VF Corporation has identified the outdoor category as a key growth driver for the corporation and plans to “aggressively pursue growth” in the division through acquisitions as well as organic internal growth. Full year 2003 sales in the company's Outdoor Coalition, which includes The North Face, JanSport and Eastpak brands, increased 14% to $580.7 million from $508.0 million in 2002.
In an exclusive interview with SEW, TNF president Mike Egeck said the first year after the acquisition of the brand was focused on “getting everything fixed”. Years two and three were focused on improving product and operational efficiencies and the company can now invest more heavily in marketing to drive brand sales. He expects to increase gross impressions in the media plan by more than 70% in 2004.
Total worldwide sales for The North Face grew by more than 25%, or 22% on a currency-neutral basis, in 2003, with North America increasing more than 35% for the year. Sales in Canada and the U.S. grew at about the same rate. Sales in Europe were up almost 50%.
Mr. Egeck said global sales for the brand actually grew approximately 35% (28% currency-neutral) for the year excluding the four outlet stores closed in 2003. The brand only has one outlet store remaining.
Total retail sales were up 8% for the year after the company closed an under-performing store in Costa mesa, CA and opened the new NYC location last April. They plan to add Boston in the “near future”.
According to Egeck, the brand has penetration in over 1,500 retail doors in the U.S. and a like number in Europe. He sees the U.S. rooftop count stabilizing, but sees increased brand penetration in existing doors and adding another 400 fixture areas to the U.S. market. Egeck said they may add as many as 1,000 additional rooftops in Europe in 2004.
The spring backlog was up 25% at year-end, but jumped to a 38% increase when including the new Summer season, which will ship in Q2, that was not part of the offering last year. Fall backlog in North America is up 30% and Europe is up 25% in local currencies. Egeck did say that the footwear orders for fall were “still coming in” so backlog should move higher.
He said all categories were contributing to the backlog increases, but sees bigger growth in footwear for both spring and fall, while the SnowSports category is also outpacing growth in the fall.
At JanSport, the college bookstore business was up 15% fro the year. The company announced plans for the launch of new line of JanSport apparel featuring outerwear and fleece for fall 04. The development of the line leverages the product development, design and sourcing capabilities of The North Face.
Eastpak is also entering apparel through a casual T-shirt and accessory line.
For 2004, VFC sees “another strong year of double-digit sales growth” in the Outdoor Coalition.
In the Imagewear division, overall sales declined slightly for the year as Occupational Apparel declined 8%, more than offsetting a 17% increase in Licensed Sports Apparel sales. Operating margins at the unit improved by 200 basis points.
As the Workwear business continues to suffer, expect VFC to put more energy behind the Licensed Apparel business and the new Harley Davidson license.
For 2004, VFC sees a low-single digit sales increase in the Imagewear business.
Overall, total sales rose 2% in 2003 to $5.2 billion, primarily a result of the aforementioned strong performance in the Outdoor Coalition business and the acquisition of Nautica. Net income from continuing operations rose 9.2% to $397.9 million, or $3.61 per share.
For the fourth quarter total VFC sales rose 6% to $1.4 billion, delivering a 52% in net income from continuing operations to $105.3 million, or 96 cents per share.
>>> The Corporate guys appear to be leaving TNF alone to execute a model that looks to be working nicely. If weve seen this kind of growth while they were “fixing” things, imagine what we see when the just focus on growth
