trending Market Intelligence /marketintelligence/en/news-insights/trending/gjqydysxpueizsjc1fri5a2 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

V.F.'s plan to abandon denim is a nod to active and outdoor fashion trends

Video

Climate Credit Analytics: Linking climate scenarios to financial impacts

Blog

What’s next in Cloud?

Blog

Global M&A Infographic Q1 2021

Blog

COVID-19 Impact & Recovery: Private Equity


V.F.'s plan to abandon denim is a nod to active and outdoor fashion trends

V.F. Corp.'s plan to spin off its jeans division is a nod to the growth of athletic, outdoor and active apparel, analysts told S&P Global Market Intelligence.

V.F. announced its plan to split with its denim brands Lee and Wrangler on Aug. 13. The apparel company instead will focus on its active-wear brands like The North Face and Timberland and will continue to look for acquisitions that fit this strategy.

With this move, V.F. is following consumers who are shopping more for yoga pants than jeans, said Morningstar analyst Dan Wasiolek in an interview. While the growth in jeans sales has flagged in the last five years, more customers are incorporating athletic and active-wear into their day-to-day wardrobes, he added.

V.F. did not immediately return S&P Global Market Intelligence's request for further comment.

In its first-quarter results, V.F. said it expects revenue for the jeans business to remain flat for the full fiscal year. The company anticipates that its active division will grow 13% to 14%, its outdoor revenue will increase 6% to 8% and the work division revenue will jump more than 35%.

"The jeans business at V.F. used to prop up these other brands," Wasiolek said. "Now, The North Face, Timberland and Vans have gotten to the point where they can stand on their own and are expected to grow at a pretty competitive pace."

V.F. also announced on Aug. 13 that it wants to move its headquarters to Denver from Greensboro, N.C. This is a "clear signal" of how V.F. plans to build on its existing brand portfolio, said Johan Gott, an analyst at A.T. Kearney, in an interview.

"Greensboro is one of the domestic centers of jeans production, but it doesn't really make sense to have an athletic leisure brand-house headquartered there," Gott said. "In Denver, they can keep on top of the latest active-wear trends and scout potential acquisition targets. It's clearly where they see the most growth potential."

Wasiolek also noted the company's move to Denver, saying the new location could make it easier for the company to stay on top of consumer trends in "one of the most active outdoor areas in the country."

Even with the shift to focus on the growing outdoor and active-wear brands, some analysts are still weighing V.F.'s place in the highly competitive apparel industry, which could jeopardize the company's success shifting its business.

S&P Global Ratings analysts noted the presence of large contenders, including NIKE Inc., Ralph Lauren Corp., PVH Corp. and Levi Strauss & Co., in an Aug. 13 note. All these companies "have the resources to successfully market their products and hinder V.F. Corp.'s efforts to gain market share," according to the note.

The industry is also "inherently subject to fluctuating consumer preferences and soft consumer spending," presenting V.F. with another challenge, the analysts wrote.

"These trends are likely to constrain top-line growth and compel [V.F.] to continue to focus on cost and operating efficiencies, as well as new growth opportunities through acquisitions," according to the note.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.