VF Corp. — now unbound — is aiming higher and ready to throw its weight around.
Since spinning off the Kontoor Brands jeans business in May, the company has been focused squarely on the active, outdoor and work sectors, playing off its Vans, The North Face and Dickies brands in particular.
For Steve Rendle, chairman, president and chief executive officer, it’s an evolution that has VF focusing on its strengths and changing into a more “purpose-led, performance-driven, value-creating enterprise.”
But VF has been a company on the move for decades, as Rendle pointed out in an interview with WWD Wednesday, after the firm reported first-quarter sales gains of 6 percent and an increase in earnings from continuing operations.
The ceo pointed to the company’s acquisition of the Lee brand in the Sixties that moved it into denim, as well as the shift to active and outdoor with Vans and The North Face this century.
VF’s scale — its revenues are expected to weigh in at $11.8 billion this year — give it a lot of power to continue expanding. But tying the business together is a philosophy that’s high on emotional IQ and focused on people.
Rendle underscored the importance of “celebrating individuality” and welcoming a “diversity of thought” while catering to a wide variety of consumers.
That ranges from emphasizing the dignity of working in the trades to underscoring the importance of a sustainable supply chain.
“There’s a powerful, responsible sourcing platform where VF has always been active and thoughtful, but this is about improving the lives of the million-plus people who touch our product,” Rendle said.
That kind of reach gives the company a chance to drive real change.
Scott Roe, executive vice president and chief financial officer, added, “As the largest player in the industry, it’s our responsibility to influence the broader market in which we play. That’s a huge opportunity and a huge responsibility to actually change the industry.”
Roe said non-governmental organizations that advocate for sustainability have urged VF to lead since it could make changes that ripple throughout the vendor base and the industry at large.
“That’s something that gets our employees really energized,” Roe said.
The business in general seems to have been energized, with the Kontoor spin-off done and new products coming into view, particularly the FutureLight waterproof gear North Face is going to introduce this fall.
Rendle said, “North Face has been working through some reset activity to reposition itself back on the core elements of the outdoor market. In FutureLight you see multiyear action coming to market in fall 2019 that is very disruptive. Disruptive to not only the core outdoor market, but to a broader, waterproof, breathable category. This is a more environmentally friendly product. It’s disruptive in its feel — it’s a much softer, lighter weight, supple fabric.”
It’s also a sign of more to come.
This is the type of innovation that drives companies like Nike and the beauty industry, which have grabbed consumer attention and market share by constantly delivering and aggressively marketing newness to the consumer. Rendle is very aware of the success they’ve had being “very thoughtful” and “programmatic” in their approach bringing fresh products to market.
“They’re able to control that conversation — and we have that ability in our tool kit,” the ceo said.
In the near term, the company is still working through the impact of its previous incarnation, which included Kontoor’s Lee and Wrangler businesses.
VF’s first-quarter net earnings fell to $49.2 million, or 12 cents a diluted share, from $160.4 million, or 40 cents, a year earlier. Adjusted earnings from continuing operations increased 61 percent to 30 cents.
Revenues for the three months ended June 30 increased 6 percent to $2.27 billion from $2.14 billion. Sales in the company’s active segment rose 8 percent, with a 20 percent jump at Vans, while VF’s outdoor business grew the top line by 7 percent, including a 9 percent advance at The North Face.
Direct-to-consumer revenues increased 14 percent with a 24 percent rise online.
Accordingly, VF opened up some upside to its annual adjusted earnings estimate, projecting a range of $3.32 to $3.37 a share, up from the $3.30 to $3.35 previously forecast.