“VF’s first quarter performance is a great example of our strong business model, disciplined execution and our ability to leverage all aspects of our portfolio,” said Eric Wiseman, VF Chairman and Chief Executive Officer.
“The combination of powerful brands and strong operating platforms creates a unique engine capable of delivering consistent, long-term shareholder value. With a strong start to the year, we’re well positioned to achieve our full year goals.”
First Quarter 2013
Revenues rose 2 percent, as anticipated, to $2.6 billion compared with the same period of 2012, driven by strength in the Outdoor & Action Sports, international and direct-to-consumer businesses. The sale of John Varvatos in April 2012 negatively impacted VF’s revenue growth comparison by 1 percentage point in the first quarter.
Gross margin improved 240 basis points to 48.1 percent, an all-time high for any quarter in VF’s history. This performance, which includes improvements in nearly every coalition, compares with 45.7 percent in the same period of 2012. The higher gross margin reflects lower year-over-year product costs and the continued shift in our revenue mix towards higher margin businesses.
Operating income on an adjusted basis grew 13 percent to $360 million in the first quarter compared with $319 million in the same period of 2012. On a GAAP basis, first quarter operating income increased 14 percent to $358 million, compared with $314 million in last year’s same period.
Adjusted operating margin was 13.8 percent compared with 12.5 percent in the first quarter of 2012. On a GAAP basis, operating margin rose to 13.7 percent from 12.3 percent in the first quarter of 2012.
Net income on an adjusted basis grew by 25 percent to $273 million from $219 million in the first quarter of 2012. Adjusted earnings per share – which excludes Timberland acquisition-related items of $0.02 per share in the first quarter – increased 25 percent, to $2.43 from $1.94 during the same period last year.
This increase includes a $0.12 per share discrete tax benefit primarily related to the impact of U.S. tax law changes enacted in 2013, which are retroactive to 2012. On a GAAP basis, first quarter net income was $270 million, with a 26 percent increase in earnings per share to $2.41, including the $0.12 per share discrete tax benefit noted above.
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