28 Oct. 2009
VF ANNOUNCES INCREASE IN DIVIDENDSVF Corp. has announced results for the third quarter of 2009. Third quarter revenues were $2,093.8 million, a decline of 5% compared with $2,206.6 million in the third quarter of 2008, with foreign currency translation accounting for two percentage points of the decline. Net income in the current quarter was $217.9 million compared with $233.9 million in the prior year's quarter. Earnings per share declined to $1.94 from $2.10. The current year included a $0.17 per share combined impact from higher pension expense and foreign currency translation of $0.11 and $0.06 per share, respectively. Also impacting the comparison was a $0.07 per share benefit from unusual items in last year's third quarter.
For the first nine months of 2009, revenues were $5,304.9 million, down 7% from $5,730.5 million in the prior year period. Foreign currency translation accounted for three percentage points of the decline. Net income and earnings per share both declined 19% to $394.4 million and $3.54 respectively. A majority of the earnings per share decline was due to higher pension expense and foreign currency translation impacts of $0.36 and $0.19 per share, respectively, which together accounted for $0.55 of the $0.83 per share reduction.
"We achieved an important improvement in our third quarter performance relative to the first half of the year as conditions have stabilized, giving us the confidence to move our earnings guidance toward the higher end of our prior range," said Eric C. Wiseman, Chairman, President and Chief Executive Officer. "Our relentless drive to control costs, reduce inventories and focus investments on our highest return opportunities has served us very well during these difficult and volatile times. We will continue this disciplined approach through the balance of this year and into 2010 to maximize opportunities for both top and bottom line growth."
Wiseman added: "Our four largest brands - Wrangler, Lee, The North Face and Vans, representing approximately 60% of our total revenues - are strong and healthy, and continue to gain share in most markets. And, we were pleased that our fifth largest brand Nautica grew revenues and achieved a significant improvement in profitability in the quarter with a return to double-digit margins."
"We are also pleased to announce a 2% increase in our quarterly dividend, to $0.60 per share, which will mark 2009 as the 37th consecutive year of higher dividend payments to shareholders,” Wiseman said. “Strong cash generation has enabled us to continue to build on our long-established track record of increasing our dividend and returning superior value to our shareholders."
Third quarter revenues in the Outdoor and Action Sports coalition were about even with the prior year, with operating income and margins each reaching record levels in the period. On a constant currency basis, revenues rose 3%. Global revenues of The North Face and Vans brands grew 10% and 4%, respectively, in the quarter on a constant currency basis. Total coalition revenues in the Americas businesses rose 1%, while international revenues were up 4% in constant dollars, led by exceptionally strong growth in Asia. Total direct-to-consumer revenues for all Outdoor and Action Sports coalition rose 17% in the quarter, with double-digit growth for their The North Face, Vans and Napapijri brands. Operating income also rose with margins reaching a record 23.1% in the quarter, with continued expansion in gross margins.
Looking ahead, revenue growth is expected to accelerate in the fourth quarter primarily due to an increase in company-owned retail store business, as well as more favorable foreign currency translation rates. In addition, operating margins should continue to expand in the quarter compared with the prior year period. "We are confident that VF has the right levers in place to drive long-term shareholder value: a foundation of powerful brands with significant long-term growth potential; expanding international and direct-to-consumer platforms that will enhance our brands' reach to consumers while also driving higher margins; and exceptionally strong cash flow that supports our solid dividend and acquisition strategy," said Wiseman.
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