North Face, Vans help boost VF's 4Q profit

Cold weather spells warmer sales for North Face, but VF's jeans sales are flat

Associated Press

The snowy weather in many parts of the U.S. this winter has spelled hotter sales for North Face.

But only about 25 percent of the products of VF Corp., the company behind North Face jackets and Smartwool socks, are related to winter. The company's fourth-quarter results overall and its outlook fell short of Wall Street expectations, and shares fell $3.04, or 5 percent, to close at $56.85 Friday. The stock has gained 49 percent in the past 12 months.

In VF's jeans business, sales were unchanged at $734 million. Wrangler brand sales rose 5 percent, while sales for the Lee brand fell 6 percent. The company said that customer traffic declines and "challenging conditions" in U.S. department stores hurt sales.

Products designed for winter did better. North Face revenue rose 12 percent, with sales in company stores and online rising 30 percent. Wholesale revenue — its sales of product to other retailers — rose by a "mid-single-digit" percentage. While retailers' orders were more modest, the company said it expects momentum to pick up this year.

The Greensboro, N.C.-based company also said that its new Vans shoes for cold and wet weather were popular. Vans revenue increased 14 percent for the quarter.

Revenue for its "outdoor and action sports" brands rose 12 percent to $1.9 billion.

"In what has arguably been the coldest winter in recent memory, companies that can provide warmth have been winning," Jefferies analyst Randal Konik said in a research note Friday.

Some competitors have also credited winter weather with helping sales. Stronger sales of fleece, gloves and other cold-weather gear helped lift sports uniform maker Under Armour Inc.'s October to December revenue.

Konik said that Deckers Ourdoor Corp., the maker of Ugg sheepskin boots, should also benefit. The company reports its quarterly results on Feb. 27.

Investors will also be watching next week to see if Columbia Sportswear — which owns Sorel, Mountain Hardwear and its namesake brand — can shake off the mild-winter blues that have hampered its fourth-quarter sales in recent years.

Overall, VF's fourth-quarter net income increased 10 percent to $367.7 million, or 82 cents per share, while revenue grew 8 percent to $3.29 billion. But analysts polled by FactSet were anticipating better, forecasting earnings of 84 cents per share on revenue of $3.36 billion.

The company's outlook for this year was also below Wall Street's prediction: Earnings of $3 to $3.05 per share versus analysts' expectation of $3.09 per share.

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