 basis points to 47.4% from 45.2% in 4Q11 while operating margin expanded 280bp to 15.1%.

The Outdoor and Sportswear segments saw year-over-year revenue gains of 6% and 15%, respectively. Jeanswear, Imagewear, International, and Direct-to-Consumer also saw gains during the quarter. Contemporary Brands' revenue was down 17% during the quarter due to the sale of John Varvatos, however, operating income surged 20% during the quarter.

The company expects 2013 revenues to grow 6% and margins to expand by ~100bp. The company also prides itself in its ability to generate cash and expects cash flow to reach a record $1.4 billion.

VFC was able to sustain top-line growth during a quarter when many competitors slumped. Their diverse portfolio of big-name brands helps to hedge against both fashion risk and weather fluctuations. The company is actively seeking new acquisition targets to strengthen the company and we remain very bullish on VFC in the long-term.

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