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Can VF Corporation Emulate Its Peers’ Double-Digit Growth?

Phalguni Soni

VF Corporation's 2Q15 Earnings: What Investors Can Expect

(Continued from Prior Part)

VF Corporation’s peers’ earnings per share grow at a double-digit pace

In 2Q15, the US dollar is expected to continue dragging on VF Corporation’s (VFC) results. Consensus Wall Street analyst estimates project adjusted EPS of $0.36 in the quarter, almost flat from a year ago.

VFC’s results will likely sharply contrast with athletic wear peers Nike (NKE), Under Armour (UA), and Columbia Sportswear (COLM), which have grown their adjusted EPS year-over-year at a double-digit growth rate in their last respective quarters.

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  • Nike grew its adjusted EPS by 25.6% year-over-year (or YoY) to $0.98.

  • Under Armour grew its adjusted EPS by 14.3% YoY to ~$0.07.

  • Columbia Sportswear grew its adjusted EPS by 17.5% YoY to $0.37.

Brand push

VFC expects to counter some of its adverse foreign exchange impact through growth in its major brands. VFC has a portfolio of some very strong brands, led by The North Face, Vans, and Timberland. These three brands come under the Outdoor & Action Sports segment, VFC’s largest segment. Segment sales came in at $7.2 billion in 2014, accounting for 55.9% of VFC’s total sales.

All three brands grew at a double-digit growth rate in 2014 in reported terms. The North Face and Vans clocked sales of over $2 billion each. Timberland may soon join these brands in the $2 billion club. VFC is projecting sales of ~$3.1 billion for Timberland by 2019, up from ~$1.5 billion in 2012.

In 1Q15, Timberland and Vans grew their sales at a double-digit growth rate in constant-currency terms.

VFC’s denim business, led by iconic brands Lee and Wrangler, also made headway in 1Q15, particularly in the mass market channel. Jeans sales rose 6% year-over-year in constant-currency terms. Wrangler sales rose in the low double digits in the Americas. New product launches and improved execution were responsible for the growth.

VFC constitutes ~0.9% and ~0.1% of the portfolio holdings in the PowerShares S&P 500 Low Volatility ETF (SPLV) and the iShares Core S&P 500 ETF (IVV), respectively.

Continue to Next Part

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