WASHINGTON (dpa-AFX) - Branded lifestyle apparel company V.F. Corp. (VFC) reported Monday that its third-quarter profit climbed from last year, despite restructuring charges. Adjusted earnings topped Street projections on Timberland acquisition and foreign currency benefit, despite margin erosion. Further, the company announced higher dividend, and lifted fiscal 2011 earnings forecast.
Third-quarter net income attributable to the company grew 24 percent to $300.7 million from $242.8 million, while earnings per share increased 21 percent to $2.69 from $2.22 last year.
The latest quarter results included transaction and restructuring costs related to the acquisition of Timberland of $26.6 million or $0.18 per share.
Adjusted earnings per share were $2.87, an increase of 29 percent over 2010 levels, benefited by $0.25 accretion from Timberland acquisition and $0.10 per share benefit from foreign currency translation.
Analysts polled by Thomson Reuters expected the company to report earnings of $2.57 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues rose 23 percent to $2.75 billion from $2.23 billion in 2010, while analysts had consensus revenue estimate of $2.63 billion for the quarter.
The acquisition of The Timberland Co. which was completed on September 13, added $163.6 million to revenues. On an organic basis, revenues increased 16 percent.
All segments posted strong revenue growth in the quarter. International revenues climbed 44 percent.
Meanwhile, gross margin declined, as anticipated, to 45.3 percent from 46.5 percent last year, reflecting the impact of higher product costs. Operating margin was 15.6 percent, lower than last year's 15.9 percent.
Further, the company said its board declared a 14 percent rise in quarterly cash dividend to $0.72 per share, marking 39th consecutive year of higher dividend payments. The dividend is payable on December 19 to shareholders of record on December 9.
Looking ahead, V.F. Corp. raised its fiscal 2011 forecast and now expects adjusted earnings of approximately $8.15 per share, including accretion from Timberland, while previous estimate was $7.50 per share. Reported earnings would be $7.90 per share.
Total revenues are now expected to rise 22 percent to 23 percent in 2011, due to continued strong organic growth and the Timberland acquisition. Organic revenue growth is anticipated at approximately 13.5 percent in 2011, above previous guidance for growth of 12 to 13 percent. The full year revenue contribution from Timberland continues to be about $700 million in 2011.
Analysts expect the company to report earnings of $7.97 per share on revenues of $9.33 billion for fiscal 2011.
Eric Wiseman, Chairman and Chief Executive Officer, said, 'We're confident that our brands' momentum will continue through the fourth quarter, and look forward to delivering a year of stellar organic growth to our shareholders, capped by the highly accretive and transformational Timberland acquisition.'
VFC is currently trading at $138.01 in pre-market activity, up $5.32 or 4.01 percent.
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