NEW YORK — Few expect VF Corp. to be the company to revolutionize the apparel industry. The conventional wisdom is that it's too big, too old and its management is too conservative.
Mackey McDonald is finding it difficult to shatter those perceptions, despite launching a campaign in 2004 to overhaul the company's focus and organization. But at the halfway point of his "New Deal" for VF, McDonald is confident it will lead to more than rising sales and earnings growth.
"I don't think people understand how much VF has changed," McDonald, a 22-year company veteran who is closing out his 10th year as chief executive officer, said during an interview at the company's Greensboro, N.C., headquarters. "Everyone thinks it's a conservative company with good control and good product. They don't understand how you can combine strengths of categories and come out stronger."
But it is that strategy of growing core categories that has driven VF's commitment to acquire and develop global lifestyle brands. The company went on its first spree in 2004, expending $667.5 million in cash to acquire the Vans, Kipling and Napapijri brands, as well as a majority interest in a Mexican intimate apparel marketing company. This followed its purchase of Nautica in 2003.
The impact on results was immediate. Sales shot up 16 percent to $6.05 billion in 2004 from $5.21 billion in 2003. Earnings spiked 19.3 percent to $474.7 million, or $4.21 a share, compared with earnings of $397.9 million, or $3.61, in the previous year.
Wall Street has rewarded the company in kind. The company's shares rose 32.9 percent in 2004, opening the year with a closing price of $41.11 a share on Jan. 2, 2004 and reaching $54.62 a share on Dec. 31. Shares have continued their ascent this year, reaching a record high of $61.61 in New York Stock Exchange trading. Shares closed at $57.45 on Wednesday.
"We've really tried to step on the pedal in terms of growth," said McDonald.
During the first half of 2005, the company spent another $213.5 million to acquire Holoubek Inc., which holds the apparel license for Harley-Davidson, and Reef Holdings Corp.
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