In the third quarter of fiscal 2019, the operating income of VF Corporation soared 30 per cent to $656 mn, including a $7 mn contribution from acquisitions net of divestitures. On a reported basis, operating margin was up 15.0 per cent to $592 mn. For the reported period, gross margin from continuing operations rose to 51.9 per cent.
During the third quarter, revenue from continuing operations climbed 8 per cent to $3.9 bn. Excluding acquisitions net of divestitures, revenue inched up 7 per cent. International revenue hiked 5 per cent including a 1-percentage point revenue growth contribution from acquisitions net of divestitures.
Active segment revenue increased 16 per cent including a 25 per cent growth in Vans brand revenue. Revenue from outdoor segment climbed 11 per cent including a 14 per cent gain in The North Face brand revenue and a 4-percentage point revenue growth contribution from acquisitions.
Direct-to-consumer revenue jumped 10 per cent including a 1-percentage point revenue growth contribution from acquisitions net of divestitures. Digital revenue increased 24 per cent. “VF’s third quarter results were fuelled by strong growth in our largest brands and balanced growth across the core dimensions of our portfolio,” said Steve Rendle, Chairman, President and Chief Executive Officer.
Inventories were up 9 per cent compared with the same period last year. Excluding the impact of acquisitions net of divestitures, inventories grew 7 per cent. The company also returned approximately $700 mn to shareholders through dividends and share repurchases. The company has $3.8 bn remaining under its current share repurchase authorisation.
For full year fiscal 2019, revenue is now expected to increase approximately 12 per cent to at least $13.8 bn. International revenue is likely to climb 10 per cent to 11 per cent versus the previous expectation of a 12 per cent to 13 per cent jump. Adjusted earnings per share is now expected to be $3.73, including an additional $45 mn, or $0.09 per share, of incremental investment, reflecting an increase of 19 per cent.
“Based on the strength of our third quarter performance and the growth trajectory we see for the remainder of fiscal 2019, we are again increasing our full year outlook, including an additional $45 mn of growth-focused investments aimed at accelerating growth and value creation into fiscal year 2020. We remain sharply focused on executing our integrated growth strategy and transforming VF into a purpose-led, performance-driven enterprise committed to delivering superior returns to shareholders,” concluded Rendle.