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VF's Earnings Rise On Growing Vans Sales - Update

VF's Earnings Rise On Growing Vans Sales - Update By Dow Jones Business News,  October 21, 2013, 03:14:00 PM EDT Vote up By Ben Fox Rubin

timberland VF Corp. ( VFC ) reported a 14% increase in earnings as the apparel maker continues to benefit from its heavy investment in the marketing of its main outdoor and sports business, which includes Vans and The North Face brands.

timberland outlet The Greensboro, N.C., company also unveiled two shareholder-friendly moves, saying it will institute a four-for-one stock split--its first split since 1997--and boost its quarterly dividend by 21%.

discount timberland boots VF, whose clothing brands also include Wrangler and Nautica, has been able to improve its results thanks to its continued expansion of its outdoors segment, which was boosted by a 2011 acquisition of the Timberland brand. Its third- quarter results reinforced the strength of the segment, its largest contributor to sales, as revenue in the business jumped 6.5% to $1.97 billion. Within the segment, the Vans brand, which sells surfing and skateboarding apparel, was particularly strong, with a 16% rise in revenue.

timberland shoes In addition, VF vowed to remain aggressive in a retail sector that is dealing with patchy demand amid a shaky economy. Chief Executive Eric Wiseman said the challenging environment "is the ideal time to up shift and hit the gas pedal a bit harder on marketing and product initiatives."

timberland boot sale With that in mind, VF said it will commit an additional $40 million in marketing investments in the second half of the year, with $10 million spent in the third quarter and $30 million planned for the fourth quarter to help drive business in its top brands.

timberland boots kids The company noted that the marketing effort wasn't a new strategy for VF, because it made similar marketing pushes in North Face, Vans and its business in China in previous years.

"Based on our strong results particularly in those three areas during the past three years, we know this is a strategy that works and works quite well at VF," Mr. Wiseman said.

Investors seemed pleased by the news. Shares, which have surged from around $50 in late 2008, continued to hit fresh all-time highs, reaching a new top of $214.40 on Monday, up 4.9% on the day. The stock has gained 41% so far this year.

VF reported a profit of $433.8 million, or $3.89 a share, up from $381.3 million, or $3.42 a share, a year earlier. Excluding Timberland acquisition-related costs, per-share earnings rose to $3.91 from $3.52.

Revenue increased 4.7% to $3.3 billion.

In addition to Vans, the outdoor and action-sports segment was helped by North Face revenue growing 3% and Timberland revenue adding 2%. VF's jeanswear business saw sales rise 4% to $747 million, driven by growth in the Americas. Wrangler revenue jumped 8%, and Lee revenue was up 3%.

John Kernan, an analyst for Cowen and Company, said that while others in the retail sector have had to resort to markdowns to work through inventory, VF has managed its inventory well all year, allowing the company to protect its profits.

VF's gross margin widened to 47.6% from 46.7%, aided by the company's shift to higher-margin businesses, including the outdoor and action-sports business, as well as lower production costs.

Mr. Kernan added that the company's increased focus on Vans, North Face and Timberland should continue to benefit results.

"There's still a lot of growth in those brands internationally and domestically, so they can continue to drive improvement in their returns and operating margins," he said.

Write to Ben Fox Rubin at

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(END) Dow Jones Newswires 10-21-131514ET Copyright (c) 2013 Dow Jones & Company, Inc.