VF to spin off Wrangler and Lee business
Fast-growing apparel brand owner VF Corporation plans to spin off its Wrangler and Lee denim business into a second listed company.
Dubbed NewCo for now, it would be a global leader in the denim category as well as incorporating the VF Outlet operations. Those businesses contributed US$2.5 billion to VF’s turnover last year.
VF chairman, president and CEO Steve Rendle said since last year the company has been engaged in a disciplined reshaping of its brand portfolio to better position the company for long-term success in a quickly changing business landscape. In that time, VF has acquired Williamson-Dickie, and the Icebreaker and Altra brands, and sold Nautica and its Licensed Sports Group, including the Majestic brand. That has sharpened the company’s focus on activity-based outdoor, active and work lifestyles. Its brands now include North Face, JanSport, Smartwool and Eagle Creek.
“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,” said Rendle.
The Wrangler and Lee jeans business is both successful and sustainable with iconic global brands and a clear path to value creation as a standalone entity, he said.
“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.”
With annual sales estimated at more than $11 billion, the trimmed-down VF business will have more flexibility to pursue its merger and acquisition strategy, explore new growth vectors and apply even more investment behind its organic brand portfolio, he said in a statement.
Post split, VF would move its headquarters to metro Denver, a location it believes is more in keeping with its outdoor wear focus and an ideal home for its Global Innovation Center for technical fabrics and Digital Lab.
“Locating these brands, along with select VF leaders, at the base of the Rocky Mountains will enable us to accelerate innovation, unlock collaboration across brands and functions, attract and retain talent and connect with consumers,” said Rendle, who will remain in his current role.
NewCo’s Asian focus
Meanwhile, the new Wrangler and Lee denim business will be free to pursue further expansion of its global footprint, with a sharp focus on Asia, building on its established presence in China. The company expects to unlock significant scale and cost efficiencies by streamlining operations, providing flexibility to pursue strategic acquisitions over time.
Scott Baxter has been designated CEO of the new company and Rustin Welton as CFO.
NewCo will be headquartered in Greensboro, North Carolina where Lee will relocate its headquarters from Kansas City, joining Wrangler.
The separation is anticipated to be complete in the first half of next year, following customary regulatory approvals and tax and legal considerations.