VF Corp. likes what it’s seeing in its jeanswear business.
“Our jeanswear business today is in really good shape,” Robert Shearer, senior vice president and chief financial officer of Greensboro, N.C.-based VF, told participants at the Morgan Stanley Global Consumer and Retail Conference in New York Tuesday.
He noted that while the company’s two $1 billion-plus denim-based brands, Lee and Wrangler, might lack the excitement of “the next fabrication for The North Face that takes climbers to the top of Mount Everest,” they continue to generate “very, very healthy margins and a lot of cash for us.”
VF’s jeanswear coalition, home to the two brands, “has been as successful in our innovation platform as any of our businesses,” he said, even if those innovations have been more focused on comfort and fit than fabrics and construction details engineered for the Himalayas.
The focus on innovation within jeanswear has helped the coalition pick up $100 million to $150 million “of revenues that we wouldn’t have otherwise had,” Shearer said.
VF also has benefited from its decision to position Wrangler’s western business as a separate unit which, according to the cfo, “has delivered 10 consecutive quarters of strong revenue growth.”
The jeanswear unit remains challenged by weakness in Europe, which, despite strength in other parts of the world, was substantial enough to push its third-quarter revenues down 1.2 percent, to $718.8 million, despite a 1 percent increase at constant currency. Third-quarter operating profit at the division moved up 19.8 percent to $131.4 million, and profit for the first nine months of the year was up 2.6 percent to $335.6 million, while sales were up 1.7 percent to $2.05 billion.
“We spent a lot of time last year talking about the impact of cotton on our margins,” Shearer recalled, “and I’m happy to say that these businesses are absolutely back on track.”
Specifically, operating margin — operating profit as a percentage of revenues — has rebounded strongly as cotton prices have returned to less inflated levels. Jeanswear’s operating margin reached 18.3 percent in the third quarter, higher than either the figure for the nine months (16.3 percent), all of 2011 (15.1 percent) or even 2010 (17 percent).
“The year is playing out really pretty much as we had planned, if not even a little bit better in terms of profitability within our jeanswear business,” Shearer said. “The jeans margins are returning to more normalized levels and you absolutely see that in this fourth quarter when our operating margin will be in the high teens.”
Shearer commented briefly on Rock & Republic, the jeans brand acquired in early 2011 for $57 million in cash out of bankruptcy. “It’s a brand that’s done really well for us and our wholesale partner Kohl’s,” he said, without divulging financial details.
Turning to Timberland, acquired last year, Shearer said the brand, part of the company’s dominant Outdoor & Action Sports coalition, is on target to generate full-year revenues of $1.7 billion and operating margin of between 10 and 11 percent while adding $1.10 to earnings per share. He added that VF expects to exceed the target for $35 million in cost reductions. Timberland apparel is scheduled to be launched in fall 2013. Full-price retail stores and annual growth of 30 percent a year in China are also on VF’s agenda for the brand.
Last year, VF generated net income of $888.1 million on revenues of $9.46 billion.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)