VF Corp, whose portfolio of clothing brands includes North Face, Wrangler, Timberland, laid out an ambitious new five-year target that would be the envy of almost anyone in the apparel industry

June 12, 2013 Leave a comment

June 11, 2013, 5:43 p.m. ET

VF Lays Out Ambitious Growth Plan

By ANDRIA CHENG

VF Corp., VFC +0.57% whose portfolio of clothing brands includes North Face, Wrangler, Timberland and others, on Tuesday laid out an ambitious new five-year target that would be the envy of almost anyone in the apparel industry. The Greensboro, N.C., company, projects that sales will increase almost 60% to $17.3 billion over the next five years. The company already has a track record for strong growth: Last year sales hit $10.9 billion, up 42% over the five-year period from 2008, when sales totaled $7.64 billion. Given its strategy of buying labels to spur growth, acquisitions will continue to play a role as it aims for a five-year compounded annual sales target of 10%, with 8% “organic” growth and 2% growth anticipated from acquisitions.The company eyes per-share profit of $18 a share for 2017, representing a five-year compounded annual rate of 13%. Analysts expected VF to end this year at $10.86 a share, according to FactSet.

While apparel manufacturers such as Fifth & Pacific (the company once known as Liz Claiborne) have downsized their brand portfolio, VF has thrived on a conservative strategy to acquire brands that help it diversify in product categories for both men and women and sales to retailers ranging from Wal-Mart Stores Inc. WMT -0.66% andJ.C. Penney Co., JCP -3.05% to Macy’s Inc. M -0.76% and Saks Inc. SKS -2.17%

In 2000, VF bought bankrupt North Face for $130 million.

VF kept the brand management independent and added shoes and other product categories to convert them to so-called lifestyle brands. It is now the company’s top label, with targeted 12% annual growth to $3.3 billion in five years from $1.9 billion last year.

The company, meanwhile, continues to open more of its own stores for brands including North Face and 7 for All Mankind. By 2017, direct sales to consumers are expected to grow to a quarter of the company’s total from 21%. Meanwhile, international sales will jump to 43% of total from 37%, VF projects.

Filed under Macro Trends

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