“Adjusted” amounts refer to non-GAAP measures as described in the “Adjusted Amounts” paragraph at the end of this news release.
“VF is at its best when we empower our brands to deliver innovative products, connect with consumers, and operate with efficiency and discipline,” said Eric Wiseman, VF Chairman and Chief Executive Officer. “Our third quarter results validate our growth strategy and our ability to deliver strong results in a challenging economic environment.”
“Our solid year-to-date results allow us to make significant, incremental brand investments while still delivering on our long-term earnings growth target,” continued Wiseman. “The announced 21 percent increase in our dividend and stock split demonstrate the confidence we have in our ability to consistently generate strong returns for VF shareholders.”
Third Quarter 2013 Review
Revenues rose 5 percent to $3.3 billion, compared with the same period of 2012, led by Outdoor & Action Sports, Jeanswear, and our International and Direct-to-Consumer businesses. Changes in foreign currency exchange rates positively impacted total reported revenue growth by approximately one percentage point during the quarter.
Gross margin improved 90 basis points to 47.6 percent, compared with 46.7 percent in the same period of 2012. With improvements in nearly every coalition, the higher gross margin reflects the continuing shift in our revenue mix toward higher margin businesses and moderately lower year-over-year product costs.
SG&A as a percent of revenues rose 40 basis points to 30 percent in the third quarter. This increase includes an 80 basis point impact from higher marketing investments to support our largest and fastest growing businesses.
Operating income on an adjusted basis grew 6 percent to $582 million in the third quarter, compared with $551 million in the same period of 2012. On a GAAP basis, third quarter operating income increased 8 percent to $580 million, compared with $537 million in last year’s same period.
Adjusted operating margin was 17.7 percent, compared with 17.5 percent in the third quarter of 2012. On a GAAP basis, operating margin rose to 17.6 percent from 17.1 percent in last year’s period.
Net income on an adjusted basis grew 11 percent to $436 million in the third quarter, compared with $393 million in the same period of 2012.
Adjusted earnings per share – which excludes items related to the acquisition of The Timberland Company (“Timberland”) of $0.02 per share in the third quarter – increased 11 percent to $3.91 per share from $3.52 per share during the same period last year. Last year’s third quarter adjusted earnings per share of $3.52 excluded $0.10 per share in Timberland acquisition-related expenses. On a GAAP basis, third quarter net income was up 14 percent to $434 million or $3.89 per share.
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