VF Corporation said that despite record third quarter sales, the results came in “somewhat softer” than expected for the period. Still, the company saw nearly all divisions post higher operating income with double-digit operating margins for the quarter. The company’s Outdoor Coalition, which is comprised of the Eastpak, Jansport, Kipling, Napapijri, The North Face, and Vans brands, again led the gainers for the quarter. Looking ahead, management expects to see the Outdoor Coalition provide the energy in the fourth quarter as well, with “generally flat” sales across the other divisions.

Total third quarter sales were up less than one percent to $1.80 billion from $1.79 billion in the year-ago quarter. Excluding roughly $29 million in sales attributed to the acquired Reef and Holoubek brands, sales would have still been flat since the company had about the same amount of sales in Q3 last year from the divested Playwear business. Net income increased 17.0% to $181.9 million, or $1.59 per share, compared to $155.4 million, or $1.38 per share, in Q3 last year.

The Outdoor Coalition posted a 13.9% sales increase in the quarter to $520.8 million, compared to $457.1 million in Q3 last year. Excluding an $18 million gain from inclusion of Reef sales this year, sales still rose about 10% for the quarter. Operating income for the ODC rose 28% to $112.0 million, with operating margins expanding to 21.5% of sales from 19.1% in the year-ago period.

The North Face saw sales increase 23% in the quarter, with gains coming from all product categories. TNF backlog for Spring 2006 was up 30% at quarter-end. Management said that TNF owned-retail is also “performing very well,” with comparable store sales in the U.S. running 17% above last year. TNF opened its two newest stores in September, one in Portland, Ore. and the other in Tyson’s Corner, Md.

Management said “strong volume gains” and a “sharp improvement” in the profitability of the Vans business were the primary drivers of the profit increase for the company. Vans’ operating margins jumped 50% in the third quarter. They said the new Vans retail prototype store continues to “show great promise,” with comparable store sales up 22% year-to-date in the remodeled stores.

Management said that Reef experienced double-digit growth across all channels, while the combined Eastpak/Jansport business was said to be “up slightly” for the period.

Spring bookings for the Napapijri brand were up 18%, with “particularly strong growth” in Germany and France. The newest Napapijri store opened recently in Munich and VFC will open the first store for the brand in the U.S., bowing in New York City next spring.

In the Imagewear business, sales increased 5.3% in the quarter to $202.8 million from $192.5 million in the year-ago period. Excluding approximately $11 million in sales attributed to the acquisition of Holoubek, sales were down about half a percent for the period. Holoubek, a licensee of the Harley-Davidson Motor Company, drove a double-digit sales gain in the licensed sports apparel business. Management expects the Imagewear group to see a negative impact in Q4 from the year-ago boost attributed to the Red Sox’ World Series run.

Imagewear operating income rose 25% to $37.2 million, with operating margins exceeding 18% in the current quarter.


>>> The Vans improvement was attributed to strong efforts by the management team running the brand. Funny how well things work when you get the family out of the way of their own business