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$52.92 0.52 (0.99%)
12/4/2008 3:37 PM

VF Corp (VFC)

CAPS Rating:
****

The Company is a marketer of branded lifestyle apparel and related products in the United States and in many international markets. It designs and manufactures or sources from independent contractors a variety of apparel and footwear for all ages.

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Avatar NetscribeConsGds (97.03) Submitted: 12/19/06 6:46 AM : Outperform Start Price: $77.70 VFC Score: 9.52

VF Corporation is the name behind the big names.VF Corporation is engaged in the manufacturing and marketing of branded lifestyle apparel and related products. The products are sold through specialty, department, chain, and discount stores, as well as licensees and distributors. VF is number 1 jeans maker with brands such as H.I.S., Lee, Riders, Rustler and Wrangler jeans in its product line. Jeans wear contributes about 39% of total sales. VF makes NIKE, MLB, NFL, and NBA apparel under license. The outdoor accessories contribute about 27% of the revenues.

The major demand for jeans wear comes from age group below 40 years which constitutes 52% of the US population. Additionally, according to survey conducted by NPD Group, 65% of all holiday gifts to be purchased this year are expected in the clothing category. Also, coupled with the rise in the disposable income, all this augurs well on the company’s jeans segment.

With nine lifestyle brands added to the outdoor accessories portfolio in last five years, contributing to superior sales growth and margin. The lifestyle business has risen from 10% of the sales mix in 2002 to 27%, and is projected to reach 60% by 2009. These projections are on the back of VF's strategy of acquiring brands to increase their presence in lifestyle market. This can be substantiated from the company’s recent acquisition of Reef Holdings. Reef designs surf-inspired products, including sandals, apparel, shoes and accessories under the Reef brand.

VF has also completely shifted its production facilities to lower cost destinations. This would help the company to improve the operating margins. With strong brands in the portfolio and initiatives on the cost front, the company should fair well.

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Avatar NetscribeConsGds (97.03) Submitted: 4/16/07 6:57 AM

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VF Corporation (VFC), through its subsidiaries, engages in the design, manufacture, and marketing of branded apparel and related products in the United States and internationally. The company’s product portfolio principally includes denim and casual tops, performance-oriented apparel, footwear, backpacks, luggage bags to name a few.

Fiscal 2006 performance was remarkable as all the segments of the company supported the approximate 10% top line growth. Management is upbeat on its outdoor segment that currently contributes over 30% to the revenues. Revenue contribution from this segment is rapidly increasing fuelled by addition of quite a few lifestyle brands in the past several years. Acquisition of Eagle Creek which is currently distributed through 1,000 outdoor and luggage retailers would further aid the growth prospects of this segment. Company’s presence in the sports apparel category is likely get a boost from the acquisition of Majestic Athletic as the latter has been licensed by National Basketball Association and many major colleges and universities to provide a variety of apparel products.

In the post-quota regime since January 2005, outsourced manufacturing and sourcing from low-cost destinations in Asia has been the rule of the game for the major players in the industry. VF has also completely shifted its production facilities to lower cost destinations in 2006, which could help the company on the operational front. Strategically, the company wants to focus on the high-margin oriented lifestyle apparel business and in line with the same, they have lately exited their intimate apparel business that contributed over 12% to the sales.

Looking ahead, company plans to expand its footprint in the fast growing Asian markets to boost its international revenues that currently form 26% of the overall revenues. Among the few clouds on the horizon is the expected recession in the consumption led U.S economy and the galloping crude oil prices which could dispirit the consumer spending. However, as the positive factors do overshadow the looming concerns, VFC is looking good for a strong bull ride in the near future.

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