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VF Corporation revenue up 23% to USD9,459 million

By FashionUnited

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Fashion

Year

ly revenues increased at VF Corporation for 2011 increased 23% to $9,459 million from $7,703 million in 2010. Timberland led the growth, adding $713 million to revenues in 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.”
 
Orga
nic 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%.
 
Net income on an adjusted basis rose 28% to $913 million from $713 million, while adjusted earnings per share increased 27% to $8.20 from $6.46. The Timberland acquisition was accretive to adjusted earnings by $0.60 per share. Organic earnings per share growth in 2011 was 18%. On a GAAP basis, net income and earnings per share in 2011 were $888 million and $7.98, respectively.
 
Cash flow from operations reached a record $1,081 million in 2011. The increase in long-term debt reflects the financing of the Timberland acquisition. During the quarter, the incremental short-term borrowings related to the Timberland acquisition were repaid, and at year-end the debt-to-total capital ratio was 32%. Inventories excluding Timberland rose 12%, with 9% of the increase due to higher product costs.
 
With regards to the coming month, the fashion group shows strong optimism, advancing that “In 2012, our Outdoor & Action Sports business should exceed 50% of total revenues – a new milestone for VF, achieved by a combination of consistent, outstanding organic growth and a track record of successful acquisitions,” said Wiseman. “A big focus for us this year will be on building the foundation to support Timberland’s future growth and to strengthen its profitability. We look forward to a year of healthy growth across our coalitions and to delivering another year of record revenues and earnings to our shareholders.”
 
According to the company estimates, 2012 revenues should increase by approximately 15% (17% in constant dollars), with Timberland accounting for about $1 billion of the growth. Excluding Timberland, revenues should rise by approximately 6% (8% in constant dollars).
 
Adjusted earnings per share is expected to rise to approximately $9.30. Included in this guidance is the anticipated negative impact from 1) foreign currency translation, which is expected to reduce earnings by $0.41 per share, and 2) higher pension expense, which will negatively impact earnings by $0.19 per share. Timberland should earn approximately $1.10 per share in 2012 (excluding acquisition-related expenses estimated at $0.20 per share). On a GAAP basis, earnings per share are expected to increase to approximately $9.10.
 
Gross margin in 2012 should expand by approximately 70 basis points over the 45.8% reported in 2011, as the headwinds posed by higher product costs subside, with all of the improvement occurring in the second half of the year. Operating margin should expand by approximately 20 basis points, which is net of a 30 basis point negative impact from higher pension expense. Timberland’s operating margin should exceed 11% in 2012. Excluding Timberland in both 2011 and 2012, the operating margin in 2012 is expected to improve 40 basis points from 13.6% to 14.0%, including a 40 basis point negative impact from higher pension expense.

Images: Timberland
Timberland
VF Corporation