NEW YORK — Analysts are bullish on VF Corp.’s back half after the Greensboro, N.C.-based firm handily beat second-quarter expectations last Thursday.
Jim Duffy, analyst at Stifel Nicolaus, said the continued growth of the firm’s international business “in the context of macro challenges [is] evidence of the relative momentum of the brand portfolio.”
Mitch Kummetz, analyst at R.W. Baird & Co., agreed: “VF’s results are generally better than its peers, which reflects market share gains.”
VF executives are equally optimistic about the year ahead and raised its full-year guidance to earnings per share of $9.50 on revenue of $10.9 billion, representing growths of 19 percent and 15 percent, respectively.
Bob Shearer, VF’s SVP and CFO, also told Footwear News the company is actively looking for acquisitions.
“The Timberland deal was by far the largest one in VF’s history, but we generate a lot of cash, and by the end of the year, our debt ratios will be in great shape and we could clearly do another acquisition. It probably would not be the size of Timberland, but we’re continuing to look to fill out our portfolio of brands, particularly and especially in outdoor and action sports,” he said.
VF also expects to expand gross margins in the second half, thanks to the strength of its direct-to-consumer business, which is on track to grow in the mid-teens for the full year.
“We really like our direct-to-consumer business — [especially] for brands such as Timberland, The North Face and Vans — because it lets you show a brand in all its glory and control the space,” said Shearer. “Our stores are very profitable for us, and in terms of investment, they give us a great return.” The firm aims to open about 130 new stores by year’s end.
While European revenue grew 14 percent in constant dollars in the first half, Eric Wiseman, VF’s chairman, president and CEO, told analysts on a call, “We share everyone’s concerns about conditions in Europe. We’re continuing to monitor conditions there very carefully and are prepared to course correct as needed should conditions change materially.”
For the second quarter ended June 30, VF earned a net income of $155.3 million, or adjusted EPS of $1.11, on revenue of $2.1 billion. The firm’s cash balance stood at $330.5 million.