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VF Sets Sights on $11B in Sales by 2012

Eric Wiseman set the tone for his tenure as the new chief executive officer of VF Corp. during the company's annual meeting with analysts on Wednesday, unveiling an aggressive five-year growth strategy that targets increasing revenues to $11 billion...

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Online sales also are expected to grow by $200 million.

"We are really underdeveloped in e-commerce across VF, especially in sportswear," said Wiseman.

The company's jeanswear coalition, home to Lee and Wrangler, long has been the dominant revenue generator and the backbone of the company. However, the outdoor and sportswear coalitions, along with the newly formed contemporary brand coalition, are likely to drive results for the foreseeable future. The outdoor coalition in particular, which includes The North Face, Napapijri, Vans, Kipling and Reef, has been on pace to emerge as the dominant division. Management expects to achieve $1.5 billion in organic growth in the outdoor segment over the next five years. The segment accounted for 33 percent of revenues last year and is expected to account for 39 percent by 2012. Product expansion will be a key element driving sales, with management citing plans to expand footwear in The North Face and Napapijri, as well as introducing Eastpak apparel and Kipling leather bags.

Management has high expectations for the new contemporary brands coalition, which is anchored by Seven For All Mankind. The segment accounted for only 2 percent of revenues last year but is expected to grow by $700 million by 2012 and account for 8 percent of overall revenues. Seven For All Mankind and Lucy, the only brands in this segment, offer some of their biggest potential on the retail side. Seven For All Mankind has only two stores currently and the company plans to open 98 more over the next five years. Lucy has 60 stores, primarily located on the West Coast. Management plans to double that number and believes the brand can eventually reach a store count of 300.

"We will dramatically increase the Lucy store base," said Wiseman.

For the sportswear coalition, which includes John Varvatos and Nautica, management anticipates revenue growth of $300 million. This will represent a slight decrease in the percentage of overall revenues generated by the segment. Sportswear currently accounts for 10 percent of revenues and is expected to represent 9 percent by 2012.

Wiseman indicated that this year will likely be a crucial year in determining Nautica's future. Rebuilding the brand has been a priority over the last year and those efforts are starting to gain traction, although a turnaround hasn't been rapid.
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