Business news : VF Corp. Reveals Growth Targets for 2017

VF Corporation Corp said revenues at its Outdoor & Action Sports coalition, which encompasses The North Face, Van’s, Timberland, Eagle Creek, JanSport and Smartwool, are expected to reach $11.1 billion by 2017.

This growth represents a five-year CAGR of 14 percent comprised of 11 percent organic growth and 3 percent growth coming from acquisitions, company executives disclosed in a presentation to investors in New York.

Outdoor & Action Sports revenues are expected to reach 64 percent of VF’s total revenues by 2017, up from 54 percent in 2012. Strong growth is anticipated across all key regions: 12 percent in the Americas, 13 percent in EMEA and 24 percent in Asia-Pacific.

Steve Rendle, Vice President, VF Corporation and Group President, Outdoor & Action Sports Americas, presented global, five-year growth targets  for the coalition’s largest brands, The North Face, Vans and Timberland.

• The North Face brand is anticipated to grow at a 12 percent annual growth rate, with revenues reaching $3.3 billion by 2017 from $1.9 billion in 2012. 
• The Vans brand raised its average annual revenue growth projection, initially provided in June of 2012, from 13 percent to 15 percent. The brand is now targeting total revenues of $2.9 billion by 2017, up from $1.5 billion in 2012. 
• The Timberland brand, now in its second full year of VF ownership, continues to anticipate growing revenues at an annual CAGR of 10 percent over the next five years, increasing to $2.3 billion by 2017 from $1.5 billion in 2012.

VF Corp. established an overall revenue target of $17.3 billion by 2017, representing sales by all five of its coalitions, which also include Jeanswear & Imagewear, Sportswear and Contemporary Brands. That represents five-year compounded annual growth rate (CAGR) of 10 percent, with 8 percent organic growth and 2 percent growth anticipated from acquisitions. VF Corp.’s earnings per share target is $18.00 for 2017, representing a five-year CAGR of 13 percent.

Given the exceptional growth in its highly profitable Outdoor & Action Sports, direct-to-consumer and international businesses, VF also raised its projections for gross and operating margin. It is now targeting a gross margin of 49.5 percent in 2017, a 300 basis point improvement over the 46.5 percent gross margin achieved in 2012. Operating margin is expected to reach 16 percent, up 250 basis points from the 2012 operating margin of 13.5 percent. Annual cash flow from operations, by 2017, is targeted at $2.4 billion, with a cumulative $9.5 billion in cash flow to be generated between 2013 and 2017.

Direct-to-Consumer: serving consumers directly
VF’s direct-to-consumer (DTC) business – consisting of its owned retail stores and e-commerce businesses – will continue to be a significant contributor to VF’s growth over the next five years. Comprising 21 percent of total revenues in 2012, direct-to-consumer is anticipated to grow to 25 percent of total revenues by 2017. Mike Gannaway, vice president, VF direct/customer teams identified key elements of the plan, including new store openings with a strong international component, accelerated e-commerce growth and continuous comp store increases to fuel a 14 percent CAGR in DTC, to $4.4 billion in revenues by 2017.

The company expects to own and operate approximately 1,775 stores, an increase of approximately 645 stores over the 1,129 stores at year-end 2012. As one of VF’s fastest growing and most profitable businesses, e-commerce revenues are expected to grow at an average rate of 25 percent annually over the next five years. DTC growth is anticipated across all key regions with CAGRs of 12 percent in the Americas, 21 percent in EMEA and 15 percent in Asia-Pacific, respectively.

International expansion
International growth is another key pillar of VF’s growth, and is expected to comprise 43 percent of total revenues by 2017 compared with 37 percent in 2012. Revenues are targeted to hit $7.4 billion in 2017, with a CAGR of 13 percent over the five-year period. During a panel discussion, Karl Heinz Salzburger, vice president, VF Corporation and president, VF International together with other executives from VF’s international team provided an overview of brand strategies that are expected to fuel revenue growth in each key geographic region, including compounded annual growth rates of 17 percent growth in Asia-Pacific, 15 percent in the Americas (non U.S.) and 11 percent in EMEA.

EVP and CFO Bob Shearer affirmed prioritize for the company's strong cash flow remain acquisitions, dividends and share repurchases. The company continues to target a dividend payout rate of 40 percent, more than 15 percent annual total shareholder return and is targeting 20 percent for the company’s return on invested capital.

VF Corporation is a global leader in branded lifestyle apparel and footwear with more than 30 brands. The company’s largest five brands are The North Face, Wrangler, Timberland, Vans and Lee. Other brands include 7 For All Mankind, Bulwark, Eagle Creek, Eastpak, Ella Moss, JanSport, Kipling, lucy, Majestic, Napapijri, Nautica, Red Kap, Reef, Riders, Splendid and SmartWool.

Source VF corp through SportsOneSource