Q3 gross margins at VF Corp reach record 46.5%
VF Corporation, a global leader in branded lifestyle apparel, announced record results for the third quarter of 2010. All per share amounts are presented on a diluted basis.
Third quarter revenues rose 7% to $2,232.4 million from $2,093.8 million in the third quarter of 2009. On a constant currency basis, revenues increased 8%. Net income rose 11% to $242.8 million, while earnings per share increased 14% to $2.22. Foreign currency translation rates negatively impacted earnings per share by $.06 in the quarter.
For the first nine months of 2010, revenues increased 5% to $5,576.4 million from $5,304.9 million in the 2009 period. Net income rose 31% to $517.1 million, while earnings per share increased 32% to $4.68.
"This quarter's strong organic revenue growth and record gross margins are a testament to VF's diverse business model and powerful brands," said Eric Wiseman, Chairman and Chief Executive Officer. "The investments we're making this year to drive growth in our strongest and most profitable businesses are clearly paying off."
"Asia represents a billion dollar opportunity for VF, and we are investing accordingly," said Mr. Wiseman. "In China, our diversified portfolio provides consumers with a variety of compelling brands, including Lee, Wrangler, The North Face, Vans, Kipling and 7 For All Mankind. We're particularly excited about the unique opportunities that The North Face and Vans brands give us to build new categories - outdoor and action sports - in this dynamic market."
"We look forward to wrapping up a very strong 2010, with revenues near record levels and all-time highs in gross margins and earnings," concluded Mr. Wiseman. "Looking ahead, we are confident that the investments made this year will drive another year of solid top and bottom line growth in 2011."
Third Quarter Business Review
Outdoor & Action Sports: The momentum continues in our Outdoor & Action Sports businesses, which again achieved record revenues, operating income and operating margins in the current quarter. The strength of The North Face and Vans businesses was clearly evidenced by another quarter of double-digit growth for each, with global revenues of these brands rising by 17% and 19%, respectively. Total global revenues in our Outdoor & Action Sports businesses rose 14% in the third quarter with strong increases in both our Americas and international businesses.
On a constant currency basis, total Outdoor & Action Sports revenues grew 17%. Revenue growth in Asia was particularly strong, rising 38% in the quarter. Our international Kipling and Napapijri businesses also achieved healthy revenue growth in constant dollars in the quarter, and lucy brand revenues grew 20%. Total direct-to-consumer revenues for our Outdoor & Action Sports businesses rose 18% in the quarter, reflecting exceptional growth in The North Face, Vans and lucy brands.
Operating income rose by 21%, with operating margins increasing by more than one full percentage point to nearly 24% in the quarter. We continued to invest heavily behind focused marketing and other brand-building initiatives for both The North Face and Vans brands to support our expectations for continued strong global growth.