One That Bucks the Consumer Blahs

VF (NYSE: VFC  ) continues to be a bright spot in the retail and consumer goods universe. Not only did its second-quarter earnings increase, but the company was also able to increase its yearly expectations.

Second-quarter net income increased 27% to $104 million, or $0.94 per share. Sales increased 11% to $1.7 billion. VF raised its full-year guidance, expecting a 12% increase in earnings per share (versus the previous guidance for a 10% increase) and a 9% increase in revenues.

I don't think I'm having an original thought when I say it's impressive to see the company doing well when many have been struggling with the slow consumer climate and the competition to woo reluctant spenders. Think of all the retail stocks that have struggled recently, like American Eagle Outfitters (NYSE: AEO  ) , Abercrombie & Fitch (NYSE: ANF  ) , and Sears Holding (Nasdaq: SHLD  ) . And of course, an arguably more direct VF rival, Liz Claiborne (NYSE: LIZ  ) , hasn't quite got its turnaround gathering steam yet. VF, on the other hand, appears to be weathering the storm quite well.

VF management argues that the diversity of the brands in its expansive portfolio allows it to be less exposed to a weak consumer climate here in the U.S. (as well as in some parts of Europe). For example, success with brands like North Face and Vans (it said revenues for those brands were up 40% and 14% respectively) help hedge it against weakness in other demographics. In fact, the company said revenues at its retail stores were up 15% due to success at the North Face and Vans stores it's been opening, and that's no small feat these days.

Meanwhile, international revenues increased by 23% (8% when you take into account currency translation), and markets like Asia, Russia, and South America proved happy hunting grounds for VF.

The current environment is difficult, and it's not a bad strategy to look for stocks that are already firing on all cylinders (and not struggling to right the ship in the middle of a storm). VF fits the bill. It's also got a nice 3.10% dividend yield. When it comes to some safer havens in the recessionary times, VF looks to me like a solid stock for investors to consider for their portfolios right now -- and any weakness in the stock could make it a really compelling buy.  

For other recent Foolishness on VF:

VF is a Motley Fool Income Investor recommendation. Sears Holdings is a Motley Fool Inside Value selection. American Eagle Outfitters is a Motley Fool Stock Advisor pick. The Fool owns shares of American Eagle Outfitters. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.


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