VF Corporation reported financial results for its fourth quarter and full year ended December 28, 2013.
Fourth Quarter 2013 Review:
Revenues rose 8 percent to $3.3 billion, compared with the same period of 2012, driven by double-digit growth in our Outdoor & Action Sports, Sportswear, international and direct-to-consumer businesses, and high single-digit percentage growth in our Imagewear coalition.
Gross margin improved 80 basis points to 48.2 percent, compared with 47.4 percent in the same period of 2012, with improvements in nearly every coalition. The higher gross margin reflects the continuing shift of our revenue mix toward higher margin businesses as well as lower year-over-year product costs.
SG&A as a percent of revenues rose 10 basis points to 32.7 percent in the fourth quarter. This increase includes the impact of an incremental investment of nearly $30 million in marketing to support growth in VF’s largest and fastest growing businesses.
Operating income on an adjusted basis grew 11 percent to $509 million in the fourth quarter, compared with $457 million in the same period of 2012. On a GAAP basis, fourth quarter operating income increased 13 percent to $508 million, compared with $450 million during last year’s same period. There were no material Timberland acquisition-related expenses in the fourth quarter of 2013 while the fourth quarter of 2012 included $7 million of such expenses. Adjusted operating margin was 15.5 percent, compared with 15.1 percent in the fourth quarter of 2012. On a GAAP basis, operating margin rose to 15.5 percent from 14.8 percent in last year’s period.
Net income on an adjusted basis grew 7 percent to $368 million in the fourth quarter, compared with $344 million in the same period of 2012. Adjusted earnings per share increased 6 percent to $0.82 per share compared with $0.77 per share during the same period last year. Fourth quarter 2012 adjusted earnings per share of $0.77 excluded $0.02 per share in Timberland acquisition-related expenses. On a GAAP basis, fourth quarter 2013 net income was up 10 percent to $368 million or $0.82 per share.
Full Year 2013 Review
Revenues increased 5 percent to a record $11.4 billion compared with $10.9 billion in 2012. International revenues were up 8 percent driven by 7 percent growth in Europe and Asia Pacific, and a 9 percent increase in the Americas (non-U.S.) region.
Gross margin rose by 160 basis points to a record 48.1 percent, compared with 46.5 percent in 2012, with improvements in nearly every business. For the full year, the improvement in gross margin reflects the continued shift in our revenue mix toward higher margin businesses as well as lower product costs.