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VF Corp achieves record revenues & earnings in 2011

17
Feb '12
VF Corporation announced results for the fourth quarter and full year ended December 31, 2011.

“The power of the VF portfolio – diversified, global and growing – has never been more evident,” said Eric Wiseman, Chairman and Chief Executive Officer. “In 2011 we achieved record revenues, record earnings and record cash flow, and we completed the transformational acquisition of Timberland. The successful execution of our key international and direct-to-consumer growth drivers has delivered healthy organic growth, strong profitability and consistent return for our shareholders this year, and we look forward to building on this momentum in 2012 and beyond.”

Revenues rose 37% to $2,910 million from $2,126 million in 2010, with the Timberland acquisition adding $549 million to revenues. Organic revenue growth in the quarter was 11%. All VF coalitions achieved higher revenues in the quarter, with the strongest growth in Outdoor & Action Sports, where total revenues rose 81% and organic growth was 19%.

Gross margin continued to reflect the impact of higher product costs, declining to 45.2% from 46.6% in the 2010 period. Operating income was $358 million on an adjusted basis in the fourth quarter. This included earnings from the Timberland acquisition of $50 million, excluding acquisition-related expenses of $6.7 million. On a GAAP basis, fourth quarter operating income was $351 million. Operating margin on an adjusted basis was 12.3% in the fourth quarter of 2011 versus 12.9% in the 2010 period. Excluding Timberland, the fourth quarter operating margin increased 10 basis points to 13.0% compared with 12.9% in the 2010 period. Operating margin on a GAAP basis was 12.1% and 3.5% in the fourth quarters of 2011 and 2010, respectively.

Net income on an adjusted basis rose 34% to $262 million from $196 million, while adjusted earnings per share increased 30% to $2.32 per share from $1.78 per share. The Timberland acquisition was accretive to adjusted earnings by $0.34 per share in the quarter. On an organic basis, earnings per share grew 11% to $1.98. On a GAAP basis, net income and earnings per share were $257 million and $2.28, respectively, in the fourth quarter of 2011.

Revenues increased 23% to $9,459 million from $7,703 million in 2010. Timberland added $713 million to revenues in 2011. Organic revenue growth was 14% (12% in constant dollars), with strong growth across all coalitions. Outdoor & Action Sports revenues rose 42% during the year, with organic growth of 20%. Jeanswear revenues rose 8%; Imagewear revenues grew 13%; Sportswear revenues were up 9%; and Contemporary Brands revenues grew by 11%.

Gross margin was in line with company guidance for the year, declining to 45.8% in 2011 from 46.7% in 2010 due to higher product costs. Operating margin on an adjusted basis was 13.5% in 2011 versus 13.3% in the prior year. Excluding Timberland, the operating margin increased 30 basis points to 13.6%.


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