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VF Corp Is a Good Buy for the Future

April 30, 2014 | About:



VF Corp (VFC) is a global leader in branded lifestyle footwear and apparel. The company has clocked strong results recently. The diversity of its brands and global presence have enabled the company to perform well. It is doing strong globally across both wholesale and direct-to-consumer businesses. VF Corp saw growth in 14 out of 15 of its brands globally, which is yet another milestone for the company. As a result of such a robust performance, its EPS beat analysts' estimates.

Good Performance

VF Corp reported strong quarterly results yet again and it is more focused for the next year with aggressive strategic actions in line. The company’s leading strategies such as innovation, connecting with consumers, serving those consumers directly, and expanding geographically has led VF Corp to emerge as a global leader in branded lifestyle footwear and apparel. It owns more than 30 brands such as The North Face, Vans, Wrangler, Timberland and Lee.

VF Corp is executing well. The company’s international business is contributing 40% to the total revenue while the DTC business is contributing about 19% of the revenue. VF Corp is expecting these channels to outperform in the future as well, proving a good growth driver to the company.

Innovative moves

VF Corp’s innovative attitude has always been its growth driver. Its innovations such as Thermoball is already seeing a handsome sell through in the DTC channel. The company is rolling out exclusive in-store concept at 300 Dick's Sporting Goods locations, featuring Thermoball as a part of an overall brand shop in their seasonal outerwear pad. With many new products in its pipeline, VF Corp is expecting good growth in future.

VF Corp, with its Never Stop Exploring campaign, using all mediums like TV, print, digital, and in-store is aiming to connect with its target consumers. With this campaign, VF Corp is aiming at personalizing the meaning of outdoor exploration and is confident of intensely connecting a wide range of North Face consumers, helping the company to sustain growth momentum of its outdoor and action sports segment.

Expansion Moves and Peers

VF Corp is using Timberland, which it acquired two years ago, in a $2 billion transaction as an aggressive tool to fuel the growth of its brand. Under this, the company is celebrating the brand’s 40th anniversary as a way to get connected with more customers. In addition to this, VF Corp has also paid off $400 million in debt associated with Timberland.

VF Corp has seen good gains arising from its acquisitions, and the same can be said about its peer PVH (PVH). This can be noted by marked growth through PVH’s Warnaco Group acquisition. This acquisition led the high-margin Calvin Klein North America retail business to register more than two-fold growth to $799.7 million from $319.6 million in the comparable quarter a year-ago.

Moving on, PVH has inked deals with Axis Golf for marketing and distributing its IZOD brand products in Australia, New Zealand, Fiji, and other South Pacific islands. This is a strategy of focusing on boosting sales of high-margin items across the globe.

Competitor Ralph Lauren (RL) also saw decent growth during the economic recovery by growing revenue every year since 2011. Its improved performance across wholesale and retail businesses led to its better than expected second quarter results. As a result of improved sales, earnings came in better than what analysts had expected. The company is expecting a good 10% growth in the revenue resulting from good sales in the next quarter.


VF Corp looks best for the long run as Ralph Lauren’s not-so-impressive performance makes it worth avoiding for now. VF's innovative pipeline and marketing moves should help it deliver long-term growth, making it a good buy.

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