At the Prudential Equity Back-to-School Conference, VF Corporation provided some additional color on their new retail strategy, which should account for about 18% of VFs total revenue by 2009. To do this the company will expand from a current store base of 525 to over 900, not including acquisitions. The companys first priority is to expand retail concepts that are already showing traction with consumers. These concepts include Kipling, which uses a small floor plan, high inventory turns, and high margins to be one of VFs more profitable formats. It also includes Wranglers international expansion into China and The North Faces retail strategy throughout Asia, Europe, and Eastern Europe.
The company is also testing new concepts, like Eastpak in Western and Eastern Europe and Napapijri stores in Europe and key U.S. markets. The company has found that this strategy not only does a “tremendous” job of marketing the brands, but also is becoming a very profitable way to distribute the brands, achieving very similar operating margins to VFCs wholesale business.
Chairman and CEO Mackey MacDonald said that VFC will continue its acquisition strategy, and that VF likes the outdoor lifestyle market. The company will look for entrepreneurial businesses that revolve around a lifestyle activity that can be expanded internationally.
