Profile and Samples Blog of Partha Anant

VF Corporation Riding High with Stronger Brands and Supply Chain Management

VF Corporation has started the year on a positive note, with earnings well in excess of the initial assessment in February. The group showed an increase of 5 % in the first quarter with revenues up to $ 1,666.7 mn when compared with $ 1,582.2 mn year over year. The growth strategy has momentum, which continues to build up as the year progresses. Even more, the execution of processes this year are driven by strong organic growth.

VF Corporation is the world´s largest apparel company that designs, manufactures and markets branded jeans wear, intimate apparel, occupational apparel, knitwear, outdoor apparel and equipment, children's playwear and other apparel. For over 100 years, the company has grown by offering consumers high quality, high value branded apparel. VF's leading brands in jeans wear, intimate apparel, outdoors and specialty apparel span virtually every channel of distribution.
Overall performance of VF Corporation’s Jeanswear experienced higher sales of full-priced products that were reflected by the rise in operating income of 5 % and operating margins rising to 17.5 % from 16.4 %. Though the US market for jeans saw a slight slow down in the first quarter, VF continued to experience solid gains in the Mass Market and Western Specialty businesses. While down from prior year levels, Lee(R) brand domestic revenues turned better than anticipated and the company expects improved top line comparisons in the second quarter. VF Corp. has scheduled announcement of Q2 results on July 19, 2006.

The outdoor division is driven by strong growth in global demand for various VF Outdoor brands, especially the Reef(R) brand that contributed a whopping $ 42 mn to overall revenue generated. Revenues of other brands like The North Face(R) brand also grew to acceptable figures. The adventure backpacks business driven by higher end Eastpak(R) brand sales in Europe is growing modestly but grippingly. Mackey J McDonald, Chairman and CEO, VF Corporation, plans to invest an additional $ 20 mn this year in increased advertising behind the company’s jeans wear brands as well as support a variety of growth initiatives in its Outdoor business. The group recently acquired net assets of Holoubek Inc and Reef Holding Corporation.
Each of the group’s sportswear businesses, which include Nautica(R) and John Varvatos(R) brands, as well as Kipling(R) brand sales in North America are achieving higher revenues. Nautica(R) branded wholesale business, which includes men's sportswear, has increased revenues in the quarter along with strong sales of spring product offerings that partially compensated for slightly lower revenues earned in Nautica(R) brand retail stores. In addition, margins reflected increased promotional activity in Nautica(R) brand retail stores during the first quarter of 2006. Nautica products are styled in timeless design and premium quality. Today Nautica products are available in more than 40 countries, including India, with more than 170 Nautica branded stores worldwide. Nautica continues to focus on global growth, with its prime focus to launch Nautica in all markets in Europe. Nautica is also on the verge of launching a new sportswear line exclusively for women. VF works closely with key retailers such as Wal-Mart Stores Inc. to manage inventory and replenishment and to gather data that will put in the picture the latest styles. The group’s successful use of demand-side data to deliver consumer needs is it’s biggest competitive advantage.

Driven by strong sales in Image apparel, VF Imagewear has delivered yet another excellent quarter. Revenues rose 4%, which includes uniforms for the industrial, public safety and service markets. The ability to add new companies to the common platform is critical to VF's growth strategy. The company wants to own great brands with growth potential and consumer appeal, though not necessarily operating at an optimum level. The management at VF claims to fix all those bits up by connecting them to the group’s coalition system. The Intimate Apparel coalition business of VF Corporation continues to anticipate more stable performance for the remainder of 2006. The focus of the management team is high and tight on returning the business to traditional levels of profitability and renewing growth in its strong brands, including Vanity Fair(R), Lily of France(R), Vassarette(R), Bestform(R) and Curvation(R).

Based on the strong performance of the Q1/FY’06, VF is raising its full year guidance for both revenues and earnings. The company is looking forward to a great performance in the second half and expects a 7 to 8 % increase in revenues. The fourth quarter is expected to be particularly strong. This forecast is based on certain strengths that VF Corporation possesses, like its reliance on a small number of large customers; the financial strength of VF's customers and its adaptation to changing fashion trends and consumer demand. VF's growth strategy comprises of the continued usage of ethical business practices by VF's suppliers, its ability to protect trademarks and other intellectual property rights, and most importantly, the way it relates to demands of end consumers.

To further strengthen its distribution network, VF Corporation has chosen Averitt Express to provide a variety of transportation and supply chain management services, also including Averitt ground transportation, inventory management, distribution, consolidation, deconsolidation, postponement and several other value-added services for warehousing. It will manage all the shipments from VF’s multiple leading brands and subsidiaries. As a part of VF’s long-term national expansion strategy, Averitt will use ‘merge-in-transit’ system for delivering the products directly to VF Outlet stores present in Southeastern and Midwestern realm of USA. Averitt has been zeroed in for its proven service with other national retailers, advanced visibility, electronic data interchange capabilities and functioning of its management team that is well coordinated with VF Corporation’s programme needs.

VF has made the transition from successful-but-stodgy manufacturer to world-spanning enterprise, delivering strong growth and financial performance by sourcing and selling its products all over the map. The company is on a growth strategy aimed at cost savings, customer service for big retail partners, new products and acquisitions that could reach more consumers and keep up with their changing tastes. About 30% of its products are now sourced from Asia and over 50 % from Mexico and Central America. Meanwhile, rapid growth in foreign markets, especially Europe, has made VF the US's most successful mass-market apparel company in terms of international sales.

Partha Anant

Client: Apparel Online

posted by Partha Anant @ 7:20 AM