2014 Guidance

“As we look to 2014, we are confident in the continued global success of VF’s portfolio of powerful brands and platforms,” Wiseman said. “Our proven execution and financial discipline makes us the best positioned company in our industry to consistently deliver products and experiences that consumers want and returns that shareholders have come to expect.”

Key points related to VF’s full year 2014 outlook include:
  • Revenue expected to increase by 7 to 8 percent including growth in every coalition. Outdoor & Action Sports coalition revenues should increase at a low double-digit rate including a mid-teen percentage growth rate from the Vans ® brand, approximately 12 percent growth for The North Face ® brand and 10 percent growth for the Timberland ® brand. Jeanswear and Imagewear are expected to grow at a low single-digit rate. Sportswear is expected to grow at a high single-digit rate and Contemporary Brands should see mid single-digit percentage growth.
  • International revenue should grow 10 percent, driven by high-teen growth in Asia and high single-digit growth in both Europe and the Americas (non-U.S.) regions. International revenues should approximate 38 percent of total revenues in 2014.
  • In 2014, to better represent the operations of its direct-to-consumer business, VF will begin to include its concession locations in its direct-to-consumer revenues. Concessions are retail locations (outside the U.S.) where the company is responsible for all aspects of operations without ownership of the retail space. After adjusting 2013 direct-to-consumer revenues for this change, direct-to-consumer is expected to grow at a high-teen percentage rate in 2014 and should represent 26 percent of total VF revenues. Direct-to-consumer growth in 2014 will be driven by approximately 150 store openings, comp store growth and an expected increase of more than 30 percent in e-commerce revenues.
  • Expect continued margin expansion, including a 90 basis point improvement in gross margin to 49 percent, and about 60 basis point increase in operating margin to 15 percent .
  • Earnings per share should increase 11 to 13 percent to $3.00 to 3.05.
  • Expect record cash flow from operations, approaching $1.65 billion.
  • Expect to spend approximately $700 million under the company’s share repurchase program; when combined with annual dividend, should return more than $1 billion to shareholders in 2014.
  • Other full year assumptions include a 23.5 to 24 percent effective tax rate, a negligible impact from changes in foreign currency and capital expenditures of approximately $270 million.

In terms of quarterly revenue comparisons in 2014, the cadence should be similar to that of 2013 – although at a higher percentage increase per quarter. Accordingly, we expect mid single-digit growth in the first half of 2014 followed by high single-digit growth in the second half of the year. First quarter earnings will face a tougher comparison against last year’s first quarter earnings per share due to the inclusion of $0.03 per share from discrete tax benefits primarily related to the impact of U.S. tax law changes (American Taxpayer Relief Act of 2012) enacted in January 2013. In the second half of 2014, revenue growth and profitability should be the strongest comparison, reflecting the growing contribution of the more seasonally driven Outdoor & Action Sports coalition and expansion of our direct-to-consumer business.

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