VF Corp. Earnings: Are Ambitious Growth Targets Within Reach?

VF (NYSE: VFC  ) will release its quarterly report on Friday, and investors have generally been pleased with the apparel maker's efforts to grow its business. Even as it seeks to capitalize on the same general trends that Nike (NYSE: NKE  ) identified in the broader athletic realm, VF's focus on high-end outdoor footwear and clothing isn't the only source of potential growth for the company. Given VF's ambitious target for revenue gains in future years, it will need every opportunity it can get.

VF has numerous brands under its belt, with its best-known North Face and Timberland products going up against Columbia Sportswear (NASDAQ: COLM  ) and other specialty manufacturers. Yet VF also has Vans footwear, Lee and Wrangler jeans, and even premium clothing and accessories under labels like Ella Moss. The question VF faces is whether this powerful combination of brands can generate the growth it wants in order to keep dominating its industry. Let's take an early look at what's been happening with VF over the past quarter and what we're likely to see in its report.


Source: The North Face.

Stats on VF

Analyst EPS Estimate

$0.63

Change From Year-Ago EPS

3.3%

Revenue Estimate

$2.75 billion

Change From Year-Ago Revenue

5.5%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can VF earnings grow faster?
In recent months, analysts have cut back their views on VF earnings slightly, reducing first-quarter estimates by $0.04 per share and full-year 2014 projections by about 1%. The stock has picked up a modest amount of ground, rising 3% since mid-January.

VF disappointed investors early in the quarter, as fourth-quarter results were weaker than shareholders had expected. Revenue rose 8%, but adjusted earnings growth of 6% was below projections. The trouble came from denim sales, which has been a problematic area for more jeans-focused retailers and producers as well. By contrast, sales of its North Face-branded outdoor gear were strong, with a 30% jump in direct sales to customers. Vans also continues to play a vital role for the company, giving VF some valuable diversification in its target-customer demographic.

VF has worked hard to give customers innovative products. With moves like including its Thermoball insulative technology in products at its brand shops, which are located at hundreds of sporting-goods stores, VF highlights its core products while turning its research and development spending into good marketing. Increased interest in nontraditional sports such as skateboarding could also drive VF to further innovation in those areas.

One interesting question is whether VF could acquire Columbia Sportswear to become an outdoors colossus. That would help give VF enough heft to challenge Nike or other major athletic-wear companies if they made a big push into outdoor apparel, and Columbia's relatively small size makes an acquisition realistic. Given VF's ambitious plans to raise its annual revenue to $17 billion by fiscal 2017 -- more than half again its current run rate based on first-quarter projections -- such an acquisition might be instrumental in bolstering sales growth.

In the VF earnings report, watch to see what approach company management takes with respect to its revenue-growth goals. With so much interest in the outdoors, VF has an opportunity to take its North Face and Timberland brands to the next level and make shareholders happier in the process.

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