VF Corp. saw “stronger-than-expected” sales from its core businesses in the third quarter and “higher–than-expected” profit contribution from the recently-acquired Nautica Enterprises, Inc. The Outdoor Coalition, which includes The North Face, JanSport and Eastpak, again posted the strongest showing in the quarter, showing a 15% sales increase in Q3, or 11% in constant currency.

The increase was driven by global double-digit sales increases at TNF, while the other brand appeared to perform better outside the U.S. Half of TNF’s sales were driven by new products and Spring 2004 backlog at the brand were up 23% at quarter-end.

TNF’s A5 line, which is geared toward the more casual outdoor lifestyle consumer for “off the rock” activities, was said to be “performing extremely well”, but Terry Lay, the CEO of the Outdoor Coalition, said that the brand was up “across all categories”.

The growth at TNF is coming more from increased penetration with current retail customers rather than an expansion of the customer base. Adding A5 and footwear is again seen as important here as the brand captures more square footage at the specialty level.

TNF owned-retail sales were up 7.5% YTD, a number that VFC sees as low because they have been focused on delivering product to their wholesale customers first, signaling a gap in product flow to their own stores. Owned retail, which currently represents less than 10% of TNF’s sales, was said to be “very well positioned” for the fourth quarter.

The packs business “got off to a slow start” for Back-to-School, but the company saw improvement in September and expects a “better fourth quarter”. The bike messenger bag silhouettes appear to be performing best here as we see elsewhere, and they see “strong performance” from the Airlift daypack line.

Imagewear sales declined 6% for the quarter, but VFC still expects to see a “double-digit sales gain again this year” driven by the strong sales of NFL products, big games and the mass-market business. The company has also added the Harley-Davidson license which should drive strong sales at mass retail. The declines in the business came from a “soft’ workwear category and price deflation in the corporate casual business.

Overall, VFC reported net income of $125.3 million, or $1.14 a share, on net sales of $1.44 bn for Q3, compared with net income $128.2 million, or $1.15 a share, on sales of $1.4 bn in the year-ago period. Last year's results included a loss of $315,000 from discontinued operations. The addition of Nautica this year added about $72 million in sales and EPS of five cents to Q3.


>>> It’s a good thing these guys keep buying more proprietary brands because the rest of their commodity businesses have real issues…