VF Corporation is an American global leader in branded clothing, footwear and apparel, they were founded in 1989 by John Barbey and are headquartered in Greensboro, North Carolina. VF corporation is a $12 billion revenue business with a huge portfolio of well-known brands across the globe, with the likes of Vans, Timberland and EastPak in their repertoire. As seen in Figure 1, since 2005, VF have been steadily increasing their annual revenue, starting off at $5.7 million in 2005 and at $12.2 million by 2014. According to the 2017 VF Corporations annual report,
“In 2017, revenue increased 7 percent to $11.8 billion, including a $247 million contribution from the Williamson-Dickie acquisition” – Steven E. Rendle, President & Chief Executive Officer of VF corporation.
Currently, the cost of one share in VF Corporations stands at $86.19, with a percentage change of +0.85%. VF is one of the worlds largest apparel, footwear and accessories companies with socially and environmentally responsible operations spanning numerous geopgraphies, product categories and distribution channels.
Section 1- Corporate Strategy:
VF Corporation operates a branded lifestyle, footwear and apparel corporate strategy. Owning a number of the largest brands worldwide, such as Vans, Timberland and Eastpak, enables VF to operate and effectively compete in this market. 2017 saw the introduction of VF’s 5-year plan towards sustained success, which they intend to have in place by 2021. This plan focuses on a specific set of key choices which VF will make in order to unlock new opportunities for further growth within the branded lifestyle, footwear and apparel market. It can also be said that VF operate under a consolidation strategy, they remain within their initial market and continue to purchase firms in this market which will further their prosperity. VF Corporation is a narrow focus business.
Section 2- Mergers, Acquisitions, Divestments:
As a firm, VF have had their fair share of acquisitions and divestments. As seen in the appendix, since the company formed in 1989, they have acquired 18 smaller firms and divested 3. They have also successfully completed a merger with the Vans brand. The 1980s saw the successful acquisition of the Blue Bell Holding Company, Inc. for $762 million. This added the brands Wrangler, Jantzen, JanSport and RedKap to the ever-growing portfolio. This acquisition effectively doubled VF’s size and made it the largest publicly held clothing company. As a result, VF became one of the two largest producers of jeans in the world, and they now held 25% of the $6 billion market. The purchase of the North Face brand offered VF a comprehensive diversification into the outdoor and active wear clothing market, it offers an all-inclusive collection of high-performance clothing. In 2010. VF successfully completed a merger with the Vans brand. As a result of this, the Vans brand becomes a wholly owned subsidiary of the corporation. In 2016, Vans had an annual revenue of $2.3 billion, making it VF’s biggest brand and subsidiary.
2010 also saw the successful acquisition of the Timberland brand. This purchase further developed VF’s involvement in the action and outdoor sports coalition. 2017 and 2018 saw two of the greatest acquisitions for VF. They acquired Williamson-Dickie Mfg. Co and VF acquires Icebreaker Holdings, respectively. The Williamson-Dickie Mfg. Co brands such as, Dickies, Workrite, Kodak, Terra, and Walls combined with VF’s current work-wear range enables VF Corporation to now become a global leader in work-wear clothing. The 2018 acquisition of Icebreaker Holdings provided a perfect complement to another one of their brands, a Colorado-based company, Smartwool. The similarity in these two brands is that they both feature Merino wool in their clothing and accessories. Combined, the Icebreaker and Smartwool brands would position VF Corporation as a global leader in the Merino wool natural fibres. It was rumoured following the successful acquisition of Icebreaker that it would become a sister company of the North Face, another one of VF Corp’s brands which was acquired in the 2000’s when they also purchased EastPak.
The long history of VF Corp has seen a number of divestments alongside its wide range of brands. Throughout the company’s history there has been a total of 3 divestments. Two in 2015, and one final one in 2018. Both licensed sports business group and the contemporary brands business were divested in 2015. VF divested the licensed sports business group to Fanatics, for an undisclosed amount of money. This divestment included the Majestic brand, which supplies apparel and fanware through licensing agreements to professional sports leagues and teams. The contemporary brands business was divested to Delta Galil Industries, another global manufacturer and marketer of branded and private label apparel for men, women and children. The brands included in this divestment were 7 for All Mankind, Splended and Ella Moss. The divestment was settled at an undisclosed amount.
Section 3&4 Scope of the firm & Strategic position:
It can be said that VF Corporation backward integrates. This is because since being founded in 1989, they have successfully completed multiple acquisitions, along with a merger with the Vans brand in 2010. VF Corporation as a result, is a large scope business. It is true to say that VF operate a positioning strategy, they have chosen their areas and excel within the areas of clothing, footwear and apparel. They do not stray from these departments and continued growth of VF is a representation of the success of this strategy. As seen in figure 3, between the years 2010-2017, VF Corp. has experienced growth annually, with all growth being a percentage of 4.5% or higher, this is until 2015, when the company experiences some stalled growth, and then a period of decline. The 4 key components in the strategic positioning and business strategy of VF Corp. are; lead in innovation, connect with consumers, serve customers directly and expand geographically. These strategies leverage the firm’s scale, scope and complexity to provide a unique value for each of its brands. As a result, the supply chain organisation must work together in order to fully understand the complexity and transform it into a strong competitive advantage. Due to the scale of VF, brand names and their worldwide presence, VF Corporation enjoys the comfort of a significant level of bargaining power with their suppliers. This is a signifcant and key competitive advantage in them maintaining their low production costs. None of their
individual suppliers represent more than 5% of the company’s costs of goods sold. Since VF keep their scale economies minimal and categorised by many small firms, this allows for the firm to achieve a cost advantage over their rivals. As seen in figure 4, in 2014, VF Corporation had a market share of 9.8%, which is significantly lower than that of one of its biggest competitors, Nike, who stand at almost 50% of the market share.
VF Corp. are preparing by the future by instigating their 5-year productivity plan, mentioned previously, which will be fully in effect by the year 2021. This plan also includes a sustainability and responsbility strategy, which is titled ‘Made for Change’. This strategy will enable VF to deliver on their environmental and social commitments, while driving further innovation and growth, and also creating value for VF as a whole, their brands, and their shareholders.