VF Corp. announced “aggressive” cost cuts as it lowered fourth-quarter expectations a second time as it also projected 2009 sales below analysts' estimates amid the stronger dollar and weaker consumer spending. At a presentation at an investor conference, VF officials projected fourth-quarter earnings, excluding restructuring charges, down 7% to 11% on a 2% revenue drop, due to the stronger dollar. In October, VF had said fourth-quarter revenue would rise 3 percent to 4 percent as per-share profit increases 1 percent to 5 percent.
Specifically, VF expects fourth-quarter profit of $1.30 to $1.35 a share, excluding charges of about 30 cents a share tied to the cost cuts. Including the charge, fourth-quarter profit is expected to range from $1.00 to $1.05 a share. Wall Street's consensus estimate was $1.46 a share, according to Reuters Estimates.
For the 2008 year, the company said revenue was expected to rise about 6 percent as per-share profit increases about 5 percent to 6 percent, excluding the charge. In October, VF said it expected full-year revenue to grow 7 percent to 8 percent while earnings rise 8 percent to 9 percent.
For all of 2009, VF forecasted 2009 per-share earnings above the company's long-term growth target of 10% to 11%, excluding impacts from higher pension costs and the stronger dollar. Revenue is expected to be “down slightly.”
The company said it anticipates an increase in pension expenses of approximately $90 million in 2009 due to the deterioration in global securities markets in 2008. The higher pension costs are expected to shave 2009 earnings by about 50 cents per share.
At the conference, Chairman and Chief Executive Eric Wiseman didn't detail the planned $100 million in annual cost savings ahead. Officials noted that VF's balance sheet and liquidity remain strong, with year-end cash of about $350 million and no long-term debt repayments due until October 2010.
VF's sports brands include The North Face, Vans, Majestic Athletic, Reef and Lucy.
