Rapid growth in China and from The North Face brand is expected to pave the way for VF to more than double its Asia-Pacific business during the next five years.
At an investor meeting in Shanghai Wednesday, VF executives outlined plans to build sales in its APAC region, expected to reach $900 million during the current year, at a compound annual growth rate of 17 percent. Sales stood at $150 million in 2007 and, helped by both organic growth and the acquisition of The Timberland Co., have enjoyed a CAGR of 43 percent since.
“Our Asia-Pacific revenues have grown nearly fivefold since 2007 and we continue to see tremendous opportunities for growth in all our brands,” said Eric Wiseman, chairman, president and chief executive officer. “That’s the power of VF’s diversified global portfolio.”
Last year, VF projected APAC sales of $1.3 billion by 2015 as a part of its plan to hit $12.7 billion in overall revenues in four years. Those projections preceded the company’s acquisition later in the year of Timberland, which in 2012 will contribute about $270 million to Asia-Pacific sales, about 31 percent of the total in the area. Timberland’s overall contribution to VF revenues this year is expected to be about $1 billion.
China, not yet a $500 million market for VF, is expected to hit $1.2 billion in sales in five years, elevating its share of the APAC business to 60 percent from 51 percent this year and its store count, currently about 2,300, to about 6,000.
VF’s five biggest brands in the region based on current sales — Timberland, North Face, Lee, Vans and accessories brand Kipling — are slated for the strongest growth, led by North Face. The outdoor brand is expected to generate about $160 million in sales this year and more than triple to $500 million by 2017, elevating its share of VF’s APAC revenues to about 25 percent from its current level of 18 percent.
Second in projected growth rate behind North Face is Vans, expected to increase at a 22 percent clip to about $320 million from about $120 million.
While Timberland is budgeted to reach $500 million by generating $230 million in additional sales, its projected CAGR of 13 percent is half that of North Face.
Lee, currently VF’s second largest brand in the region with sales of about $200 million, is expected to grow to about $350 million, a CAGR of 12 percent that will see its share of APAC sales drop to 18 percent from the current level of 22 percent. Kipling will maintain its 7 percent share of APAC sales while growing at an 18 percent rate to about $135 million from about $65 million.
Overall, the five-year plan calls for a 17 percent CAGR. This year, growth in APAC is expected to hit 20 percent, with Europe expanding at what VF described as a “low double-digit rate.”
Karl Heinz Salzburger, group president of VF International, put the plans for Asia-Pacific into a holistic context for investors. “In 2012, we expect international sales to comprise about 37 percent of VF’s total revenues,” he said. “With the addition of Timberland and the continued strong growth expected in our Asia-Pacific and European businesses, we now believe international revenues could account for 45 percent of total revenues by 2017.”
China is by far VF’s biggest market in the region, with 2012 sales of about $460 million, about three times Japan’s $153 million in projected sales this year. While Japan is seen growing at 8 percent a year, expanding to about $220 million, China’s CAGR is projected at 21 percent as VF expands its retail footprint and seeks to further capitalize on the company’s portfolio of outdoor and action sports brands. India is expected to grow slightly faster, with a 22 percent CAGR, and expand volume to about $200 million from $72 million and its share of regional revenues to 10 percent from 8 percent.
VF said Wednesday that it would open a subsidiary office in Korea, where the company projects 2017 sales of about $120 million within five years.
VF has substantial wiggle room in the world’s two most populous nations, owning and operating its brands in China and last November acquiring full ownership of the joint venture the group formed in India with Arvind Ltd. in 2006.
Not surprising for a firm that generated nearly half of its sales through the Outdoor & Action Sports Coalition last year — the coalition accounted for $4.56 billion in sales last year, 48.2 percent of VF’s total of $9.46 billion — the company is particularly keen on opportunities to address the outdoor market. In a presentation by Bruno Feltracco, vice president and managing director of the coalition in Asia, the Chinese outdoor market last year was estimated at $1.7 billion at retail, with 40 percent growth over 2010. The broader “outdoor-inspired” retail market was about $4 billion. However, competition is fierce, with 574 brands competing for outdoor-related expenditures among China’s more than 1.3 billion population, according to VF.
Shares of VF Wednesday rose 20 cents, or 0.1 percent, to close at $160.73. They reached a 52-week high of $164.35 on Sept. 14.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion