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VF Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 29, 2012 03:24PM

VF Corp. (VFC) filed Annual Report for the period ended 2011-12-31. V F Corp has a market cap of $16.16 billion; its shares were traded at around $146.39 with a P/E ratio of 18.2 and P/S ratio of 1.7. The dividend yield of V F Corp stocks is 2%. V F Corp had an annual average earning growth of 7.1% over the past 10 years. GuruFocus rated V F Corp the business predictability rank of 3.5-star.

Highlight of Business Operations:

Translating a foreign entity’s financial statements from its functional currency into the U.S. dollar, VF’s reporting currency, has an impact on VF’s reported operating results. A weaker U.S. dollar in relation to the functional currencies of those countries where VF conducts its international business (primarily in Europe/euro-based countries) positively impacted revenue comparisons by $100 million in 2011 relative to 2010, while a stronger dollar negatively impacted revenue comparisons by $21 million in 2010 relative to 2009. The weighted average translation rates for the euro were $1.39, $1.33 and $1.39 per euro for 2011, 2010 and 2009, respectively. If the U.S. dollar remains at the exchange rate in effect at the end of December 2011 ($1.30 per euro), reported revenues in 2012 will be negatively impacted compared with 2011.

The Outdoor & Action Sports Coalition achieved record revenues and operating income in 2011. Global revenues for this coalition increased 42% over 2010, reflecting 20% organic growth and 22% growth from the Timberland acquisition. Outdoor & Action Sports revenues in the Americas increased 31% over 2010 and international revenues rose 63%, with approximately one-half of the growth in each of the geographies coming from the Timberland acquisition. Of the 30% increase in international organic revenues, 6% was attributable to foreign currency translation. Nearly all Outdoor & Action Sports brands achieved double-digit growth in the year, with the two largest brands — The North Face® and Vans® — achieving global revenue growth of 21% and 23%, respectively. In addition, revenues of the Kipling®, Eastpak®, Reef® and Napapijri® brands increased 24%, 21%, 17% and 15%, respectively. Coalition revenues in Asia increased 93%, with over 50 percentage points of the growth due to the Timberland acquisition. Direct-to-consumer revenues in the coalition rose 44% in 2011 over 2010 with approximately 25 percentage points of the increase from the Timberland acquisition. Direct-to-consumer revenue growth was also driven by new store openings, comp store revenue growth and an expanding e-commerce business with increases of 26% and 17% in The North Face® and Vans® direct-to-consumer businesses, respectively.

The 14% increase in revenues in 2010 over 2009 was driven by growth in The North Face® and Vans® brands of 18% and 20%, respectively. These brands experienced growth in both domestic and international markets. Direct-to-consumer revenues for this coalition rose 20% in 2010 over 2009, with double-digit growth in

Domestic jeanswear revenues increased 4% in 2011 over 2010 with unit pricing contributing to 8% revenue growth, offset by a 4% reduction in unit volumes. The domestic jeanswear growth was led by increases in the western and Lee® businesses of 11% and 8%, respectively. Mass market revenues in 2011 were flat with 2010 levels. International jeanswear revenue growth in 2011 was 17%, of which 3% was due to the impact of foreign currency translation. Asia revenues rose by 37%, and Mexico, Canada and Latin America each had double-digit growth. European jeanswear revenues increased 6%, with approximately two-thirds of the increase attributable to favorable foreign currency translation.

Domestic and international revenues rose 11% and 8% in 2011 over 2010, respectively, with double-digit revenue growth in the Splendid®, Ella Moss® and John Varvatos® brands. Global 7 For All Mankind® revenues increased 4% in 2011 over 2010, with growth both domestically and internationally. New stores, comp store revenue growth and higher e-commerce revenues drove 34% growth in direct-to-consumer revenues for this coalition in 2011.

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Stocks Discussed: VFC,
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