VF Announces Record First Quarter Results
-- EPS rises 17% to $.63
-- Sales up 5% to $1.3 billion
-- Operating margins expand to 10.8% from 10.1%
-- Dividend of $.20 per share declared
WYOMISSING, Pa., April 21 /PRNewswire/ -- Marking the eighth consecutive
quarter of record earnings, VF Corporation (NYSE: VFC) announced today results
for the first quarter ended April 4, 1998.
Earnings reached a record $78.1 million, up 11% from $70.2 million in the
first quarter of 1997, with earnings per share up 17% to $.63 from $.54 in the
prior year period. Sales in the current quarter rose 5% to $1,326.2 million
compared with $1,262.8 million in 1997. Excluding the impact of the strong
U.S. dollar on foreign currency translations, sales in the quarter would have
risen 7%. The negative impact of the strong dollar on earnings was $.02 per
share.
"We're pleased to start 1998 on such a strong note," said Mackey J.
McDonald, President and Chief Executive Officer. "Our coalition activities
are resulting in reduced costs, and at the same time our investments in our
brands and in acquisitions are contributing to our growth. The result is an
increase in sales, accompanied by continued margin expansion."
Performance Review
The sales increase in the quarter was fueled by excellent performance in
categories VF has targeted for growth, which include jeanswear, intimate
apparel, workwear and daypacks. Domestic intimate apparel sales increased
69%, including the addition of Bestform Group acquired in January 1998.
Excluding Bestform, the Company's domestic intimate apparel business, which
includes the Vanity Fair and Vassarette brands, rose 6%. Also contributing to
the sales increase in the quarter was an 8% rise in domestic jeans sales,
balanced across the Company's Wrangler, Lee, Riders and Timber Creek brands.
Margins in both jeanswear and intimate apparel continued to improve from prior
year levels.
Offsetting these sales gains were slight declines in the Company's
knitwear, playwear and international businesses. Knitwear results were down
more than anticipated, reflecting weakness in sales of private label products
and industry pricing pressures, while playwear sales declined due to the
Company's previously announced decision to exit the licensed childrenswear
business in the mass channel. Mr. McDonald noted, however, that playwear
continued its profit turnaround, with operating income doubling in the
quarter. International results continue to reflect the impact of a strong
dollar on foreign currency translations and softness in several key European
markets. Excluding foreign currency effects, international sales would have
been up slightly in the quarter.
Gross margins rose in the quarter to 34.2% from 33.1%, as the Company
continued to benefit from its move toward a more balanced manufacturing base
and greater synergies among its coalitions. Operating margins also expanded,
despite continued heavy investments in brand marketing and common systems and
processes.
"1998 is a year of execution for VF," said Mr. McDonald. "Our goal is to
aggressively move forward with our 'consumerization' initiatives -- which
include investments in consumer-focused brand marketing, new operating systems
and lower cost manufacturing -- while still delivering solid top and bottom
line growth to our shareholders. We believe our strong financial position and
cash flow will give us the flexibility needed to achieve that goal, while at
the same time allowing us to move forward with our stock repurchase program."
Annual Meeting
At the Company's annual meeting, three Directors were reelected to serve
until the 2001 shareholders meeting: Robert D. Buzzell, Distinguished
Professor, School of Business Administration, George Mason University; Edward
E. Crutchfield, Chairman and Chief Executive Officer, First Union Corporation;
and George Fellows, President and Chief Executive Officer, Revlon, Inc. and
Revlon Consumer Products Corporation. Also at the meeting, shareholders
approved the amended articles of incorporation to increase the number of
authorized shares of Common Stock from 150,000,000 to 300,000,000.
Dividend Declared
The Board of Directors declared a regular quarterly cash dividend of
$.20 per share, payable June 19, 1998 to shareholders of record as of the
close of business on June 9, 1998.
CONSOLIDATED INCOME Quarter Ended
April 4, April 5,
1998 1997
(In thousands*)
Net Sales $1,326,205 $1,262,781
Costs and Expenses 1,196,029 1,144,821
Income Before Income Taxes 130,176 117,960
Income Taxes 52,070 47,774
Net Income $78,106 $70,186
Earnings Per Common Share
Basic $.63 $.54
Diluted .62 .53
Average Number of
Common Shares Outstanding 121,251 127,926
* Except per share amounts
CONSOLIDATED BALANCE SHEETS April 4, April 5,
1998 1997
ASSETS (In thousands)
Cash $69,716 $219,745
Accounts Receivable 728,708 682,247
Inventories 888,088 743,187
Property, Plant and Equipment 722,849 725,607
Intangible Assets 911,125 842,596
Other Assets 369,451 301,065
$3,689,937 $3,514,447
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $1,061,849 $802,806
Long-term Debt 516,840 517,616
Other Liabilities 157,237 164,248
Redeemable Preferred
Stock, net 31,016 27,355
Common Shareholders'
Equity 1,922,995 2,002,422
$3,689,937 $3,514,447
Cautionary Statement on Forward-looking Statements
Certain statements included herein are "forward-looking statements" within
the meaning of the federal securities laws. Management cautions that forward-
looking statements are not guarantees and that actual results could differ
materially from those expressed or implied in the forward-looking statements.
Important factors that could cause the actual results of operations or
financial condition of the Company to differ include, but are not necessarily
limited to, the overall level of consumer spending for apparel; changes in
trends in the segments of the market in which the Company competes; the
financial strength of the retail industry; actions of competitors that may
impact the Company's business; and the impact of unforeseen economic changes
in the markets where the Company competes, such as changes in interest rates,
currency exchange rates, inflation rates, recession, and other external
economic and political factors over which the Company has no control.
Investors are also directed to consider the risks and uncertainties discussed
in documents filed by the Company with the Securities and Exchange Commission.
VF Corporation is an international apparel company and a leader in
jeanswear, intimate apparel, knitwear, playwear, workwear, daypacks and
swimwear. Its principal brands include Lee, Wrangler, Riders, Rustler,
Maverick, Vanity Fair, Vassarette, Lee Sport, Healthtex, Jantzen, JanSport and
Red Kap. Its international intimate apparel brands include Lou, Bolero,
Variance, Carina, Siltex, Belcor, Gemma and Intima Cherry.
VF Corporation's press releases, annual report and other information can
be accessed through the Company's home page on the World Wide Web,
vfc.com. Shareholders can also utilize a new toll-free number to
obtain information and updates on the Company, 1-888-VF-NEWS1.
SOURCE VF Corporation
CONTACT: Cindy Knoebel, Director, Investor Relations of VF Corp.,
610-378-1151, or 212-765-4215
Company News On Call: prnewswire.com or fax,
800-758-5804, ext. 939350
Web Site: threads.vfc.com
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