Analysts Upbeat on VF

Analysts Upbeat on VF
Timberland spring '13

VF Corp. may have come up short on revenue expectations in the second quarter, but analysts are optimistic about the company’s opportunities for the back half of the year.

Baird & Co. analyst Mitch Kummetz said the Greensboro, N.C.-based firm’s strength in the outdoor and action-sports category is cause for confidence going into the third and fourth quarters.

“There is still significant long-term growth in front of the company, particularly in the outdoor and action-sports coalition,” Kummetz wrote in a note to investors. “Both [The North Face and Vans] brands resonate remarkably well with their consumers, and VF plans to leverage this brand equity to extend to different categories and channels, and across regions.”

Despite VF’s mixed performance, Susquehanna Financial analyst Chris Svezia said the firm is still able to execute efficiently.

“VF is clearly one of the best operators in the space and will more than likely continue to produce solid results with some upside to current estimates,” Svezia said. “We expect investments to continue as the company maintains a longer-term focus.”

During a conference call with analysts last Friday, VF Chairman, President and CEO Eric Wiseman said the firm is comfortable with its full-year guidance. He noted that VF’s revenues are on track to grow 6 percent this year, to $11.5 billion. Earnings per share, meanwhile, are expected to increase 13 percent, which is in line with the company’s five-year plan.

“Looking at the balance of the year, while the economic environment remains a bit uncertain … we’re confident that our powerful brands and platforms are among the best positioned in the industry,” Wiseman said.

The firm expects an even more strengthened balance sheet in the third quarter as it expects to pay off the $400 million debt associated with the acquisition of the Timberland brand.