VF Corp. expects to continue to gain efficiencies as it integrates its various acquired businesses, but now expects those synergies to extend beyond the intra-coalition benefits they have been focused on to-date. Company CFO Bob Shearer told SEW that while they will look to find logistics and distribution synergies between Vans and Reef, and the West Coast apparel DC for the Outdoor Coalition is expected to pay big dividends, the company will now look for opportunities to utilize cross-Coalition synergies as well. This could well lead to an East Coast distribution opportunity for the Outdoor Coalition in DCs set up for the Sportswear, Jeanswear, or Intimate Apparel groups. To fully realize this opportunity, VFC has brought in a corporate operations chief to engineer the integration.
The company has divided its business into Lifestyle and Heritage. Shearer said that the Lifestyle brands, which are represented by many of the acquired brands from the last few years, could represent 60% to 65% of the business within five years. He said the Heritage businesses, which include the Jeanswear and Intimates Coalitions, will see flat to low-single-digit growth, while the Lifestyle brands should see gains in the high-single-digit to low-double-digit range. The CFO said they are on the path to see 25% of sales generated outside the U.S.
VFC is also focused on growing its owned-retail strategy, planning to expand its current base of 525 stores, including 305 regular retail and 220 outlet stores, to approximately 928 doors. The increase will primarily come in the regular retail side, which is expected to grow 113% to 649 stores. Owned-retail is expected to grow to 18% of total revenues, up from 13% currently.
Skechers USA execs were downright giddy in Florida, reflecting the energy they are currently generating at retail these days. The company now sees 2005 fourth quarter sales at the top end of its previous guidance for $210 million to $220 million. SKX now expects year-end 2005 revenues to exceed one billion dollars.
Genesco talked about its five-year plan, estimating that the Journeys store base will grow 50% to more than 1,000 doors generating $850 million in sales up from $522 million. Journeys comps are expected to see low- to mid-single-digit growth over that period. GCO sees even bigger opportunities for the Hat World business and its Lids chain, which is estimated to be seven times the size of its nearest competitor. Hat World expects to distance itself further from its peers, adding another 90 stores this year on the way to increasing the store base from 552 stores to 900 doors over the five year plan. Square footage is expected to grow 65% over that period. Comp store sales are forecast to grow low-single-digits to help the retailer more than double sales. The Underground Station store base is forecast to grow 85% from 165 doors to more than 300 doors. GCO is focused on improving operating margins from 4.7% to the high-single-digit range.
Journeys and Hat World made up 47% of company revenues, but contributed 58% of operating earnings.
45% of Journeys business is womens.
15 brands make up 75% of revenue today versus five brands representing that share five years ago.
