* Expects full-year earnings of $3.06/shr vs est $3.09
* Expects current-qtr sales to rise at same rate as 2nd-qtr
* 2nd-qtr EPS $0.36 vs est $0.35
* 2nd-qtr sales rise 8 pct to $2.40 bln
(Adds analyst comment, details; updates shares)
By Ramkumar Iyer
July 18 Apparel retailer VF Corp, which
owns brands such as Timberland and The North Face, reported a
fall in gross margins for the first time in nine quarters and
forecast a full-year profit below the analysts' average
The company's shares fell as much as 2.4 percent on Friday.
The apparel retailer also said it expects third-quarter
revenue to increase by about 8 percent, which translates to
around $3.53 billion, below the analysts' average expectation of
$3.60 billion, according to Thomson Reuters I/B/E/S.
Gross margins fell 10 basis points to 48.4 percent in the
second quarter ended June 28, hurt by unfavorable foreign
exchange rates and the company's efforts to lower its jeanswear
The gross margin decline was "a disappointment", Credit
Suisse analyst Christian Buss wrote in a note.
"We had expected accelerated investments in international
markets as well as owned retail to support margins," he said.
Buss had expected second-quarter gross margins of 49.4
percent - the same figure the company reported in the previous
VF Corp said it expects gross margins to return to
historical levels of about 49 percent as it shifts focus away
from jeanswear - a category that saw low demand.
The company, which also owns the Lee and Wrangler brands,
said jeans sales fell 1 percent, primarily in the Lee brand, as
fewer women shopped for denim clothes in the quarter.
The company's rivals are also struggling in the volatile
North American retail environment as stagnant wage growth and
rising taxes force consumers to keep a lid on discretionary
Gap Inc said last week that sales at stores open at
least a year fell 2 percent in June, hurt by declines at its Gap
and Banana Republic brands.
VF Corp's net profit rose to $157.7 million, or 36 cents per
share, in the quarter, from $138.3 million, or 31 cents per
share a year ago.
Total revenue rose 8 percent to $2.40 billion.
Analysts on average had estimated a profit of 35 cents per
share on revenue of $2.36 billion, according to Thomson Reuters
The company expects full-year earnings of $3.06 per share,
compared with Wall Street's estimate of $3.09 per share.
Sales in its outdoor and action sports business rose 16
percent to $1.27 billion, accounting for more than half its
Shares of Greensboro, North Carolina-based VF Corp were down
1.2 percent at $60.89 at 14:30 ET on the New York Stock
(Editing by Simon Jennings)