Clothing company V.F. Corporation (NYSE:VFC)’s shares plunged more than 4 percent on Monday, after it slightly missed the third quarter revenue estimates. Though its flagship, The North Face, demonstrated a slow growth, the company’s profits came higher than expected.
Third quarter revenues came at $3.15 billion, 14 percent higher than last year’s $2.75 billion. But they were below the Wall Street estimates of $3.17 billion. The North Face, the cold weather brand, grew 5 percent, lower than 22 percent growth in the third quarter a year earlier. However, gross margins jumped to 46.7 percent from 45.3 percent.
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The business of North Face suffered because retailers ordered only what they needed. Additionally, some of the North Face orders have moved into the fourth quarter. Last year, retailers couldn’t sell all the cold-weather merchandise, due to unusually warm winter. So, they had to offer heavy discounts on cold-weather clothes, thus hurting their margins. The owner of Lee, Wrangler, and Nautica brands also suffered due to lower-than-expected sales in European stores.
V.F. Corporation (NYSE:VFC) is aggressively expanding its international business, especially in Asian and European markets. The Greensboro, North Carolina-based company said its international revenues grew 28 percent during the third quarter. Revenues were also helped by the last year’s acquisition of Timberland, a footwear company.
The company earned $381.3 million in profits, or $3.42 a share in the third quarter, compared to $300.7 million, or $2.69 a share in a year earlier quarter.
“Our third-quarter results clearly demonstrate VF’s unique competitive advantages – diversity across brands, geographic regions and channels; powerful brands that resonate with consumers; and business disciplines that enable the consistent, successful execution of our growth strategies,” said the company CEO, Eric Wiseman.
V.F. Corporation (NYSE:VFC) also announced a quarterly dividend of 87 cents a share, 21 percent higher than last quarter’s payout. It will be paid to shareholders on December 20. Despite missing on the analysts’ estimates, the company has increased its outlook for the full-year profits to $9.60 per share, from the July forecast of $9.50 a share. Analysts are expecting $9.54 per share.
VF shares are down 4.1 percent to $159.93 in the morning trading.