VF Corporation announced results for the fourth quarter and full year 2008. All per share amounts are presented on a diluted basis and reflect continuing operations.
Fourth quarter revenues decreased 2% to $1,912.2 million, compared with $1,955.2 million in the fourth quarter of 2007, with nearly all the decline attributed to the effects of foreign currency translation. Income from continuing operations in the current quarter was $115.9 million, compared with $164.4 million in the prior year's quarter.
Included in the most recent quarter was a previously announced charge of $41 million related to cost reduction actions. Earnings per share from continuing operations was $1.05 in the fourth quarter, compared with $1.46 last year and, as expected, included a negative $.30 per share impact from the charge. Foreign currency translation also impacted earnings by $.02 per share.
For the full year 2008, revenues increased 6% to a record $7,642.6 million from $7,219.4 million in 2007, driven by strong performance in our Outdoor coalition and a full year of revenues from our growing Contemporary Brands coalition. Including the aforementioned charge, income from continuing operations declined to $602.7 million from $613.2 million.
Earnings per share from continuing operations reached a record $5.42, and includes the $.30 per share impact from the cost reduction initiatives, compared with $5.41 in 2007. The full year benefit from foreign currency translation to revenues and earnings per share was $109 million and $.15 per share, respectively.
“The strength of VF's business model was reflected in our 2008 performance, with record revenues and strong earnings despite extraordinarily challenging economic conditions. Our powerful brands, diversity and strong financial condition, combined with a history of exceptional operational execution, should all work to our advantage as we continue to navigate through these uncertain times,” said Eric C. Wiseman, Chairman and Chief Executive Officer.
Fourth Quarter Business Review: During the quarter, we took aggressive actions to reduce costs across our business, which are expected to result in savings of $100 million annually beginning in 2009. Operating income in the 2008 quarter was $179.8 million compared with $250.6 million in the prior year's quarter, with $41 million of the decline attributable to the cost reduction initiatives.
The balance of the decline was due to exceptionally difficult retail conditions in the fourth quarter that resulted in unprecedented levels of promotional activity across many of our businesses. Operating margins were 9.4% in the quarter compared with 12.8% in the 2007 period, with over 200 basis points of the decline due to the cost reduction initiatives.
Outdoor: Our Outdoor coalition had another outstanding quarter, with total revenues up 13% and 17% in constant dollars. Domestic revenues grew 17% in the quarter while international revenues rose 6% (17% in constant dollars). The North Face, Vansand Napapijri brands each posted double-digit revenue gains in the quarter. Globally, revenues of The North Face brand grew 20% in the quarter while global revenues of the Vans brand increased 18%.
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