Consumer brands company VF (NYSE: VFC) bucked the trends last quarter, and this time around, it's more of the same.
Fourth-quarter net income increased an impressive 51% to $164.4 million, or $1.46 per share. (The EPS figure included a $0.02 benefit from one-time items.) Revenue increased 22% to $1.96 billion. The company pointed out the revenue gain was driven by 12% organic growth and 10% growth in 2007 acquisitions such as Seven for All Mankind and lucy activewear. So far, so good, on the 7FAM acquisition -- VF said 7FAM experienced double-digit revenue growth, ahead of its initial expectations.
Just like last quarter, VF's international exposure gave it an extra boost. International revenue increased 30% in the quarter, a diversification that helps VF better insulate itself against a slowdown here in the U.S. VF also stood by its guidance for 2008, expecting 9% revenue growth and earnings per share growing by 10%.
I finally broke down and put an "outperform" on VF in Motley Fool CAPS last November (very shortly after I marveled at the fact that it had bucked the trend, and started mulling whether it might be a good value). It has a great group of brands, and the fact that it was able to buck the trend last quarter made me begin to believe that perhaps many investors were underestimating its growth. Meanwhile, it produces strong cash from operations and even pays a dividend.
And while I have recently said rival Liz Claiborne (NYSE: LIZ) may very well be able to pull off its much-needed makeover sooner rather than later, and prove itself a bargain, I'd say VF is a more conservative investment because it's already showing signs of strength.
Many retail and consumer names are stuck near 52-week lows lately -- a few off the top of my head are baby boomer retailers like Chico's (NYSE: CHS) and Coldwater Creek (Nasdaq: CWTR), and even youth-oriented, historically fast-growing companies like Zumiez (Nasdaq: ZUMZ) and Volcom (Nasdaq: VLCM). Each of those stocks has been wiped out pretty mercilessly, and trolling lists of beaten-down stocks is always a good start when you're looking for values.
When it comes to VF, though, there's an even better argument: Things appear to be going very well for it, even with a tough consumer climate here in the States. And that's nothing short of impressive.
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