“Having achieved yet another quarter of record revenue, gross margin and earnings per share performance, we remain on track to deliver a year of outstanding results to our shareholders,” said Eric Wiseman, VF Chairman and Chief Executive Officer. “Our third quarter results clearly demonstrate VF’s unique competitive advantages – diversity across brands, geographic regions and channels; powerful brands that resonate with consumers; and business disciplines that enable the consistent, successful execution of our growth strategies.”
Wiseman concluded, “We are confident in our ability to deliver a very strong fourth quarter across our businesses, supported by higher levels of strategic investments in key brands and markets that are proven drivers of both top and bottom line growth.”
Third Quarter 2012 Review
Revenues rose 14 percent to $3.1 billion from $2.8 billion in 2011. Third quarter revenues from Timberland were $499 million compared with $164 million in the same period of last year; the acquisition was completed on September 13, 2011. Organic revenue growth in the quarter was 2 percent (6 percent in constant dollars) driven by continued strength in the Outdoor & Action Sports, international and direct-to-consumer businesses. The Outdoor & Action Sports, Jeanswear, Sportswear and Imagewear coalitions all achieved growth on a constant dollar basis. The sale of John Varvatos impacted VF’s organic revenue growth by 1 percentage point in the third quarter.
Gross margin rose by 140 basis points to a record 46.7 percent, compared with 45.3 percent in the same period of 2011 with improvements in nearly every business. The higher gross margin also reflects the continued shift in our revenue mix towards higher margin businesses.
Operating income was $551 million on an adjusted basis in the third quarter of 2012 and included adjusted operating income from Timberland of $77 million. On a GAAP basis, third quarter operating income was $537 million compared with $430 million in the same period of the prior year. Acquisition-related expenses for Timberland in the third quarter of 2012 and 2011 were $14 million and $27 million, respectively. Adjusted operating margin was 17.5 percent compared to 16.6 percent in the third quarter of 2011. The current quarter’s operating margin was negatively impacted by 80 basis points by Timberland. On a GAAP basis, operating margin was a record 17.1 percent.
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