VF delivered EPS of $3.52 a share, against the Street’s expectations of $3.49, and it increased full-year EPS guidance by 10 cents to $9.60.
“Outdoor [sales are] still solid. The company also expects to spend more on marketing in order to support continued momentum in The North Face and Vans, which we view as a bullish sign for the brands,” said Kate McShane, analyst at Citi Investment Research.
Jim Duffy, analyst at Stifel Nicolaus, agreed: “With the backdrop of macro challenges, we are encouraged by continued organic growth in Europe, led by Vans, and … we are comfortable that macro factors in Europe, not brand issues, are the impediment [in that region].”
On a conference call with analysts, VF Chairman, President and CEO Eric Wiseman said, “Uncertainty around world economic conditions will persist. The diversification provided by our brand portfolio continues to pay off with results that continue to trend above those of many of our competitors.”
He added the firm is on track to wrap up the year with fourth-quarter constant dollar revenue growth of 7 percent in the first fully comparable quarter with Timberland under VF’s ownership, and an increase in adjusted EPS of just over 30 percent.
Steve Rendle, VP of VF and group president of its Outdoor & Action Sports Group, told Footwear News, “We’re feeling positive. What we’re seeing is what we expected. We have a really strong diversified portfolio with Vans, Timberland and The North Face. This is the year of Vans doing exceptionally well. It’s coming into its own [after] a number of years of very focused strategies around [product placement], and it’s trending really well in Europe because there is so much market opportunity and pent-up demand [for the category].”
In total, VF will increase the marketing spend on its brands in the fourth quarter by $18 million, or 13 percent year over year, the firm said.
In the three months ended Sept. 29, VF earned a net income of $381.3 million, or $3.52 a share, an increase from $300.7 million, or $2.87, in the same period a year ago.
Revenue grew 14.5 percent to $3.15 billion, led by the outdoor and action sports coalition’s 28.9 percent upswing to $1.85 billion.
By brand, Timberland sales declined slightly in the third quarter, but together with Smartwool contributed $499 million to sales, and for the full year should see a modest increase in revenues on a constant-dollar basis.
The North Face increased 8 percent in constant-dollar terms and remains on track for mid-teen constant-dollar revenue growth both in the fourth quarter and for the full year. Vans grew 26 percent currency-neutral. Both brands should benefit from new store openings and comp-store and e-commerce growth, supported by higher levels of marketing spending in key regions in the fourth quarter, VF said.
The firm ended the quarter with a cash balance of $304.6 million and long-term debt of $1.4 billion.
Its stock closed on Monday down about 4 percent, to $159.46 a share.