V.F. Corporation (VFC – Analyst Report) posted third-quarter 2015 results, as reported earnings of $1.07 a share dipped 1% year over year, falling short of the Zacks Consensus Estimate of $1.12. However, on a currency neutral basis, earnings per share improved 14%.

VF Corporation – Earnings Surprise | FindTheBest

Total revenue of $3,612.8 million advanced 3% year over year, but missed the Zacks Consensus Estimate of $3,672 million. On a currency neutral basis, revenues were up 8% on a year-over-year basis. The increase in revenues was mainly attributable to strength witnessed across Outdoor & Action Sports, Jeanswear, international and direct-to-consumer businesses.

The company’s gross margin contracted 40 basis points (bps) to 47.9% as foreign currency headwinds offset benefits from the ongoing mix shift to higher-margin businesses and improved product costs. On a currency neutral basis, gross margin expanded 60 bps to 48.9%.

Operating income edged up 2% to $643 million, whereas operating margin shrunk 20 bps to 17.8%. Excluding the negative impact from currency headwinds, operating income jumped 14%, while the operating margin expanded 100 bps to 19%.

Segment Details

Revenues at Outdoor & Action Sports rose 5% to $2,296.6 million (up 13% on a currency neutral basis). The upside was attributable to growth in both the wholesale and direct-to-consumer channels. Revenue growth was driven by a respective 11%, 10% and 21% increase in sales in The North Face, Vans and Timberland brands, all on a currency neutral basis.

Jeanswear revenues of $747.9 million remained flat year over year (up 4% on a currency neutral basis). During the quarter, the segment’s performance benefited from mid single-digit percentage growth in the Americas and Europe, coupled with high single-digit growth in the Asia-Pacific region. Global revenues inched up 2%, while the same jumped 8% on a currency neutral basis for the Lee brand in the quarter. Revenues for the Wrangler brand slipped 1% (up 3% on a currency neutral basis).

Imagewear revenues remained flat at $291.5 million (up 1% on a currency neutral basis), as growth in Licensed Sports Group operations was offset by a high single-digit percentage deceleration in the workwear business.

Revenues at Sportswear dropped 1% to $161.7 million, as revenues of the Nautica brand slipped at a low single-digit percentage rate.

Contemporary Brands’ revenues plunged 16% to $83.2 million (down 13% on a currency neutral basis). The company’s International revenues fell 5% year over year, but jumped 9% on a currency neutral basis. On a reported basis, international revenues accounted for 38% of the company’s total revenue, compared to 41% contribution recorded in the same period last year.