VF AIMS TO HIT $7B BY 2000
Byline: Thomas J. Ryan
NEW YORK — VF Corp. wants to hit $7 billion in sales by 2000 through a combination of putting a bigger marketing push behind core businesses and acquisitions.
Last year, sales reached $5.2 million. To reach the $7 billion goal, the company would need a 10 percent average growth rate. This would represent a brisk step up for the apparel giant, where sales bumped up 1.5 percent in 1996 and 1.8 percent in 1995.
Speaking Wednesday at Prudential Securities’ textile and apparel conference at The Millenium Broadway, Mackey McDonald, president and chief executive officer, said he expects sales will be helped by the planned investment of a total of $1.25 billion in its brands over the five years from 1996 to 2000 to drive sales in its key growth categories.
After the presentation, McDonald told WWD the company “is still interested” in Maidenform, which filed a Chapter 11 petition on July 22. As reported, VF’s $240 million offer to buy Maidenform fell through in April.
In addressing the conference, he said VF has split its business into growth categories — which includes jeans, intimate apparel, daypacks and workwear — and maintenance categories, which consists of knitwear, swimwear, European intimate apparel and playwear.
He said the marketing push has helped increase sales in the growth categories by 7 percent in the first six months of this year, with profits rising 10 percent.
He said the jeans area has been bolstered by line extensions such as Lee Riveted, and ads showcasing a more contemporary approach to its western styles, including a commercial for Wrangler featuring cattle stampeding down Wall Street.
McDonald cited “significant opportunities” going forward for increasing Wrangler/Rider women’s jeans sales in the discount channel, where women’s holds a 12 percent overall market share versus 50 percent for men. (For more on Wrangler, see page 16.)
Overall, McDonald said VF owns a 30 percent share of the U.S. jeans market, with its closest competitor, Levi Strauss, at about 18 percent.
VF is also working to take over ownership or form joint-partnerships for its jeans lines in Europe, where most of that business is conducted through licenses.
Regarding intimate apparel, McDonald said Vanity Fair continues to hold the number-one market position among department store intimate apparel brands, helped by new product launches such as Satin Solutions. He also called Vassarette, a mass market label, “one of the faster growing brands out there.” He said increasing offshore manufacturing and a 23 percent reduction in sku’s by yearend will help intimate apparel.
McDonald noted that the company has a “very focused acquisition strategy” for its core growth areas. The firm acquired the Brittania brand from Levi’s in September and last year acquired Bulwark Protection Apparel Inc. for its workwear group.
McDonald also said VF has had held various discussions about licensing designer names in the jeans area and continues to evaluate potential deals in this area. A licensed denim line under the Joe Boxer name will bow in young men’s retail stores this fall, he said.
Meanwhile, McDonald said VF’s “maintenance” categories “are improving in economic value,” with combined profits surging 71 percent in the first half of this year.
McDonald said VF’s cash flow from operations is averaging $400 million annually. Its debt-to-total capital ratio is at 22.3 percent, the lowest level in 15 years.
As reported, VF’s earnings in the six months ended July 5 increased 18.5 percent to $149.1 million, or $2.30 a share, while sales advanced 5.8 percent to $2.51 billion.