US based apparel conglomerate VF Corporation has announced its plan to divide the company into two independent, publicly traded companies.
One would be VF Corporation, a global apparel and footwear powerhouse while another, yet to be name, will hold VF’s Jeans and VF Outlet businesses and will be a global leader in the denim category. These companies have been created through a tax-free spinoff of NewCo to VF’s shareholders.
“In alignment with our strategic plan, the decision to separate these businesses will allow VF to sharpen its focus as a consumer-centric and retail-minded organization anchored in activity-based lifestyle brands. Our Jeans platform is a successful, sustainable business with iconic global brands and a clear path to value creation as a standalone entity. This exciting step forward will mean that both VF and NewCo have the resources, management focus and financial flexibility to thrive in a dynamic consumer marketplace, creating an even brighter future for both organizations and all of their stakeholders,” said the company’s Steve Rendle, Chairman, President and Chief Executive Officer.
VF’s decision to say goodbye to its denim brands like Lee and Wrangler comes at a time when denim is losing market share to leggings and yoga pants.
Other than Lee and Wrangler, VF also owns smaller brands Rustlers and Rock & Republic.
The development surfaced as VF witnessed decline in demand for its jeans after influx of private label brands in the market.
Sneaker brand Vans, outerwear retailer The North Face and boots maker Timberland are other major brands offered by North Carolina-based VF.
The denim business of VF witnessed US $ 2.66 billion in sales and US $ 422 million in profit last year. However, it reported 5 per cent decline in sales and profit declined by 2 per cent since 2015.
The brand in its latest quarter witnessed 25 per cent increase in revenue. The brand now anticipates 2019 revenue in the range of US $ 13.6 billion to US $ 13.7 billion, reflecting a rise of 10 percent to 11 percent.