VF Corp closes strong 2013 with a bang

By

Olivier Guyot

Published
Feb 18, 2014

VF Corp definitely has three powerful engines under the hood. Once again, the American group recorded incredible growth for the last quarter of fiscal year 2013. Revenues attained 2.378 billion euros (3.259 billion U.S. dollars), up 8% compared to the same period a year earlier. Operating profits reached 371 million euros, up 11%, while its net profit rose from 245 to 268 million euros.

Powering this growth is the company's Outdoor & Action Sports segment, which achieved a 12% rise in sales through its brands The North Face (+12%), Vans (14%) and Timberland (+13%). Sportswear brought in 151 million euros, a 14% jump, boosted by Nautica (+11%) and especially Kipling (33%). Imagewear rose 9% to 209 million euros, buoyed by a contract renewal that was reportedly signed earlier in the year. In contrast, Jeanswear (Wrangler, Lee) stagnated at 535 million euros, as did contemporary brands (7 For All Mankind, Ella Moss ...), posting 79 million euros. The company's "Other" category for business outside of its main segments contracted by 7% to 25 million euros.

VF Corp. ended 2013 with a revenues of 8.33 billion euros, up 5% compared to last year. Operating profit rose 12% to 1.2 billion euros and net income reached 883 million, an increase of 11%.

The Outdoor & Action Sports segment rose 9%, bringing in 4.654 billion euros in sales. Jeanswear only grew by 1%, representing a little over 2 billion euros, Imagewear was down 1% at 777 million euros and Sportswear shot up 8% to 456 million euros. The Contemporary brands segment dropped 2% over last year to 303 million euros.

This year the group saw its international sales grow yet again, which now accounts for 38% of overall revenues versus 37% in 2012. The same applies to its direct-to-consumer business, which rose from 21% to 22% of overall revenues, with a 13% increase in growth for this channel.

Direct-to-consumer business is one of VF Corp.'s main growth drivers for 2014. Starting this fiscal year, the group is now counting concession retail stores outside the U.S. as part of its store network and expects a sharp increase in direct-to-consumer business. The company's outlook predicts the segment will account for 26% of total revenues, with 150 store openings and 30% growth for e-commerce.

VF Corp. forecasts growth of 7 to 8% for its overall turnover for the year. The outlook forecasts increases around 15% for Vans, 12% for The North Face and 10% for Timberland. For its other segments, the company has more modest goals in the single digits, but still in the growth column. For its international business, the group expects an increase of 10%, coming close to a 20% rise in Asia and close to 10% in Europe and the Americas, excluding the United States. VF Corp says its gross margin will also need to improve to facilitate such growth, which it aims to raise from 48.1% to 49%.