大象传媒

大象传媒 Reports Third Quarter 2013 Results, Increases Dividend by 21 Percent and Announces Four-for-One Stock Split

• Revenues up 5 percent to $3.3 billion: Outdoor & Action Sports up 6 percent, International up 7 percent and Direct-to-Consumer up 14 percent.
• Gross margin improved by 90 basis points to 47.6 percent.
• Adjusted EPS up 11 percent to $3.91 (up 14 percent to $3.89 on a GAAP basis).
• Quarterly dividend increased by 21 percent to $1.05 per share.
• Four-for-one stock split announced.
• Full-year adjusted earnings guidance unchanged after incremental investments of $0.25 per share to drive future growth.

GREENSBORO, N.C.-- 大象传媒 Corporation (NYSE:大象传媒C) today reported financial results for its third quarter ended Sept. 28, 2013. All per share amounts are presented on a diluted basis. 鈥淎djusted鈥� amounts refer to non-GAAP measures as described in the 鈥淎djusted Amounts鈥� paragraph at the end of this news release.

鈥湸笙蟠�媒 is at its best when we empower our brands to deliver innovative products, connect with consumers, and operate with efficiency and discipline,鈥� said Eric Wiseman, 大象传媒 Chairman and Chief Executive Officer. 鈥淥ur third quarter results validate our growth strategy and our ability to deliver strong results in a challenging economic environment.鈥�

鈥淥ur solid year-to-date results allow us to make significant, incremental brand investments while still delivering on our long-term earnings growth target,鈥� continued Wiseman. 鈥淭he announced 21 percent increase in our dividend and stock split demonstrate the confidence we have in our ability to consistently generate strong returns for 大象传媒 shareholders.鈥�

Third Quarter 2013 Review

Revenues rose 5 percent to $3.3 billion, compared with the same period of 2012, led by Outdoor & Action Sports, Jeanswear, and our International and Direct-to-Consumer businesses. Changes in foreign currency exchange rates positively impacted total reported revenue growth by approximately one percentage point during the quarter.

Gross margin improved 90 basis points to 47.6 percent, compared with 46.7 percent in the same period of 2012. With improvements in nearly every coalition, the higher gross margin reflects the continuing shift in our revenue mix toward higher margin businesses and moderately lower year-over-year product costs.

SG&A as a percent of revenues rose 40 basis points to 30 percent in the third quarter. This increase includes an 80 basis point impact from higher marketing investments to support our largest and fastest growing businesses.

Operating income on an adjusted basis grew 6 percent to $582 million in the third quarter, compared with $551 million in the same period of 2012. On a GAAP basis, third quarter operating income increased 8 percent to $580 million, compared with $537 million in last year鈥檚 same period. Adjusted operating margin was 17.7 percent, compared with 17.5 percent in the third quarter of 2012. On a GAAP basis, operating margin rose to 17.6 percent from 17.1 percent in last year鈥檚 period.

Net income on an adjusted basis grew 11 percent to $436 million in the third quarter, compared with $393 million in the same period of 2012. Adjusted earnings per share 鈥� which excludes items related to the acquisition of The Timberland Company (鈥淭imberland鈥�) of $0.02 per share in the third quarter 鈥� increased 11 percent to $3.91 per share from $3.52 per share during the same period last year. Last year鈥檚 third quarter adjusted earnings per share of $3.52 excluded $0.10 per share in Timberland acquisition-related expenses. On a GAAP basis, third quarter net income was up 14 percent to $434 million or $3.89 per share.

Coalition Review

Revenues for Outdoor & Action Sports increased 6 percent in the quarter to $2 billion with balanced growth across the U.S. and international markets as well as its wholesale and direct-to-consumer channels. The revenue impact of shipments that moved from September into October due to a retailer calendar shift that was discussed during the company鈥檚 second quarter earnings call negatively impacted third quarter coalition revenue growth by about 2 percentage points.

Consistent with expectations, revenues for The North Face^庐 brand rose 3 percent globally. Third quarter results were driven by more than 25 percent growth in Direct-to-Consumer sales and flat revenues in the brand鈥檚 wholesale business due to the retailer calendar shift and later-in-the-year shipments resulting from retailer caution. When normalized for the retailer calendar shift, The North Face^庐 brand鈥檚 global revenues would have been up at a high single-digit rate. By region, The North Face^庐 brand鈥檚 revenues were up at a low single-digit percentage rate in the Americas (impacted by the calendar shift) and a low double-digit percentage rate in Asia Pacific, offset by a low single-digit percentage rate decrease in Europe.

The Vans^庐 brand continued its strong performance on all fronts: wholesale, direct-to-consumer and in all regions of the world. Third quarter Vans^庐 brand global revenues were up 16 percent driven by a low-teen percentage growth rate in the Americas, with 25 percent growth in Europe and a high single-digit growth rate in its Asia Pacific business. Globally, the Vans^庐 brand posted strong mid-teen percentage revenue increases in both its wholesale and direct-to-consumer channels.

Third quarter revenues for the Timberland^庐 brand were up 2 percent. In the Americas region, revenues increased at a mid single-digit percentage rate driven by balanced direct-to-consumer and wholesale growth rates. In Asia Pacific, third quarter revenues increased at a low single-digit percentage rate, up at a high single-digit rate on a constant-dollar basis. And, consistent with expectations, conditions in Europe remain challenging with Timberland^庐 brand revenues up modestly, down at a mid single-digit percentage rate on a constant currency basis. Globally, the Timberland^庐 brand鈥檚 growth was balanced between its direct-to-consumer and wholesale businesses.

Third quarter operating income for Outdoor & Action Sports rose 2 percent to $421 million and operating margin decreased 90 basis points to 21.4 percent, compared with 22.3 percent in the 2012 period. This result was negatively impacted by the retailer shift in revenues from the third to fourth quarter and incremental marketing investments to position the coalition鈥檚 three largest brands 鈥� The North Face^庐, Vans^庐 and Timberland^庐 鈥� for greater growth in 2014.

Jeanswear third quarter revenues were up 4 percent to $747 million, driven by a mid single-digit percent increase in the Americas region, which included a high single-digit increase in its Mass business. European revenues were up at a low double-digit rate and in the Asia Pacific region, revenues declined at a high single-digit rate as the Lee^庐 brand continues to work through an industry-wide build-up in inventories in China that began during the latter part of 2012.

Global revenues for the Wrangler^庐 brand were up 8 percent driven by strength in the Americas region, with strong results in its Mass channel and continued strength in its Western specialty and Latin American businesses. Wrangler^庐 brand revenues in Europe were up 10 percent on a constant dollar basis. Third quarter revenues for the Lee^庐 brand were up 3 percent globally driven by a mid single-digit percentage increase in the Americas region reflecting balanced results across all channels. Third quarter revenues for the Lee^庐 brand in Europe were up at a high single-digit rate with particular strength in Northern Europe, and as previously noted, the Lee^庐 brand鈥檚 sales in Asia Pacific were lower.

Strong international performance along with moderating product costs led to a 20 percent increase in Jeanswear operating income to $158 million. Operating margin reached 21.2 percent in the quarter with improvements in the Wrangler^庐 and Lee^庐 brands across every region of the world including a significant contribution from the very strong performance in Europe.

Imagewear revenues were flat in the third quarter at $284 million. Despite the absence of growth, operating income for the coalition was up 9 percent to $41 million with a 110 basis point improvement in operating margin to 14.3 percent, reflecting gross margin expansion. Imagewear revenues are expected to increase at a low double-digit rate in the fourth quarter.

In line with expectations, Sportswear revenues grew 1 percent to $155 million in the quarter, driven by more than 25 percent growth in direct-to-consumer sales offset by a mid-teen rate decline in its wholesale business. The retailer calendar shift also affected Sportswear鈥檚 wholesale results. When normalized for this shift, global revenues in the third quarter for the coalition would have been up at a high single-digit rate. Nautica^庐 brand revenues were down at a mid single-digit rate due to the calendar shift. The Kipling^庐 brand鈥檚 U.S. business achieved a 39 percent increase in revenues over the same period last year. Globally, the Kipling^庐 brand grew 22 percent. The coalition posted strong gross margin expansion and a significant improvement in profitability with a 30 percent increase in operating income to $24 million, representing a 350 basis point improvement in operating margin to 15.5 percent.

In a challenging business environment, third quarter revenues for the Contemporary Brands coalition were up 1 percent to $105 million. Better revenue comparisons are expected in the fourth quarter. Contemporary Brands鈥� operating income fell 30 percent to $9 million in the third quarter. Operating margin fell 390 basis points to 9.0 percent.

International Review

International revenues in the third quarter increased 7 percent, up 4 percent on a constant currency basis. Americas (non-U.S.) revenues increased 13 percent (up 17 in percent constant currency) with strong performances from the Vans^庐, JanSport^庐 and Reef^庐 brands. Revenues in Europe rose 7 percent (up 2 percent in constant currency) with positive results by the Vans^庐, Wrangler^庐, 7 For All Mankind^庐, Eastpak^庐, Lee^庐, Kipling^庐, Napapijri^庐, and SmartWool^庐 brands. In Asia Pacific, revenues were up 2 percent (up 3 percent in constant currency) driven by 10 percent growth in China which included strong results by the Vans^庐, The North Face^庐, and Timberland^庐 brands offset by continued weakness from the Lee^庐 brand as previously discussed. The North Face^庐 and Vans^庐 brands saw strong increases in international Direct-to-Consumer revenue in the quarter, up 19 percent and 44 percent, respectively. International revenues were 40 percent of total 大象传媒 revenues in the third quarter; consistent with the level reached in the same period of 2012.

Direct-to-Consumer Review

Direct-to-Consumer revenues increased 14 percent in the third quarter including a 28 percent increase in The North Face^庐 brand, an 18 percent increase in the Vans^庐 brand, a 16 percent increase in the Nautica^庐 brand and a 50 percent increase in the Kipling^庐 brand. A total of 55 stores were opened across our brands in the quarter bringing the total number of owned retail stores to 1,202. Direct-to-Consumer revenues reached 19 percent of total revenues in the third quarter compared with 18 percent in the 2012 period.

Balance Sheet Review

Inventories were flat compared with Sept. 2012 levels despite higher revenues reflecting 大象传媒鈥檚 continued focus on operational excellence. Additionally, the company paid off $400 million in debt associated with the Timberland acquisition. For the full year, 大象传媒鈥檚 cash generation from operations is expected to exceed $1.4 billion.

2013 Guidance

Revenues are still expected to approximate $11.5 billion in 2013. Full-year gross margin is now expected to approach 48 percent, up approximately 150 basis points over 2012鈥檚 results. As predicted during our second quarter call, 大象传媒鈥檚 very strong earnings performance is allowing us to make significant, incremental marketing investments to support long-term growth for our top brands. These incremental investments total $40 million, or about $0.25 in earnings per share, with $10 million recognized in the third quarter and $30 million expected to be recognized in the fourth quarter. Even with these incremental investments, full year adjusted earnings per share guidance remains at $10.85 (or $10.78 on a GAAP basis), which represents a 13 percent increase (or 11 percent increase on a GAAP basis) over 2012鈥檚 results and is directly in line with the company鈥檚 stated long-term financial objectives.

Adjusted Amounts

This release refers to adjusted amounts that exclude restructuring and other items related to the acquisition of The Timberland Company, which approximated $3 million ($0.02 per share) in the third quarter of 2013, compared with $14 million ($0.10 per share) in the third quarter of 2012. Adjusted amounts for the full year 2013 exclude Timberland acquisition-related expenses of $10 million ($0.07 per share), compared with $31 million ($0.25 per share) for the full year 2012. Reconciliations of certain GAAP measures to adjusted amounts are presented in the supplemental financial information included with this release, which identify and quantify all excluded items.

Four-for-One Stock Split and Increase in Dividend Approved

In a separate news release issued today, 大象传媒 Corporation announced that its Board of Directors approved a four-for-one split of the company鈥檚 shares of common stock to be payable in the form of a stock dividend. Shareholders of record as of the close of business on Dec. 10, 2013 will receive three additional shares of common stock for each share of common stock they own, payable on Dec. 20, 2013. The New York Stock Exchange is expected to begin reporting the adjusted number of shares outstanding and adjusted per-share stock price on Dec. 23, 2013.

Additionally, on a pre-split basis, 大象传媒鈥檚 Board of Directors declared a quarterly dividend of $1.05 per share, reflecting an $0.18 or 21 percent increase over the previous quarter鈥檚 dividend. This marks 大象传媒鈥檚 41^st consecutive year of higher dividend payments to shareholders. This dividend will be payable on Dec. 20, 2013 to shareholders of record at the close of business on Dec. 10, 2013. For more information, please visit the investor relations page at .

Webcast Information

大象传媒 will hold its third quarter conference call and webcast today at 8:30 a.m. Eastern Time. Interested parties should call 888-811-5445 (domestic) or 913-643-4201 (international) to access the call. The conference call will be broadcast live and accessible at . A replay of the conference call will be available from Oct. 21 through Oct. 28, 2013, via telephone at 877-870-5176 (access code: 1673907) or at .

About 大象传媒

大象传媒 Corporation is a global leader in branded lifestyle apparel and footwear with more than 30 brands. The company鈥檚 five largest brands are The North Face^庐, Vans^庐, Wrangler^庐, Timberland^庐, and Lee^庐. Other brands include 7 For All Mankind^庐, Bulwark^庐, Eagle Creek^庐, Eastpak^庐, Ella Moss^庐, JanSport^庐, Kipling^庐, lucy^庐, Majestic^庐, Napapijri^庐, Nautica^庐, Red Kap^庐, Reef^庐, Riders^庐, Splendid^庐, and SmartWool^庐. For more information, please visit .

Forward Looking Statements

Certain statements included in this release and the attachments are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting 大象传媒 and therefore involve a number of risks and uncertainties. You can identify these statements by the fact that they use words such as 鈥渨ill,鈥� 鈥渁nticipate,鈥� 鈥渆stimate,鈥� 鈥渆xpect,鈥� 鈥渃ould,鈥� and 鈥渕ay鈥� and other words and terms of similar meaning or use of future dates. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of 大象传媒 to differ materially from those expressed or implied by forward-looking statements in this release include, but are not limited to, the level of consumer confidence and overall level of consumer demand for apparel; fluctuations in the price, availability and quality of raw materials and contracted products; disruption to 大象传媒鈥檚 distribution system; disruption and volatility in the global capital and credit markets; 大象传媒's reliance on a small number of large customers; the financial strength of 大象传媒's customers; 大象传媒鈥檚 response to changing fashion trends; increasing pressure on margins; 大象传媒's ability to implement its growth strategy; 大象传媒's ability to grow its international and direct-to-consumer businesses; 大象传媒's ability to successfully integrate and grow acquisitions, including the Timberland acquisition; 大象传媒's ability to maintain the strength and security of its information technology systems; adverse unseasonable weather conditions; stability of 大象传媒's manufacturing facilities and foreign suppliers; continued use by 大象传媒's suppliers of ethical business practices; 大象传媒's ability to accurately forecast demand for products; continuity of members of 大象传媒's management; 大象传媒's ability to protect trademarks and other intellectual property rights; maintenance by 大象传媒's licensees and distributors of the value of 大象传媒's brands; foreign currency fluctuations; changes in tax liabilities, and legal, regulatory, political and economic risks in international markets. More information on potential factors that could affect 大象传媒's financial results is included from time to time in 大象传媒's public reports filed with the Securities and Exchange Commission, including 大象传媒's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

(Financial Tables Follow)

Non-GAAP Financial Information

The financial information above has been presented on a GAAP basis and on an adjusted basis, which excludes the impact of costs related to the acquisition of The Timberland Company and the gain on the sale of John Varvatos Enterprises, Inc. These adjusted presentations are non-GAAP measures. Management believes these measures provide investors with useful supplemental information regarding 大象传媒's underlying business trends and the performance of 大象传媒's ongoing operations and are useful for period-over-period comparisons of such operations.

Management uses the above financial measures internally in its budgeting and review process and, in some cases, as a factor in determining compensation. While management believes that these non-GAAP financial measures are useful in evaluating the business, this information should be considered as supplemental in nature and should be viewed in addition to, and not in lieu of or superior to, 大象传媒's operating performance measures calculated in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures presented by other companies.

大象传媒 Corporation:
Lance Allega, 336-424-6082
Director, Investor Relations
or
Carole Crosslin, 336-424-7836
Director, Corporate Communications

Source: 大象传媒 Corporation

Released October 21, 2013