VF Corporation, a global leader in branded lifestyle apparel, announced record results for the second quarter of 2011. All per share amounts are presented on a diluted basis.
Second Quarter Results Summary Revenues rose 15% to $1,840.1 million from $1,594.1 million in 2010. All VF coalitions achieved double-digit revenue increases in the quarter, with the strongest growth in Outdoor & Action Sports, where revenues increased 23%. Jeanswear and Sportswear revenues each grew by 10%, Imagewear revenues rose 16%, and Contemporary Brands revenues were up 11%.
Gross margin declined, as anticipated, to 45.9% from 47.1% in the 2010 period, reflecting the impact of higher product costs. Gross margin in the quarter also included a 65 basis point benefit from the gain on the closure of a European jeanswear facility; this gain was anticipated and reflected in previously provided full year gross margin guidance. Operating margin was 10.3% compared with 10.6% in the 2010 period.
Growth in both net income and earnings per share of 17% was stronger than anticipated. Net income rose to $129.4 million from $110.8 million, while earnings per share increased to $1.17 from $1.00. Earnings per share in the quarter included costs related to the pending acquisition of The Timberland Company of $.02 per share. Two items in the quarter that were anticipated and reflected in previously provided full year guidance were the aforementioned gain from the facility closure that benefited earnings by $.07 per share, and foreign currency translation that benefited earnings by $.03 per share.
First Half Results Summary
Revenues increased 14% to $3,798.9 million from $3,344.0 million in 2010, with strong growth in every coalition.
Net income of $330.1 million represented a 20% increase over the $274.4 million reported in the 2010 period. Earnings per share were $2.99 compared with $2.47, rising 21% in the first half. Earnings per share in the period benefitted by $.11 in special items reported in the first quarter, and by $.04 due to foreign currency translation. Earnings per share also include the aforementioned second quarter items of $.02 in acquisition-related expenses and $.07 benefit from the facility closure.
"With double-digit revenue growth in all coalitions, and in both our international and direct-to-consumer businesses, VF is firing on all cylinders," said Eric Wiseman, Chairman and Chief Executive Officer. "Our marketing investments continue to fuel outstanding growth, our brands are gaining momentum - and we are confident that this momentum is sustainable." He continued, "The signing of a definitive merger agreement between VF and The Timberland Company on June 12th marks a transformational acquisition for VF, and will result in a $10 billion apparel and footwear powerhouse anchored in outdoor and action sports. We look forward to completing the acquisition this quarter."
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