VF Corporation's Q4 revenue increases 20 percent

VF Corporation’s revenue increased 20 percent or 18 percent currency neutral to 3.6 billion dollars, including a 247 million dollars contribution from the Williamson-Dickie acquisition, which closed on October 2, 2017. Excluding the Williamson-Dickie acquisition, the company said, revenue increased 12 percent or 10 percent currency neutral, driven by broad-based strength across VF’s international and direct-to-consumer platforms, outdoor & action sports coalition and workwear businesses.

“VF's fourth quarter results were stronger than we expected as growth continues to accelerate across core dimensions of our portfolio,” said Steve Rendle, the company’s Chairman and CEO in a media statement, adding, “We delivered a top-quartile total return for shareholders in 2017 and our strong performance provided us with the capacity to reinvest about 100 million dollars back into our business.”

Review of VF’s Q4 results

During the fourth quarter, the company decided to sell its Nautica brand business and on April 28, 2017, the company completed the sale of its licensed sports group (LSG) business, including the Majestic brand. On August 26, 2016, the company concluded the sale of its contemporary brands businesses, which included the 7 For All Mankind, Splendid and Ella Moss brands. VF’s after-tax net loss from discontinued operations was 17 million dollars in the fourth quarter, while the after-tax net loss from discontinued operations was 106 million dollars for the full year 2017.

Gross margin for the quarter improved 130 basis points to 51.5 percent and on an adjusted basis, gross margin increased 60 basis points to 51.6 percent. Excluding the Williamson-Dickie acquisition, adjusted gross margin increased 140 basis points to 52.4 percent. Changes in foreign currency negatively impacted gross margin by 10 basis points. Operating income on a reported basis was 481 million dollars and on an adjusted basis, increased 6 percent to 497 million dollars, including a 19 million dollars contribution from the Williamson-Dickie acquisition.

Operating margin on a reported basis increased 390 basis points to 13.2 percent, while adjusted operating margin declined 180 basis points to 13.6 percent. Adjusted operating margin, excluding the Williamson-Dickie acquisition, declined 130 basis points to 14.1 percent and changes in foreign currency negatively impacted operating margin by 30 basis points.

Fourth quarter loss per share was 0.18 dollar on a reported basis, including a 1.16 dollars negative impact from recent US tax legislation. On an adjusted basis, earnings per share increased 13 percent to 1.01 dollars, including a 0.04 dollar contribution from the Williamson-Dickie acquisition. Relative to the company's outlook provided on October 23, 2017, fourth quarter earnings per share included an incremental 0.06 dollar or 35 million dollars pretax impact from additional investments to drive accelerated growth in 2018 and beyond.

FY17 revenues rise 7 percent

Full year revenue increased 7 percent to 11.8 billion dollars, including a 247 million dollars contribution from the Williamson-Dickie acquisition. Excluding the Williamson-Dickie acquisition, revenue increased 5 percent or 4 percent currency neutral, driven by continued momentum in VF's international and direct-to-consumer platforms, outdoor & action sports coalition and workwear businesses.

Gross margin for the year increased 120 basis points to an annual record high of 50.5 percent and on an adjusted basis, gross margin increased 100 basis points to 50.5 percent. Excluding the Williamson-Dickie acquisition, adjusted gross margin increased 120 basis points to 50.7 percent. Changes in foreign currency negatively affected gross margin by 60 basis points. Operating income on a reported basis increased 10 percent to 1.5 billion dollars and adjusted operating income decreased 2 percent to 1.5 billion dollars, including a 19 million dollars contribution from the Williamson-Dickie acquisition.

Operating margin on a reported basis increased 30 basis points to 12.7 percent, while adjusted operating margin declined 120 basis points to 12.9 percent. Excluding the Williamson-Dickie acquisition, adjusted operating margin declined 110 basis points to 13.0 percent. Changes in foreign currency negatively impacted operating margin by 50 basis points.

Earnings per share on a reported basis declined 30 percent to 1.79 dollars, including a 1.15 dollars negative impact from recent US tax legislation. Adjusted earnings per share increased 4 percent or 7 percent currency neutral to 2.98 dollars, including a 0.04 dollar contribution from the Williamson-Dickie acquisition. Relative to the company's original outlook provided on February 17, 2017, full year 2017 earnings per share included a 0.19 dollars or around 100 million dollars pretax impact from incremental investments.

VF expects transition quarter revenue to rise 16 percent

VF added that since there is a change in the company's fiscal year end to the Saturday closest to March 31 from the Saturday closest to December 31 and the company will report results for the transition quarter ending March 31, 2018. For the transition quarter revenue is expected to be around 2.9 billion dollars, up 16 percent, including about a 200 million dollars contribution from the Williamson-Dickie acquisition. Excluding the Williamson-Dickie acquisition, revenue is expected to increase at a high single-digit rate due in part to changes in foreign currency.

Adjusted earnings per share is expected to approximate 0.65 dollar, up 27 percent, including about a 0.02 dollar contribution from the Williamson-Dickie acquisition. Excluding the Williamson-Dickie acquisition, adjusted earnings per share is expected to increase more than 20 percent due in part to changes in foreign currency.

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