For the three months ended Sept. 30, VF Corporation saw income grow by 12.9 percent to $233.9 million, with sales up by 6.5 percent to $2.19 billion. The company’s Outdoor Coalition was clearly the biggest earner, with a 16.9 percent increase in operating income, led by 15 percent growth at The North Face and 11 percent at Vans. Though VF Corp. invested heavily in infrastructure, operating income in this division reached $188.6 million, and its revenues were up by 12 percent to $906.6 million, helped by strong growth in volume and international expansion. Within Outdoor, VF Corp. also saw double-digit gains with Kipling, Reef, Eastpak and Napapijri. Fourteen stores opened during the quarter.
International sales made up 34 percent of the total, and they grew by 22 percent in the quarter. Strength in Western Europe led a 22 percent growth in sales in the Outdoor Coalition outside the USA. But despite the promising figures, VF Corp. noted that it had seen a weakening in European business similar to that in the domestic market. Sales in the company’s imagewear division fell by 3 percent, while contemporary brands jumped by 208 percent. Overall, VF’s sales outside the USA were up by 22 percent in the third quarter. Comparable store sales were up in the high single digits, but strangely the business was not good in its outlet stores. Its activewear sports licensing business was down in the low single digits as well.
The company had previously forecast a 9 percent growth in sales for the third quarter; it says that it fell short because of the declining market and the strengthening of the dollar. VF Corp. revised its guidance for the fourth quarter and is now expecting sales growth of 3 to 4 percent, down from previous expectations of 8 percent. It does see an improvement in the gross margin, though, due to an increase in its own retail sales.
VF Corp. doesn’t plan to cut spending on advertising or R&D. Instead, it sees the poor economic climate as a good opportunity to increase market share and maybe watch for possible acquisitions. It still plans to open 90 new stores this year, mostly Vans, The North Face and the contemporary brand Lucy; it had 662 own stores at the end of the third quarter.