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%.

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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.

Revenues in Europe increased 5% on a currency neutral basis (down 11% on a reported basis) and revenues in the Asia-Pacific region improved 12% on a currency neutral basis (up 7% on a reported basis). Revenues in the Americas (non-U.S.) region advanced 19% on a currency neutral basis (up 1% on a reported basis).

Direct-to-Consumer revenues rose 3% (or 8% on a currency neutral basis). During the reported quarter, the company added 60 stores, taking the VF-owned retail outlets count to 1,480. Overall, direct-to-consumer revenues contributed 22% to V.F. Corp.’s third-quarter revenues, consistent with its contribution a year ago.

Financial Details

V.F. Corp. ended the quarter with cash and equivalents of $566.6 million, long-term debt of $1,411.4 million, and shareholders’ equity of $5,361.2 million. On Oct 20, 2015, the Zacks Rank #2 (Buy) company announced a 16% hike in its quarterly dividend to 37 cents a share, marking the 43rd straight year of annual dividend hike. The increased dividend will be payable on Dec 18, to stockholders on record as of Dec 8, 2015.

Outlook

Management continues to expect 2015 revenues to grow 3% year over year. On a currency neutral basis, revenues are now anticipated to rise 7.5%, compared to an 8% increase expected earlier.

The company continues to envision 2015 earnings per share to increase 15% on a currency neutral basis. However, on a reported basis, management now anticipates a 3% increase in earnings per share, compared with the previous projection of 5% growth.

V.F. Corp. reaffirmed its guidance for gross margin expansion of 70 bps to 49.5%, on a currency neutral basis. On a reported basis, gross margin is now anticipated to remain flat year over year.

Other Stocks to Consider

Other well-ranked stocks in the same industry include Columbia Sportswear Company (COLM - Analyst Report)  and Guess' Inc. (GES - Analyst Report), each with a Zacks Rank #1 (Strong Buy), and G-III Apparel Group, Ltd. (GIII - Snapshot Report), with a Zacks Rank #2.