大象传媒

大象传媒 Reports 2013 Fourth Quarter and Full Year Results, and Announces Outlook For 2014

• Full year 2013 adjusted EPS up 13 percent (up 12 percent on a GAAP basis)
• Full year gross margin up 160 basis points to 48.1 percent
• Full year revenues up 5 percent; fourth quarter revenues up 8 percent
• 2014 revenues expected to increase 7 to 8 percent
• 2014 gross margin expected to reach 49 percent; operating margin should reach 15 percent
• 2014 EPS expected to grow 11 to 13 percent to $3.00 to $3.05
• 2014 cash flow from operations expected to approach $1.65 billion
• Expect to return more than $1 billion to shareholders in 2014 through share repurchases and dividends

GREENSBORO, N.C.-- 大象传媒 Corporation (NYSE: 大象传媒C) today reported financial results for its fourth quarter and full year ended December 28, 2013. All per share amounts are presented on a diluted basis. 鈥淎djusted amounts鈥� refer to non-GAAP measures that exclude expenses related to the acquisition of the Timberland^庐 and Smartwool^庐 brands (鈥淭imberland鈥�) and the gain on the sale of John Varvatos Enterprises, Inc. (鈥淛ohn Varvatos鈥�) as described in the 鈥淎djusted Amounts鈥� paragraph at the end of this release.

鈥�2013 was a terrific year for 大象传媒 with record gross margin and earnings per share,鈥� said Eric Wiseman, 大象传媒 Chairman and Chief Executive Officer. 鈥淭he combined power of our brands and platforms remains our greatest competitive advantage enabling us to push the envelope on product innovation to connect even more intensely with consumers and providing stellar returns to our shareholders.

鈥淎mong many noteworthy brand performances, two significant milestones included The North Face^庐 brand passing $2 billion in global revenues and the Vans^庐 brand surpassing the $1.7 billion revenue mark, becoming 大象传媒鈥檚 second largest brand,鈥� Wiseman continued. 鈥淎nd with strong results from our direct-to-consumer and international businesses, supported by outstanding execution from our global supply chain, we鈥檝e established excellent momentum that we expect to contribute to a strong year for 大象传媒 in 2014.鈥�

Fourth Quarter 2013 Review

Revenues rose 8 percent to $3.3 billion, compared with the same period of 2012, driven by double-digit growth in our Outdoor & Action Sports, Sportswear, international and direct-to-consumer businesses, and high single-digit percentage growth in our Imagewear coalition.

Gross margin improved 80 basis points to 48.2 percent, compared with 47.4 percent in the same period of 2012, with improvements in nearly every coalition. The higher gross margin reflects the continuing shift of our revenue mix toward higher margin businesses as well as lower year-over-year product costs.

SG&A as a percent of revenues rose 10 basis points to 32.7 percent in the fourth quarter. This increase includes the impact of an incremental investment of nearly $30 million in marketing to support growth in 大象传媒鈥檚 largest and fastest growing businesses.

Operating income on an adjusted basis grew 11 percent to $509 million in the fourth quarter, compared with $457 million in the same period of 2012. On a GAAP basis, fourth quarter operating income increased 13 percent to $508 million, compared with $450 million during last year鈥檚 same period. There were no material Timberland acquisition-related expenses in the fourth quarter of 2013 while the fourth quarter of 2012 included $7 million of such expenses. Adjusted operating margin was 15.5 percent, compared with 15.1 percent in the fourth quarter of 2012. On a GAAP basis, operating margin rose to 15.5 percent from 14.8 percent in last year鈥檚 period.

Net income on an adjusted basis grew 7 percent to $368 million in the fourth quarter, compared with $344 million in the same period of 2012. Adjusted earnings per share increased 6 percent to $0.82 per share compared with $0.77 per share during the same period last year. Fourth quarter 2012 adjusted earnings per share of $0.77 excluded $0.02 per share in Timberland acquisition-related expenses. On a GAAP basis, fourth quarter 2013 net income was up 10 percent to $368 million or $0.82 per share.

Full Year 2013 Review

Revenues increased 5 percent to a record $11.4 billion compared with $10.9 billion in 2012. International revenues were up 8 percent driven by 7 percent growth in Europe and Asia Pacific, and a 9 percent increase in the Americas (non-U.S.) region.

Gross margin rose by 160 basis points to a record 48.1 percent, compared with 46.5 percent in 2012, with improvements in nearly every business. For the full year, the improvement in gross margin reflects the continued shift in our revenue mix toward higher margin businesses as well as lower product costs.

SG&A as a percent of full year revenue rose 50 basis points to 33.6 percent. This increase includes the impact of higher marketing expense that increased the SG&A ratio by 60 basis points, including the nearly $40 million in incremental marketing investments in the second half of 2013 that increased the SG&A ratio by 40 basis points.

Operating income on an adjusted basis increased 11 percent to $1.7 billion in 2013. On a GAAP basis, full year operating income rose 12 percent to $1.6 billion from $1.5 billion in 2012. Acquisition-related expenses for Timberland in 2013 and 2012 were $11 million and $31 million, respectively. Adjusted operating margin was 14.5 percent compared with 13.8 percent in 2012. On a GAAP basis, operating margin was 14.4 percent versus 13.5 percent in 2012.

Net income on an adjusted basis rose 13 percent to $1.2 billion compared to $1.1 billion in 2012. Adjusted earnings per share, which excludes $0.02 in Timberland acquisition-related expenses in 2013 increased 13 percent, to $2.73 from $2.41 in the same period last year. Adjusted earnings per share of $2.41 in 2012 exclude a combined $0.02 in Timberland acquisition-related expenses and the gain from the sale of John Varvatos. On a GAAP basis, full year net income was $1.2 billion while earnings per share grew 12 percent to $2.71 per share.

Coalition Review

Revenues for the Outdoor & Action Sports coalition increased 12 percent in the quarter to $1.9 billion with balanced growth across the U.S. and international markets as well as in wholesale and direct-to-consumer channels. Full year Outdoor & Action Sports revenues were up 9 percent in 2013.

Fourth quarter revenues for The North Face^庐 brand rose 12 percent globally driven by more than 30 percent growth in direct-to-consumer sales and a mid single-digit increase in the brand鈥檚 wholesale business. By region, The North Face^庐 brand鈥檚 revenues were up 10 percent in the Americas and increased at a high-teen percentage rate in both Europe and Asia Pacific. For the full year, revenues for The North Face^庐 brand grew 7 percent, establishing 大象传媒鈥檚 first $2 billion brand.

Revenues for the Vans^庐 brand in the fourth quarter were up 14 percent with strong, double-digit growth across all geographies, as well as in the brand鈥檚 wholesale and direct-to-consumer platforms. Revenues in the Americas region were up at a low double-digit rate in the quarter, which contributed to the brand surpassing the $1 billion mark in annual revenues in its largest region. In Europe, the Vans^庐 brand grew 20 percent and was up nearly 20 percent in the Asia Pacific region. Revenues for the Vans^庐 brand globally for the full year were up 17 percent.

Revenues for the Timberland^庐 brand were up 13 percent in the fourth quarter. In the Americas region, revenues increased at a high-teen rate driven by strong direct-to-consumer and wholesale growth rates. In Europe, the Timberland^庐 brand posted its strongest quarter of the year with a low-teen rate percentage increase in revenues. And in Asia Pacific, where the brand鈥檚 largest market is Japan, fourth quarter revenues were down modestly, but up at a high single-digit rate on a constant-dollar basis. Globally, the Timberland^庐 brand鈥檚 growth was balanced between its direct-to-consumer and wholesale businesses in the quarter. Full year Timberland^庐 brand revenues were up 5 percent.

Fourth quarter operating income for Outdoor & Action Sports rose 11 percent to $358 million. Operating margin decreased 10 basis points to 18.7 percent, compared with 18.8 percent in the 2012 period, including the impact of incremental marketing investments in The North Face^庐, Vans^庐 and Timberland^庐 brands in 2013.

Jeanswear fourth quarter revenues were flat at $734 million. Revenues in the Americas business were flat, including flat results in the U.S. offset by declines in Central and Latin America. In Europe, revenues were up at a mid single-digit percentage rate and sales in our Asia Pacific region were down slightly. In 2013, global Jeanswear revenues were up 1 percent.

Fourth quarter revenues for the Wrangler^庐 brand were up 5 percent driven by strength in the Americas region, with mid single-digit growth in western specialty and slight growth in its U.S. mass channel business, offset by a 10 percent decline (up 8 percent in constant dollars) in Latin America. Wrangler^庐 brand revenues in Europe were up 4 percent (flat on a constant dollar basis). Fourth quarter revenues for the Lee^庐 brand were down 6 percent driven by a mid single-digit percentage increase (up low single-digit percentage in constant dollars) in Europe and Asia, offset by a 10 percent decline in the Americas region, where the business is being negatively impacted by ongoing challenges in the U.S. mid-tier channel.

Operating income for Jeanswear in the fourth quarter rose 2 percent to $134 million. Operating margin grew 40 basis points to 18.3 percent in the quarter, with improvements primarily attributable to strong performances from both the Wrangler^庐 and Lee^庐 brands outside the U.S.

Imagewear revenues were up 9 percent in the fourth quarter to $287 million. This increase is largely due to a contract that was renewed later than expected. For the full year, revenues for the Imagewear coalition were down 1 percent. Fourth quarter operating income for Imagewear was up 31 percent to $45 million, with a 250 basis point improvement in operating margin to 15.6 percent, reflecting meaningful gross margin expansion.

Sportswear had a strong quarter with revenues increasing 14 percent to $208 million. The Nautica^庐 brand grew 11 percent with solid increases in both its wholesale and direct-to-consumer businesses. The Kipling^庐 brand鈥檚 U.S. business achieved a 33 percent increase in revenues compared with the same period last year. Globally, the Kipling^庐 brand grew 28 percent. For the year, Sportswear coalition revenues were up 8 percent. In the fourth quarter, operating income increased 11 percent to $36 million, while operating margin declined 50 basis points to 17.2 percent.

In a business environment that continues to be challenging for premium denim, fourth quarter revenues for the Contemporary Brands coalition were up 1 percent to $108 million. Full year revenues for the coalition were down 7 percent, or down 2 percent excluding the impact of the sale of the John Varvatos^庐 brand in April 2012. Contemporary Brands鈥� fourth quarter operating income was flat compared with last year鈥檚 fourth quarter at $9 million. Operating margin was also comparable at 8.3 percent.

International Review

International revenues in the fourth quarter increased 11 percent, up 10 percent on a constant currency basis. Revenues in Europe rose 15 percent, up 10 percent in constant currency, with positive results from nearly every brand in 大象传媒鈥檚 portfolio. In Asia Pacific, revenues were up 7 percent (up 11 percent in constant currency) driven by 14 percent growth in China, which included strong results from nearly every brand. As anticipated, the Lee^庐 brand returned to growth during the quarter in China. Americas (non-U.S.) revenues increased 5 percent (up 11 percent in constant currency) driven by particular strengths in the Vans^庐, Timberland^庐 and The North Face^庐 brands. International revenues were 38 percent of total 大象传媒 revenues in 2013 compared to 37 percent in 2012.

Direct-to-Consumer Review

Direct-to-consumer revenues grew 14 percent in the fourth quarter driven by a 32 percent increase in The North Face^庐 brand, a 12 percent increase in the Vans^庐 brand, 8 percent increases from both the Timberland^庐 and Nautica^庐 brands, and a 44 percent increase in the Kipling^庐 brand. Fifty-three stores were opened across our brands during the quarter bringing the total number of 大象传媒 owned retail stores to 1,246. For the full year 2013, direct-to-consumer revenues grew 13 percent and accounted for 22 percent of total 大象传媒 revenues compared with 21 percent in 2012.

Balance Sheet Review

Inventories were up 3 percent compared with December 2012 levels reflecting 大象传媒鈥檚 continued focus on operational efficiency. For the full year, 大象传媒鈥檚 cash generation from operations exceeded $1.5 billion.听The company returned nearly $700 million to shareholders through dividends and share repurchases despite contributing $100 million to its pension plan and repaying $400 million of debt.

2014 Guidance

鈥淎s we look to 2014, we are confident in the continued global success of 大象传媒鈥檚 portfolio of powerful brands and platforms,鈥� Wiseman said. 鈥淥ur proven execution and financial discipline makes us the best positioned company in our industry to consistently deliver products and experiences that consumers want and returns that shareholders have come to expect.鈥�

Key points related to 大象传媒鈥檚 full year 2014 outlook include:

• Revenue expected to increase by 7 to 8 percent including growth in every coalition. Outdoor & Action Sports coalition revenues should increase at a low double-digit rate including a mid-teen percentage growth rate from the Vans^庐 brand, approximately 12 percent growth for The North Face^庐 brand and 10 percent growth for the Timberland^庐 brand. Jeanswear and Imagewear are expected to grow at a low single-digit rate. Sportswear is expected to grow at a high single-digit rate and Contemporary Brands should see mid single-digit percentage growth.
• International revenue should grow 10 percent, driven by high-teen growth in Asia and high single-digit growth in both Europe and the Americas (non-U.S.) regions. International revenues should approximate 38 percent of total revenues in 2014.
• In 2014, to better represent the operations of its direct-to-consumer business, 大象传媒 will begin to include its concession locations in its direct-to-consumer revenues. Concessions are retail locations (outside the U.S.) where the company is responsible for all aspects of operations without ownership of the retail space. After adjusting 2013 direct-to-consumer revenues for this change, direct-to-consumer is expected to grow at a high-teen percentage rate in 2014 and should represent 26 percent of total 大象传媒 revenues. Direct-to-consumer growth in 2014 will be driven by approximately 150 store openings, comp store growth and an expected increase of more than 30 percent in e-commerce revenues.
• Expect continued margin expansion, including a 90 basis point improvement in gross margin to 49 percent, and about 60 basis point increase in operating margin to 15 percent.
• Earnings per share should increase 11 to 13 percent to $3.00 to 3.05.
• Expect record cash flow from operations, approaching $1.65 billion.
• Expect to spend approximately $700 million under the company鈥檚 share repurchase program; when combined with annual dividend, should return more than $1 billion to shareholders in 2014.
• Other full year assumptions include a 23.5 to 24 percent effective tax rate, a negligible impact from changes in foreign currency and capital expenditures of approximately $270 million.

In terms of quarterly revenue comparisons in 2014, the cadence should be similar to that of 2013 鈥� although at a higher percentage increase per quarter. Accordingly, we expect mid single-digit growth in the first half of 2014 followed by high single-digit growth in the second half of the year. First quarter earnings will face a tougher comparison against last year鈥檚 first quarter earnings per share due to the inclusion of $0.03 per share from discrete tax benefits primarily related to the impact of U.S. tax law changes (American Taxpayer Relief Act of 2012) enacted in January 2013.听In the second half of 2014, revenue growth and profitability should be the strongest comparison, reflecting the growing contribution of the more seasonally driven Outdoor & Action Sports coalition and expansion of our direct-to-consumer business.

Share Repurchase Authorization

In December 2013, 大象传媒鈥檚 Board of Directors听authorized an additional 50听million shares of common stock for its repurchase program. The company鈥檚 previous program, approved in听February 2010, authorized听10听million shares of common stock, of which听approximately 3听million shares are still available for execution. This brings the total current authorization of 大象传媒鈥檚 new program to听53听million shares.

Repurchases under 大象传媒鈥檚 new program will be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements and other relevant factors. This share repurchase plan does not obligate 大象传媒 to acquire any particular amount of common stock, and it may be suspended at any time at the company's discretion. 大象传媒 had approximately 440 million shares of common stock outstanding as of Jan. 31, 2014.

Dividend Declared

大象传媒鈥檚 Board of Directors declared a quarterly dividend of $0.2625 per share, payable on March 20, 2014 to shareholders of record on March 10, 2014. As a reminder, prior to 大象传媒鈥檚 four-for-one stock split, the quarterly dividend was $1.05 per share.

Adjusted Amounts

This release refers to adjusted amounts that exclude restructuring and other items related to the acquisition of Timberland, which approximated $11 million ($0.02 per share) for the full year 2013. Adjusted amounts for 2012 exclude Timberland acquisition related expenses of $31 million ($0.06 per share) and the gain on the sale of John Varvatos of approximately $42 million ($0.08 per share). 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.

Webcast Information

大象传媒 will hold its fourth quarter conference call and webcast today at 8:30 a.m. Eastern Time. Interested parties should call 888-455-2238 (domestic) or 719-325-2492 (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 Feb. 14 through Feb. 21, 2014, via telephone at 877-870-5176 (access code: 8653621) 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� 鈥渟hould,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.

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

Source: 大象传媒 Corporation

Released February 14, 2014