GREENSBORO – US apparel giant VF Corporation has announced it will spin off its Lee and Wrangler jeans businesses into an independent public company as it looks to focus more on profitable brands such as Vans sneakers and outdoor brand The North Face. The company’s jeans businesses have underperformed in recent years, with the denim market becoming increasingly saturated thanks to the growth of private label jeans from retailers such as Walmart. Annual sales of VF-made jeans were down one per cent in the company’s latest reporting period, against a backdrop of an overall rise in sales of 12.5 percent.
The newly reorganised VF Corp, which also recently sold apparel brand Nautica, will also retain Timberland. It will have an annual revenue of more than US$11bn, while the jeans spin-off, which is yet to be named, will have a turnover of just over US$2.5bn. The deal is expected to be completed in the first half of 2019.
“As shown by our recent quarterly results, VF continues to gain momentum on our transformation journey, marked by strong progress on our strategic initiatives and portfolio management,” said VF corp Steve Rendle, CEO and president. “With these strong foundations in place, we are now ideally positioned to create two independent, leading, global companies. 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 organisation 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 organisations and all of their stakeholders.”