VF Corporation (VFC) saw record first quarter earnings per share in April and raised guidance on its strengthening business as consumers replenish their wardrobes.
VF Corporation manufactures apparel under 30 well-known brands including The North Face, Nautica, 7 For All Mankind, Wrangler, Lee, Vans, Red Kap, Reef, Riders, JanSport, Eagle Creek, lucy and Majestic.
VF Corporation Surprised by 26% in the First Quarter
On Apr 30, VF Corporation reported first quarter results which saw a record earnings per share of $1.44. This easily beat the Zacks Consensus by 30 cents.
Revenue rose to $1.75 billion from $1.73 billion in the year ago quarter. The quarter was boosted by strength across most of its segments and further controlling of inventory.
The Outdoor & Action Sports segment performed particularly well. Revenue grew 10% with global revenues of The North Face and Vans jumped 9% and 20%, respectively. Revenue in the Americas businesses rose 11% while international sales jumped 8%.
The Jeanswear segment struggled a bit, with revenue declining 7%. However there were some bright spots as sales climbed 40% in Asia and the Lee brand rose 3% in the United States.
The company has been focusing on its international expansion. International revenue increased 2% but was down 5% on constant currency. Revenue was up big in Asia, growing 31% on the strength of The North Face, Vans and Lee brands.
VF Corporation saw strong growth in its Outdoor & Action Sports segment and Jeanswear in Asia, Mexico, South America and Canada but there continues to be weakness in the European jeanswear segment and it exited the mass market business in Europe.
2010 Guidance Raised
Given the stronger than expected results in some segments, and inventories that have been reduced 15%, VF Corporation raised its revenue guidance to an increase of 3% to 4% from 2% to 3%.
It expects the Outdoor & Action Sports segment to grow more than 10% which is higher than its previous guidance of the high single digits. Asia is also much stronger than the company anticipated.
Earnings per share is now forecast to be about $5.90 from a prior range of $5.60 to $5.70. This is earnings per share growth of 16%.
Analysts have been scrambling to revise estimates since the results. The 2010 Zacks Consensus is $5.99 per share, which is higher than the $5.90 guidance range.
The second quarter consensus has also been revised higher and now calls for 76 cents, up from 74 cents 30 days ago.
VF Corporation is scheduled to report second quarter results on Jul 20.
Value Fundamentals
VF Corporation has a forward P/E of 13.4 which is below the P/E of the S&P 500. It also has a price-to-book of 2.3 which is well within the value parameter of under 3.0.
VF Corporation has a stellar 5-year average return on equity (ROE) of 17.8%. It also pays a nice dividend currently yielding 3% which is higher than the industry which averages zero.
VF Corporation is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
