VF Earnings Fall, but Footwear Solid

LOS ANGELES — Even as analysts expressed disappointment with VF Corp.’s significant earnings decline in the first quarter — and in some cases lowered their ratings — they said the company’s strong brand portfolio should position it for a strong post-recession rebound.

Jim Duffy, an analyst at Thomas Weisel Partners, said the company could see a turnaround by year-end. “We continue to believe VF is well positioned to play a lead role in consolidating share in the category and expect the company to emerge from the downturn with a stronger market position,” he wrote in a research note.

During the first quarter, net earnings fell 33 percent to $100.4 million, or 91 cents per diluted share, from $148.9 million, or $1.33, in the same period of 2008.

Revenue during the quarter declined 7 percent to $1.73 billion from $1.85 billion in the year-ago quarter.

During a conference call with investors and analysts, Chairman, President and CEO Eric Wiseman said Vans and The North Face continue to be bright spots within the company’s brand portfolio.

However, he also indicated that more difficult times lie ahead for some of the company’s business units.

“While our first-quarter results came in largely as we expected, we’ve seen a few areas where conditions have significantly and unexpectedly deteriorated,” he said. “So today, we are resetting the bar for our revenue and earnings guidance at levels that we believe capture these changes and more appropriately reflect the scale and scope of this recession.”

Citing volatility in the global market, the company said it would no longer provide quarterly sales and earnings guidance.

For the full year, the company said it expects earnings per share of $4.70 to $5, compared with $5.42 in 2008. Sales are expected to decline 5 percent to 7 percent, or $7.03 billion to $7.18 billion, based on the company’s 2008 sales of $7.56 billion.

That move prompted Susquehanna Financial Group to lower its rating from positive to neutral. “Given management’s recent guidance revisions (thrice in the past six months), we remain cautious on the current outlook,” analyst Christopher Svezia wrote in a note. “With that said, VF continues to have one of the strongest brand portfolios in our universe and has solid long-term growth opportunities available when conditions improve.”

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