VF Company reports Vans & North Face top earners
Surfersvillage Global Surf News, 27 February, 2014 - 2013 was a terrific year for VF with record gross margin and earnings per share, said Eric Wiseman, VF Chairman and Chief Executive Officer. The combined power of our brands and platforms remains our greatest competitive advantage enabling us to push the envelope on product innovation to connect even more intensely with consumers and providing stellar returns to our shareholders.
Among many noteworthy brand performances, two significant milestones included The North Face® brand passing $2 billion in global revenues and the Vans® brand surpassing the $1.7 billion revenue mark, becoming VFs second largest brand, Wiseman continued. And with strong results from our direct-to-consumer and international businesses, supported by outstanding execution from our global supply chain, weve established excellent momentum that we expect to contribute to a strong year for VF in 2014.
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.
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 years 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 years 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. Operating income on an adjusted basis increased 11 percent to $1.7 billion in 2013. On a GAAP basis, full year operating income rose 12 percent to $1.6 billion from $1.5 billion in 2012. Acquisition-related expenses for Timberland in 2013 and 2012 were $11 million and $31 million, respectively. Adjusted operating margin was 14.5 percent compared with 13.8 percent in 2012. On a GAAP basis, operating margin was 14.4 percent versus 13.5 percent in 2012.
Net income on an adjusted basis rose 13 percent to $1.2 billion compared to $1.1 billion in 2012. Adjusted earnings per share, which excludes $0.02 in Timberland acquisition-related expenses in 2013 increased 13 percent, to $2.73 from $2.41 in the same period last year. Adjusted earnings per share of $2.41 in 2012 exclude a combined $0.02 in Timberland acquisition-related expenses and the gain from the sale of John Varvatos. On a GAAP basis, full year net income was $1.2 billion while earnings per share grew 12 percent to $2.71 per share.
Revenues for the Outdoor & Action Sports coalition increased 12 percent in the quarter to $1.9 billion with balanced growth across the U.S. and international markets as well as in wholesale and direct-to-consumer channels. Full year Outdoor & Action Sports revenues were up 9 percent in 2013.
Fourth quarter revenues for The North Face® brand rose 12 percent globally driven by more than 30 percent growth in direct-to-consumer sales and a mid single-digit increase in the brands wholesale business. By region, The North Face® brands revenues were up 10 percent in the Americas and increased at a high-teen percentage rate in both Europe and Asia Pacific. For the full year, revenues for The North Face® brand grew 7 percent, establishing VFs first $2 billion brand.
Revenues for the Vans® brand in the fourth quarter were up 14 percent with strong, double-digit growth across all geographies, as well as in the brands wholesale and direct-to-consumer platforms. Revenues in the Americas region were up at a low double-digit rate in the quarter, which contributed to the brand surpassing the $1 billion mark in annual revenues in its largest region. In Europe, the Vans® brand grew 20 percent and was up nearly 20 percent in the Asia Pacific region. Revenues for the Vans® brand globally for the full year were up 17 percent.