About The Lee Apparel Company Inc

When the going gets tough, the tough head to V.F. Corporation to get kitted out. The company is a leading light in the outdoor & action sports industry, owning a number of brands in specialist product categories: Timberland, The North Face, and Napapijri (outdoor footwear and apparel); JanSport, Eastpak, Eagle Creek, and Kipling (backpacks); and Reef and Vans (surf and skateboarding inspired footwear). V.F. also does a roaring trade in jeans, owning the brands Lee, Riders, Wrangler, and Rock & Republic. Its Majestic label offers licensed MLB, NFL, and NBA apparel. The company sells directly to consumers online and through more than 1,500 V.F.-operated retail stores worldwide. V.F. also sells wholesale to department and specialty stores, mass merchants, and discounters.

Operations

V.F. operates four main business segments: Outdoor & Action Sports is the largest at over 60% of total sales, followed by Jeanswear (nearly 15%), Imagewear (9%), and Sportswear (under 5%).

V.F.'s Outdoor & Action Sports segment has a stable of 11 popular outdoor brands across the apparel, footwear, equipment, backpacks, luggage and accessories categories. Vans, a youth counterculture brand, is the segment's biggest earner and sells shoes and clothing through 600 V.F.-owned retail units, online, and through distributors. The North Face, the next biggest brand, sells tents, sleeping bags, backpacks, and other such outdoor accessories alongside its rugged apparel and footwear lines. The segment also sells handbags, luggage, backpacks, women's activewear, and surf-inspired footwear across its various other brands.

The Jeanswear segment sells jeans and related clothing and accessories through 7 brands. In the US, the Lee brand is sold through mid-tier department stores and the Rustler and Rider by Lee brands are sold through regional discount stores. Outside the US, Wrangler and Lee are sold as high-end brands.

The Imagewear business is divided into occupational workwear and uniforms and the Licensed Sports Group (LSG) businesses; each makes about 50% of segment revenue. Imagewear has three workwear brands: Red Kap (premium workwear), Bulwark (protective workwear for the petrochemical, utility, and mining industries), and Horace Small (law enforcement). The LSG business owns the Majestic brand, the official uniform supplier for all 30 Major League Baseball teams until the license expires in 2019. LSG also has licenses for NFL, NBA, and NHL, as well as motorcycle firm Harley-Davidson.

Sportswear consists of the Nautica and Kipling brands.

Geographic Reach

V.F. Corp. rings up over 60% of its sales in the US, while the remainder mostly comes from Europe. It also sells in Asia, Canada, Mexico, and Latin America. The apparel maker has more than 25 manufacturing plants in the US, Mexico, Central and South America, the Caribbean, Europe, and the Middle East.

The company operates more than 30 distribution centers primarily in the U.S., Argentina, Belgium, Canada, Chile, China, Mexico, the Netherlands, Turkey and the UK.

Sales and Marketing

V.F. makes sales through specialty stores, department stores, national chains, mass merchants and its direct-to-consumer (DTC) operations. V.F. makes direct-to-customer sales through owned-operated stores, concession retail stores, and online and accounts for nearly 30% of total sales. VF generates a significant chunk of its sales through third-party retail chains. V.F.'s 10 largest customers account for more than 20% of total sales.

The apparel maker advertises in trade publications and on radio and television. Its digital initiatives include social media, mobile platforms, and the internet.

Financial Performance

V.F. Corporation has enjoyed revenue and profit growth for the past several years as it continues its worldwide expansion.

However, in fiscal 2016 sales flattened out, falling a negligible $13.6 million. Growth of 2% in the Outdoor & Action Sports and Imagewear segments was offset entirely by falls in Jeanswear (-$54.5 million) and Sportswear (-$99 million). Growth came mainly from International sales, which grew 4% despite unfavorable currency movements. Direct-to-consumer sales increased 8%.

Net income fell 11%, or $143 million, to $1.2 billion as the company incurred restructuring costs without adding to the top line. V.F. also took a writedown of is lucy business, which it is merging into The North Face. Restructuring costs aside, bottom line performance was good, aided by lower product costs, better pricing, and a shift towards higher margin business.

Cash from operating activities increased 23% to $1.5 billion due to the absence of a discretionary contribution to a pension plan undertaken in 2015, as well as higher collections of accounts receivable.

Strategy

V.F. is reshaping its business as intensifying higher competition meant the company fell short its lofty revenue goals. It is selling off underperforming units to place greater focus on its main growth drivers, Vans, The North Face, and Timberland. The lucy brand, trounced by activewear rivals such as Athleta, Lululemon, and Fabletics, is being merged into the stronger North Face brand. V.F. is also shipping off its entire Licensed Sports Group business to online licensed sports merchandiser Fanatics.

On the flipside, V.F. expanded its workwear business by acquiring Dickies hospital scrubs and Kodiak boots maker Williamson-Dickie. W-D is viewed as having strong potential to break the $1 billion annual sales milestone, and will double V.F.'s workwear business.

Mergers and Acquisitions

In 2017 V.F. Corp. agreed to acquire family-owned Williamson-Dickie Manufacturing Co., a maker of work wear, for $820 million in cash. The deal adds Williamson-Dickie's Workrite, Kodiak, Terra, Walls, and Dickies brands to V.F.'s closet. V.F. expects that it will gain about $200 million in revenue from the deal in 2017 and as much as $1 billion by 2021. The transaction is expected to close in the 2017 fourth quarter.

Company Background

The gear-and-apparel maker has invested heavily in acquisitions to further build its outdoor and action sports business, which has grown to account for more than 50% of sales. V.F. in September 2011 acquired global footwear maker Timberland for $2 billion. Marking the biggest acquisition in the company's history, V.F. was enticed by Timberland's overseas presence and its strong growth during the past decade.

In 2010, on the wholesaling side V.F. took control of its Vans-branded products marketing venture in Mexico. The roughly $30 million purchase also put V.F. in charge of Vans retail stores.

V.F., founded in 1899, is controlled in part by trusts established by its late founder John Barbey.

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The Lee Apparel Company Inc

1 Lee Dr
Shawnee Mission, KS 66202-3620
Phone: 1 (913) 789-0330

Stats

  • Employer Type: Public
  • Secretary To The President: Claudia Broddus
  • President: Terry Lay
  • Secretary: R R Trowbridge
  • Employees: 10,300

Major Office Locations

  • Shawnee Mission, KS