With technology impacting consumer shopping behaviors and the now-quicker reaction to trends, VF Corp. is taking a different look at its business, including how it thinks about the acquisitions front.
Steven Rendle, president and chief executive officer, said in a telephone interview that the company has been working on becoming an “agile and consumer-centric organization.”
He spoke about the company’s plans for 2017 following VF’s posting of fourth-quarter and year-end results.
With the apparent need to be more nimble, Rendle said the company is open to both brand and technology acquisitions, “tools that can more quickly access [developments to] bring it into our view and allow us to be able to utilize [the information] in a more efficient way.”
As for how VF thinks about acquisitions, Rendle said: “We really take our consumer profile as the foundational element for how we think and look at acquisition targets. We have the outdoor consumer, the action-sports consumer, the outdoor lifestyle that’s more urban [represented by the Timberland brand], and the Wrangler workwear consumer. We think about the consumer profile when we are looking at brands to enhance our ability to find new opportunities to bring products to that consumer’s life. We also look at new capabilities that might enhance our current portfolio to be stronger.”
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Much of 2016 was spent on how to evolve the company and tweak current processes.
“We spend a lot of time thinking about – and spent a fair amount of time last year – refreshing and updating our strategy. We are evolving the things we do today,” Rendle said. He said the focus has been on analyzing the learnings for what’s working, looking at the disruption at retail and eyeing the rise of online shopping to create a platform that delivers content in a seamless shopping experience.
“There’s been significant change in the marketplace. When trends used to hit 10 years ago, it would last six, 12, maybe 18 months, depending on the strength of the trend. Today, with [easy] access to content, we see how quickly [consumers] see and pick up an idea. The trends are moving very rapidly,” Rendle said.
The ceo cited its Vans brands as the best example of its consumer-centric model, where the company can track the amount of time interacting with the consumer on the site, review data analytics for shopper insights, and study and analyze information on how shoppers interact with associates inside Vans stores. The data “helps to inform on the products we are offering. We know the nuances they are looking for, and are feeding that into our product offerings, as well as elevating those parts of the brand experience to make sure it is at the forefront of what they are consuming,” Rendle explained.
The company is also taking lessons from The North Face’s European operation to help with refocusing its U.S. business. The ceo said the core North Face consumer “is consistent with what they are looking for no matter where they are in the globe.” The European team in 2015 upped the product creativity quotient. “We didn’t bring our best product offer in 2016 [in the U.S.], and we are using that [European] template to reinforce with our product team here in the U.S.,” Rendle said.
Rendle said during the conference call that VF would “capitalize on and leverage” its resources in workwear across the company, noting the sector as a “catalyst for growth [because] we see strengthening of the industrial sector and increased spending on infrastructure.”
In 2017, VF will focus on Vans, The North Face and Timberland, which it expects will have a collective growth rate in the high single-digit range.
During the quarter, the company took an $80 million impairment charge to its Lucy Activewear brand following its decision to “merge the Lucy women’s product engine with that of The North Face brand.” In 2018, the Lucy product would be positioned in the North Face brand as part of its mountain athletics collection.
For the fourth quarter ended Dec. 31, VF saw net income slip 15.3 percent to $264.3 million, or 63 cents a diluted share, on a total revenue decline of 0.2 percent to $3.32 billion. Net sales were essentially flat at $3.29 billion.
For the year, net income decreased 12.8 percent to $1.07 billion on a 0.1 percent dip in total revenues to $12.02 billion.
Eric Wiseman, executive chairman, said during the conference call: “At VF, our fundamentals are strong and our ability to win with consumers is unchanged. And while segments of our wholesale business in North America struggled in 2016, our global direct consumer business and our business outside the U.S. remain strong.”