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.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye