By  on February 16, 2018

As VF Corp. continues to reshape its portfolio, which now includes the planned sale of the Nautica brand, it is also taking a deeper dive into speed-to-market initiatives.The reshaping of the portfolio is part of the group's five-year strategic initiative that was unveiled at its investor day meeting last March. The aim of that day was to show Wall Street the company’s plan is to become a more consumer and retail-centric organization.As for the Nautica sale, Steve Rendle, chairman, president and chief executive officer, said during a conference call to Wall Street analysts on Friday after the company reported fourth-quarter results, “While we do not yet have a definitive agreement, we are actively engaged with several parties and will update you as conditions warrant.”Rendle also spoke about the three lenses that company executives use when considering mergers and acquisitions activity. “There’s a strategic lens, there’s a financial lens, and are we the right owner lens. And as we’ve looked continuously, this is not a one-and-done type of action. This is something we’re doing on a very proactive, very regular basis evaluating all brands within our portfolio.“But specific to Nautica, [we] just came to a point where it didn’t necessarily hit all of our strategic touch points financially. It was not in line with driving our financial aspirations, and we came to a point where we thought perhaps it would be a better owner that could unlock the value that this brand holds,” Rendle said.Chief financial officer Scott Roe told analysts that, with the recent deals for Williamson-Dickie and Icebreaker, the “first priority has been to deleverage the balance sheet and get our credit metrics back in line.”In a telephone interview, Rendle declined to provide further details on the planned sale of Nautica, such as whether interested parties were strategic or financial buyers. He would only say that VF is “well into the process” and it is speaking with “a couple of people we’ve been working with.”For the fourth quarter ended Dec. 30, the company posted a net loss of $90.3 million, or 23 cents a share, on total revenues that rose 20.1 percent to $3.65 billion. On an adjusted basis, the company said earnings per share for the quarter were $1.01.Rendle said the top priorities for the year include protecting and enabling the explosive growth in Vans, while reenergizing growth in the Timberland and The North Face brands in North America. To better enable that growth, the company has added to the responsibilities of its four group presidents. One has oversight for the Asia-Pacific region, another for Europe, and one for Americas West and Americas East, Rendle said in the interview. In addition to their respective regional responsibilities, each one will also have oversight of one of the company’s big global brands.Further, to help the company meet the needs of consumers and the retail marketplace, Rendle said the company is taking a very close look at its speed-to-market process.The ceo explained that VF has an ongoing project called “Acting Vertical,” where it is “deconstructing the entire process” to determine where it can reduce the time from inception to delivery. Rendle noted that about two-thirds of the timeline is for design and delivery, while about one-third is for the manufacturing of the item. The company is also reviewing manufacturing capability, how to enable quicker conversion of materials and finished goods, as well as where the distribution centers should be located. That analysis will help the company build its “road maps” for an already existing deep supply chain network and manufacturing framework, Rendle said.The strategic road map disclosed at last year’s Investor Day remains VF's focus for 2018 and beyond. “What’s exciting is to see the benefits of that focus. Our direct-to-consumer and digital growths have [increased], up 15 percent for direct-to-consumer, with 30 percent growth in digital. We are committed to grow international in the high, single-digit[s],” the ceo said.Direct-to-consumer now accounts for more than 30 percent of the company’s total revenues. The ceo also told WWD that VF is “delivering on our commitments slightly ahead of where we thought we would be, financially.”Roe noted in the interview that the international business is “very profitable, generating a lot of cash.” He added, “With tax reform, the ability to bring that cash back to the U.S. is even easier.”During the conference call, Roe said the “access to cash is a big deal,” given that 40 percent of VF’s business is offshore. And with repatriation now easier, he concluded, “For us, that’s going to be a good thing.”

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