“The expectation for the fourth quarter is that things accelerate to some degree,” said Mitch Kummetz, an analyst at R.W. Baird & Co. “For The North Face and Timberland, retail inventories are cleaner than they were a year ago, and there’s less carryover, so assuming we have some cooperative weather, they’re in a better position.”
Christopher Svezia, an analyst at Susquehanna Financial, wrote in a note to investors that the “potential strong chase environment” could be an opportunity for VF.
He also predicted Timberland, which notched a 2 percent sales increase overall (and mid-single-digit growth in North America), will be a bigger contributor in future seasons. “Overall, Timberland remains a [fiscal year 2014] story and should benefit from the apparel relaunch, as well as from increased investments,” Svezia said.
In the company’s conference call, Steve Rendle, president of VF’s Outdoor & Action Sports Americas Group, also hailed the progress at Timberland. “The work we’ve done during the past two years at Timberland is really paying off,” he said. “We continue to make significant progress with Timberland and remain confident that we have set the right path for stronger, long-term growth.”
Additionally, Rendle pointed to strength at Vans, where sales rose 16 percent in the quarter.
“Within footwear, growth across all aspiration channels has been significant, with positive trends across all tiers, including double-digit growth in core board shop, boutique, lifestyle and family footwear channels,’ he said.
To support growth, the company also announced it is raising its ad spend for the second half of the year to $40 million. The focus will be on The North Face, Vans and Timberland, oriented to markets outside the U.S. and emphasizing the brands’ direct-to-consumer businesses.
Net profits rose 13.8 percent to $433.8 million, or $3.89 a diluted share, from $381.3 million, or $3.42, in the year-ago period. Revenues grew 4.7 percent to $3.3 billion, from $3.15 billion.