Some investors may be worried about all things retail, especially considering questions about consumer strength here in the U.S., but VF (NYSE:VFC) isn't adding to worries, given its strong third-quarter earnings report.

VF's net income increased 5% to $207.2 million, or $1.84 per share. Total revenue increased 15% to $2.07 billion, and income from continuing operations increased 13% to $1.86 per share.

The consumer goods company had more good news to impart -- it increased its guidance for the fourth quarter and for the year. For 2007, EPS will be up 13% and revenue will be up by 15%. It also increased its dividend by 5.5% to $0.58 per share.

The good news doesn't stop there -- VF has generated $73.5 million in free cash flow, and last year at this time, it was in the red. However, in an interesting aside, although VF has reduced its long-term debt, its short-term borrowings grew to $1.05 billion. The company says its debt-to-capital ratio for the year will approximate last year's levels.

VF's initiatives seem to be working, making it a consumer-oriented company that can capitalize on many trends -- domestic and international, discount and high-end brands -- and supply its merchandise to other retailers through its retail stores. Its brands not only include discount names like Lee and Wrangler that are available at places like Wal-Mart (NYSE:WMT), but also higher-end names like Vans and North Face.

It has also made some strategic acquisitions recently, like high-end denim company Seven for All Mankind, which competes with companies like True Religion (NASDAQ:TRLG), as well as yoga apparel retailer Lucy, which could give recent hot IPO lululemon (NASDAQ:LULU) a run for its money.

VF is doing a fine job of providing stewardship to a number of brands, compared with rival consumer goods company Liz Claiborne (NYSE:LIZ), which has been selling off brands to focus on the strongest ones. It may look cheaper than VF, but it's also got a lot to prove. 

That's right, VF's PEG ratio of 1.57 doesn't come across as cheap, but then again, ponder the likelihood that the company's long-term growth will beat expectations, given recent success. Plus, it does have a nice dividend. Although I'd like to wait for some temporary setback to discount its shares, it's a solid stock for the watch list.

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