By  on December 15, 2005

NEW YORK — VF Corp. is adding direct retailing to consumers as a key element in its growth strategy.

The Greensboro, N.C.-based manufacturing giant is in the second year of a five-year reorganization campaign that hinges on achieving growth through the acquisition of lifestyle brands. However, during an analysts' meeting in New York on Wednesday, management added a new growth "plank" to its strategy, announcing plans to open more than 400 company-owned stores over the next four years.

"We have over 500 retail outlets," said Mackey McDonald, the 22-year VF veteran who has held the title of chief executive officer for the last decade. "A lot of people don't realize the depth of our retail exposure today and we're continuing to build."

The company owns 525 stores — 305 standard retail operations and 220 outlet stores. According to management, these stores accounted for 13 percent of sales in 2005. Management now has its sights set on more than doubling the number of standard stores to 649 and increasing the number of outlets to 279 for a total of 928 stores by 2009. The increased store count is expected to account for 18 percent of sales.

Eric Wiseman, executive vice president of global brands, said the decision to commit to retail as a core growth strategy provides growth opportunities across all its businesses regardless of size.

"We're interested in retail primarily to showcase each brand and its lifestyle," said Wiseman.

The move also provides an opportunity for VF to continue growing its mature brands, which management refers to as its heritage businesses — such as Lee, Wrangler and Vanity Fair — that have made the company the $6 billion sales giant it is today. Company-owned stores in the heritage businesses accounted for a paltry 1 percent of sales in 2005. For lifestyle businesses, such as Vans and The North Face, company-owned stores accounted for 20 percent of volume.

The bulk of the retail expansion will be focused on international markets, where sales have steadily increased over the last three years. International sales are expected to account for 23 percent of total sales in 2005 compared with 19.8 percent of total sales in 2002. Not surprisingly, Europe accounts for 82 percent of the international sales pie. Management is therefore turning its attentions to Latin America, Mexico, Asia and Eastern Europe, which accounted for a combined 13 percent of international sales.

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