VF Corporation
Address:
105 Corporate Center Boulevard
Greensboro, North Carolina 27408-3194
U.S.A.
Telephone: (336) 424-6000
Fax: (336) 547-7630
http://www.vfc.com
Statistics:
Public Company
Incorporated: 1899 as Reading Glove and Mitten Manufacturing Company
Employees: 58,000
Sales: $5.08 billion (2002)
Stock Exchanges: New York Pacific
Ticker Symbol: VFC
NAIC: 314911 Textile Bag Mills; 314912 Canvas and Related Product Mills; 315191 Outwear Knitting Mills; 315192 Underwear and Nightwear Knitting Mills; 315223 Men's and Boys' Cut and Sew Shirt (Except Work Shirt) Manufacturing; 315224 Men's and Boys' Cut and Sew Trouser, Slack, and Jean Manufacturing; 315225 Men's and Boys' Cut and Sew Work Clothing Manufacturing; 315228 Men's and Boys' Cut and Sew Other Outerwear Manufacturing; 315231 Women's and Girls' Cut and Sew Lingerie, Loungewear, and Nightwear Manufacturing; 315232 Women's and Girls' Cut and Sew Blouse and Shirt Manufacturing; 315239 Women's and Girls' Cut and Sew Other Outerwear Manufacturing; 315234 Women's and Girls' Cut and Sew Suit, Coat, Tailored Jacket, and Skirt Manufacturing; 315291 Infants' Cut and Sew Apparel Manufacturing; 315999 Other Apparel Accessories and Other Apparel Manufacturing; 448140 Family Clothing Stores
Company Perspectives:
VF is the global leader in creating powerful brands of apparel. The consumer is the focus of everything we do.
We are the best at bringing people comfort and quality in our brands. We know our consumers, where they are and where they're headed. We are dedicated to our retail partners. We believe in treating our associates, our colleagues and all those we serve in the course of doing business with the highest levels of honesty, integrity, consideration and respect.
Our world-class people are the source of our success. As a company, we bring excellence in operations and the latest technology to the art of apparel. We bring to market the right products at the right time. Working together, we have a bright future because we create superior products and market them with exceptional skill.
All these things mean success--for our associates, our retailers, our shareholders, our communities, and the millions of people who feel good in our brands.
These are the things that make us great. These are the things that make us VF.
Key Dates:
1899: Eight men form the Reading Glove and Mitten Manufacturing Company in Reading, Pennsylvania.
1911: One of the eight, John Barbey, buys out his partners.
1913: Company's name is changed to Schuylkill Silk Mills.
1914: Company expands into the manufacture of silk lingerie.
1917: Through a contest, "Vanity Fair" is selected as a brand name for the line of lingerie.
1919: Company changes its name to Vanity Fair Silk Mills, Inc.
1942: With World War II leading to an embargo on silk, the company drops the word "Silk" from the corporate name.
1951: Vanity Fair Mills goes public.
1969: Hosiery maker Berkshire International Corporation is acquired; Vanity Fair Mills changes its name to VF Corporation; company expands into jeanswear with the purchase of H.D. Lee Company, Inc.
1984: Bassett-Walker, Inc., producer of fleece activewear, is acquired.
1986: Purchase of Blue Bell Holding Company, Inc. for $762 million brings the following brands into the fold: Wrangler and Rustler jeanswear, Jantzen and JanSport swimwear and sportswear, and Red Kap occupational apparel.
1991: Children's wear maker Healthtex, Inc. is acquired.
1997: Consumerization initiative is launched, along with a corporate restructuring of the firm's 17 divisions into five units called "coalitions": Jeanswear, Intimate Apparel, Knitwear, Playwear, and International.
1998: VF acquires Bestform Group Inc. and such intimate apparel brands as Bestform, Exquisite Form, and Lily of France; company headquarters are shifted from Wyomissing, Pennsylvania, to Greensboro, North Carolina.
2000: VF acquires backpack maker Eastpak; jeans brands Chic, H.I.S., and Gitano; and The North Face, Inc., producer of outerwear and high-tech sporting gear.
2001: Company launches major restructuring involving the closure of more than 30 U.S. plants, the elimination of more than 13,000 jobs, and the divestiture of the private-label knitwear business and the Jantzen swimwear unit.
Company History:
VF Corporation is one of the world's largest publicly owned fashion apparel manufacturers, designing and producing a diverse array of clothing products for both the U.S. and international markets. The company owns an array of well-known brands in several categories that are sold through a variety of retail sales channels, including department, specialty, mass-merchant, and discount stores. VF is the leading maker of jeans in the United States, holding about one-quarter of the market with such brands as Wrangler, Lee, Rustler, and Riders. Approximately half of the company's revenues come from the sale of jeanswear. Intimate apparel, which includes the Vanity Fair, Lily of France, Vassarette, and Bestform brands, generates about 16 percent of sales. Another 10 percent comes from marketing occupational apparel under the Red Kap, Penn State Textile, and Bulwark brands. VF also sells children's playwear under the Healthtex and Lee brands, North Face outdoor apparel and equipment, and JanSport and Eastpak daypacks and bookbags. The company's knitwear apparel business designs, manufactures, and markets imprinted sports clothing under licenses from Major League Baseball, the National Basketball Association, the National Football League, the National Hockey League, major universities and colleges, and top NASCAR drivers. Other operations include a chain of about 50 VF retail outlet stores located across the United States, selling a wide range of company products. More than 80 percent of company revenues are derived domestically; the remainder primarily originates in Europe, with South America and Asia contributing small portions of overall sales.
The Early Years
The company's beginnings can be traced to the year 1899, when eight men formed the Reading Glove and Mitten Manufacturing Company in Reading, Pennsylvania, and began producing and selling knitted and silk gloves. Of the founders, two men had previous experience in the garment industry as hosiery manufacturing executives, while a third, John Barbey, was a brewer and banker and controlled the company's financial operations. After 12 years of slow growth, Barbey purchased his partners' interests in the company in 1911. The following year, Barbey's son John Edward (known as J.E.) joined the firm as vice-president, and in 1913 the company's name was changed to Schuylkill Silk Mills.
In 1914 the company expanded into the manufacture of silk lingerie, and after three years of successful sales, the Barbeys decided to conduct a contest to find a brand name for their lingerie line. The winner received a $25 prize for the name "Vanity Fair." With hopes of establishing a national reputation for the company's merchandise, the Barbeys launched an extensive advertising campaign that emphasized the superior quality and style of Vanity Fair lingerie. This direct-to-the-consumer approach was considered innovative in that time period, because most other lingerie was of mediocre quality and was sold without brand names primarily through jobbers. The Barbeys' campaign was successful, and as the Vanity Fair brand name became more well known, the company once again changed its name to Vanity Fair Silk Mills, Inc. in 1919.
By the early 1920s, the rising success of the lingerie product line prompted Vanity Fair to discontinue its glove manufacturing operation and devote itself exclusively to the business of making lingerie. J.E. Barbey was named general manager of the company in 1931 in addition to his position as vice-president. Union organizing activities in the Reading area in the 1930s prompted Vanity Fair to open a new factory in 1937 in Monroeville, Alabama, in the union-unfriendly South. J.E. Barbey was known for his antiunion views and did not want to run a unionized factory. The Reading plant remained in operation though not unionized, but after a new wave of organizing actions arose following the end of World War II and two unsuccessful attempts were made to unionize the plant, it was closed for good in 1948.
Innovation and Expansion in the Mid-1900s
Upon his father's death in 1939, J.E. Barbey assumed the presidency of Vanity Fair, a position that he held for the next quarter century. During that time, he led the company through turbulent times, such as the economic changes that came with World War II. In 1941 the war brought about an embargo on silk, and the company began using rayon in the production of its lingerie. (The silk embargo also led the company to drop the word "Silk" from the official corporate name in March 1942.) Throughout the rest of the 1940s, Vanity Fair perfected the use of other new types of lingerie fabrics and subsequently introduced products made from a nylon tricot material in 1948.
These innovations changed the face of the lingerie industry. Nylon tricot was soon considered to be an ideal lingerie fabric because of its strength, wearing power, elasticity, and ease-of-care features. Its use also enabled the company to produce lingerie with a variety of fashionable features and in many popular colors. As a result, in 1950 Vanity Fair became the first lingerie manufacturer to receive the Coty Award for Design.
In 1951 Barbey, who owned nearly all of the company's common stock, decided to take the company public. About one-third of Barbey's shares were sold via an initial public offering. The stock traded over the counter until 1966, when a secondary stock offering of shares held by the J.E. Barbey Estate and Trusts was completed (Barbey had died in 1956). The offering represented about a quarter of the outstanding shares and left the Barbey trusts with about a 25 percent stake in Vanity Fair Mills. The offering also enabled the company to gain a listing on the prestigious New York Stock Exchange.
The founder's son's death marked the end of Barbey leadership at the company. Harold G. Miller, who had been with Vanity Fair since 1919, was named chairman. Neal Dow and Miller both served brief stints as president before Manford O. Lee began a long tenure in the position in early 1959. Lee, who began with the company in 1942, was named chairman in 1965 following Miller's retirement.
Throughout the 1950s and early 1960s, the company achieved steady growth through its production of lingerie and foundation garments. Overseas expansion began in 1958 when Vanity Fair entered into an agreement with the U.K. firm Wolsey Ltd. to make Vanity Fair-style lingerie under the brand Wolsey-Vanity Fair. A similar agreement was reached with an Australian firm the following year. An International Division was created in 1962 to help drive foreign expansion. In 1967, as sales growth for lingerie items was beginning to top off, Vanity Fair attempted to offset the effects by expanding into the robe and loungewear market.
First Acquisitions in 1969; Emergence of VF Corporation
In the late 1960s, Vanity Fair began its evolution into a multibrand clothing powerhouse under the leadership of Manford Lee. The firm completed two major acquisitions in 1969, including the purchase of the H.D. Lee Company, Inc., a manufacturer of men's and boys' jeans and casual pants based in Shawnee Mission, Kansas. Also acquired was Reading, Pennsylvania-based Berkshire International Corporation, one of the world's largest producers of women's hosiery.
H.D. Lee had been established in the midwestern United States in 1889 as a wholesaler called the H.D. Lee Mercantile Company. In the early 1900s, the firm began selling overalls that it obtained from a supplier in the eastern United States. Because deliveries from this supplier were often unreliable, Lee began manufacturing its own overalls, jackets, and dungarees in a factory in Salina, Kansas. It also introduced the Lee Union-All, a garment designed to protect an entire suit or uniform. The Union-All became the official doughboy fatigue uniform during World War I. Beginning in the 1920s, Lee launched a series of innovative fabrics and apparel, including heavy-duty denim and Lee Rider cowboy pants. In the 1940s, Lee improved its cowboy pants with a tighter fit and the Tighter Rider brand became the best fitting cowboy pants available. The company established its International Division in 1959, and was rewarded a Presidential "E" citation in 1964 for making an outstanding contribution to the export expansion program of the United States.
Berkshire International traced its roots back to the early 1900s, when it was founded as Berkshire Knitting Mills, a manufacturer of cotton stockings. The company's production process applied paraffin wax to cotton thread to give the woven stockings the luster of silk. Berkshire developed into the world's largest manufacturer of women's hosiery, thanks in part to the popularity of motion pictures featuring beautiful actresses in short skirts and stockings, as well as to the outbreak of World War I, which fueled domestic production.
After acquiring the Lee Company and Berkshire International, Vanity Fair changed its name to VF Corporation as a means of reflecting its expansion into these new areas. VF Corporation was designated the parent company of H.D. Lee and Berkshire International, and a new subsidiary was formed under the Vanity Fair name to house the intimate apparel business. Another consequence of the acquisition of Berkshire was that VF gained a large amount of real estate that the latter company had needed because hosiery manufacturing demands a great deal of physical space. In 1970 some of Berkshire's unused factory space in Wyomissing, Pennsylvania, three miles west of Reading was converted into the first VF factory outlet store. The second opened in Monroeville, Alabama, ten years later, and over the following two decades about four dozen more would begin operating. Initially the outlets offered only overstocks, factory seconds, and the like, but eventually about half of the merchandise was goods that had been specifically planned for sale through this channel.
Meanwhile, in 1971, VF acquired Kay Windsor, Inc., a manufacturer of budget-priced, ready-to-wear women's dresses and sportswear. This business encountered difficulties during the 1970s because of the growing popularity of women's pantsuits, however, and its division was closed down in 1982.
In 1977 a VF Corporation International Division was established to manage the company's growing operations overseas. The need for this new division had arisen as the export of Vanity Fair intimate apparel to Europe and the Far East soon grew to include many of the products from the Lee Company and Berkshire International. VF reported profits of $28 million on revenues of $470 million that year.
An Industry Leader in the 1980s
Although the jeans market was beginning to experience diminished demand, VF entered the 1980s in a more profitable position than either of the two other major jeans makers, Levi Strauss & Co. and Blue Bell, Inc. VF's success was attributed to less dependence on foreign markets; earnings from other areas, such as lingerie; million-dollar investments in capital improvements; and tighter inventory controls. VF also benefited from Levi Strauss's decision to expand the distribution of its products to mass-merchandise outlets. Independent retailers that had previously carried the Levi's brand angrily responded to this development by stocking the Lee brand instead. Because of the rising demand for Lee's products, several of VF's Berkshire International sites were converted to jeans manufacturing facilities, as Lee became VF's largest operating division, accounting for as much as 80 percent of the corporation's revenues in the early 1980s.
In 1980 Lawrence R. Pugh joined VF as president and chief operating officer. Pugh had previously worked in a variety of management positions at various companies, most recently as head of Samsonite's luggage division. Manford Lee lost a battle with cancer in early 1982, and Pugh became CEO in addition to president. He became chairman of VF the following year. At that time, Robert Gregory was the president of the Lee division, and he joined Pugh in an effort to inject new life into the sluggish jeans market. The two men embarked upon a marketing strategy to set Lee apart from other jeans industry leaders by segmenting production into men's and women's lines. VF became one of the first producers to manufacture stretch jeans for women, as well as dressier, more expensive jeans, which began competing with the designer lines that had become popular. VF developed the Ms. Lee brand, which soon became the best-selling line of women's jeans in the United States.
Meanwhile, VF was also segmenting and upgrading its Vanity Fair lingerie lines with more fashionable items to appeal to younger women. In addition to introducing new products, Pugh increased spending for advertising, expanded the company's retail distribution channels, and increased the size of the VF sales force. The new initiatives helped propel revenues past $1 billion for the first time in 1993.
Continuing to diversify, in 1984 VF acquired Modern Globe, Inc., a manufacturer of men's and women's cotton undergarments since 1917, for $37.4 million. VF also purchased Bassett-Walker, Inc., a producer of fleece activewear based in Martinsville, Virginia, in November 1984 for $293.3 million. Bassett-Walker traced its origins to the founding of the Virginia Underwear Company in 1928 and by 1960 had become one of the largest manufacturers of knitted outerwear in the United States. The addition of these companies to VF's corporate portfolio helped the parent company continue to diversify, which allowed it to avoid reliance upon any one product or market segment.
In 1986 VF became the United States' largest apparel manufacturer and domestic jeans supplier when it acquired the Blue Bell Holding Company, Inc., a competitor that was the producer of Wrangler jeans, for $762 million. Blue Bell traced its origins to Hudson Overall Company, which was formed in Greensboro, North Carolina, in 1904. The company was renamed Blue Bell Overall Company in 1919 and merged with its chief competitor, Big Ben Manufacturing, in 1926. Ten years later, Blue Bell merged with another major work clothes manufacturer, Globe Superior Corporation, forming Blue Bell-Globe Manufacturing Company. After acquiring the H.D. Bob Company in 1940 and Casey Jones in 1943, the newly named Blue Bell, Inc. had begun manufacturing garments for the military in World War II. After the war, the company had applied the production methods it used in making military garments to the manufacture of casual clothing and western-style wear. In 1947 the brand name Wrangler was developed for this rapidly growing product line.
VF's friendly purchase of Blue Bell was viewed as an ideal marriage between two companies that had similar manufacturing cultures. The merger offered VF an opportunity to expand more deeply into menswear, while also having available resources to broaden its distribution channels to include mass merchants and discount stores. Furthermore, when VF acquired Blue Bell, it purchased not only the Wrangler product line but also Blue Bell's other holdings: the Rustler jeans product line, Jantzen and JanSport swimwear and sportswear, Red Kap occupational apparel, and licenses to the Marithé and François Girbaud upscale sportswear collections. The Rustler brand had been introduced by Blue Bell in 1979 as a basic jean to be sold through mass merchandisers. Red Kap, founded in 1922, had been acquired by Blue Bell in 1964. Blue Bell acquired Jantzen in 1980, 70 years after the swimwear maker's founding. Four years later, Jantzen acquired JanSport, maker of backpacks and bookbags.
Although VF had grown considerably in size as a result of its many acquisitions throughout the 1980s, declining jeans sales finally caught up to it in 1989. In the past, whenever one division's sales had slowed, VF had managed to survive the slump by relying on strong sales in its other divisions. This time, however, the company was paying the price for its decision three years earlier to begin marketing its Lee jeans through mass merchandisers and discount outlets. Just as competitor Levi Strauss had found when it attempted the same thing, the marketing error of moving into the discount realm ended up alienating department store buyers, who began refusing to carry the Lee line because of the lower-quality image it now possessed. Without the aid of department and specialty stores, VF found itself amidst a marketplace already dominated by low-cost importers with widely recognized brand names and large consumer advertising budgets. The Lee division traditionally had not given retail stores significant advertising support and found itself at a sizable disadvantage. As a result, both sales and profits in the jeans area fell significantly.
Compounding the company's problems was the growing popularity of a new line of casual men's apparel called Dockers, which had recently been introduced by Levi Strauss. The Dockers brand cut severely into VF's sales of jeans. VF had not changed its basic Lee Rider style, and had been so involved in rejuvenating its jeans business that it had neglected to notice that other manufacturers had expanded into different trouser lines that took advantage of new apparel trends.
Early 1990s: Rejuvenation, New String of Acquisitions
In the early 1990s, VF not only began taking further measures to rejuvenate its jeans sales but also started focusing on the market segment of women aged 25 to 44. It continued to offer increased marketing for its women's jeans lines, while also emphasizing support for other women's apparel such as the JanSport and Jantzen lines. In 1990 the company purchased the manufacturing operations of intimate apparel brands Vassarette and Form-O-Uth from Munsingwear, Inc. for $11.5 million and added them to the intimate apparel division. The following year marked the $29 million acquisition of Healthtex, Inc. a leading manufacturer of children's wear.
With a diverse array of products under its corporate umbrella, as well as numerous distribution options, VF instituted a program to strengthen relationships with its retailers and its consumers. First, VF began investing more time and money into researching the buying patterns, needs, and lifestyles of its consumers, so as to better serve them. The company then offered its retailers increased advertising and merchandising support based on the results of its consumer research. The information obtained through market research was also helpful in determining which brands to emphasize at any given point in time. Furthermore, VF's proprietary Market Response System was introduced, providing an electronic link between retailers' sales floors and corresponding VF divisions and allowing VF to keep its products in stock at all times.
VF also saw continued growth as a result of its ongoing acquisition program. In 1992 the company purchased three European intimate apparel companies. VF spent $34.6 million for the Valero Group, a Paris-based firm that owned the Variance, Siltex, Bolero, and Silhouette brand names. The Spanish company Vives Vidal, S.A. (Vivesa) and its French affiliate Jean Bellanger Enterprises were bought for $116.3 million, bringing onboard the Intima Cherry, Lou, Carina, and Gemma intimate apparel brands. These additions, combined with the success of newly developed products throughout the year, helped VF break the $3 billion mark in annual sales for the first time in the company's history. With the purchases, VF's international division posted a sales increase of 52 percent for 1992.
Following that record year, Pugh handed down his role as president to Mackey J. McDonald, while still remaining at the company's helm as chairman and CEO. McDonald was a one-time president of the Wrangler division who had worked his way through the ranks since joining VF in 1983. Together, the two led VF through a year of rejuvenated jeans sales, with the exception of the Girbaud division, which began experiencing a decline.
Completed in January 1994 were the acquisitions of Nutmeg Industries, Inc., for $352.2 million, and the H.H. Cutler Company, for $154.7 million, both of which helped VF become a leading supplier of licensed sports apparel. VF's Bassett-Walker division actually benefited from these acquisitions as well, as it became the main supplier of knitwear for the two companies, and therefore increased its output.
The year 1994 was also characterized by cooperative endeavors between different VF divisions and other well-known companies. For example, H.H. Cutler teamed up with Walt Disney Company to create playwear featuring characters from the movie The Lion King, all of which sold out quickly and prompted the creation of similar items the following year featuring Pocahontas. Also, H.H. Cutler and Healthtex combined to introduce a Fisher-Price brand of children's discount clothing. Jantzen worked with Nike, Inc. to develop a new line of performance swimwear, while Nutmeg readied itself to launch some of its 1995 sports apparel under the Lee Sport name.
Unique projects and ideas such as those above, coupled with VF's conservative financial strategies and high level of brand name recognition by consumers, enabled the company to break the $5 billion mark in annual sales for 1995. At the end of the year, Pugh once again handed down one of his roles at VF to McDonald, who added the responsibilities of being CEO to his list of duties as company president. Pugh, who had overseen the company's growth from two brands to nearly two dozen, remained with the company as its chairman.
Entering the late 1990s, a good majority of VF's products were competing in mature markets, which dictated that the company's future growth was contingent on deriving ways to gain market share. In VF's favor was the evolving trend in many businesses toward dressing more casually at work. But rather than rely solely on such consumer trends and buying patterns, VF began actively formulating new methods to reach consumers and provide them with the best customer service possible, while at the same time increasing name brand recognition. For example, the company began testing a new interactive touch-screen computer program in stores called the Lee FitFinder, aimed at helping customers determine the best sizes and styles for their individual body types.
Late 1990s and Beyond: Restructuring and Adding Brands for Future Growth
The historic breaking of the $5 billion sales plateau in 1995 was accompanied by the negative news of a huge decline in net income, which dropped from $274.5 million to $157.3 million. This falloff highlighted the need for cost containment, particularly in an era in which consumers were increasingly seeking quality products at less-than-premium prices. One initiative to contain costs undertaken in the late 1990s was to move more of the manufacturing operations offshore. At the end of 1995, VF announced that it would close nine U.S. plants, laying off 3,800 workers in the process, and open new plants in Mexico and Central America. At the time, the company had about 80 percent of its manufacturing in the United States, and it was aiming to reduce this figure to 65 percent. Around this same time, VF began manufacturing and marketing Lee jeans in China through a joint venture in the province of Guangdong. In December 1997 subsidiary VF do Brasil Ltda. was formed to coordinate manufacturing and marketing activities of the Lee brand in Brazil, the second largest jeanswear market in the world.
One of the first initiatives that McDonald launched after becoming CEO was a program called "consumerization," in which the company aimed to reorient all of its operations--including manufacturing, marketing, systems technology--toward meeting the needs of customers. VF needed a new organizational structure to support the new strategy because the old divisional arrangement was too complicated. Starting in 1997 the company's 17 domestic and foreign divisions were consolidated into five operating units called "coalitions": Jeanswear, Intimate Apparel, Knitwear, Playwear, and International. The restructuring cost about $150 million, and it was aimed at saving a similar amount by eliminating the redundancies of the divisional structure. At the same time, VF said that it would spend an additional $250 million over a four-year period to revamp its product line through a fresh round of advertising, consumer research, and product redesign. The company set a goal of achieving an additional $2 billion in revenue during this period, which would result in overall sales of $7 billion by 2000.
In March 1997, meanwhile, VF signed a letter of intent to acquire Maidenform Worldwide Inc., maker of intimate apparel under the Maidenform, Oscar de la Renta, and Self Expression brands. The acquisition of Maidenform, which had annual revenues of about $400 million, would have represented a major expansion of VF's intimate apparel business, but the deal was called off in April. Later in 1997 VF expanded its jeans portfolio with the purchase of the Brittania brand from Levi Strauss. Brittania was a mass-market brand that VF subsequently repositioned as a fashion-forward, young men's jeans brand. Then in October 1997 the company announced that it would break with its Pennsylvania roots by moving the corporate headquarters from Wyomissing to Greensboro, North Carolina, in order to locate the corporate staff closer to where much of the firm's marketing and support units were positioned. The move was completed in June 1998. VF's factory outlet in Wyomissing, the company's largest, stayed put.
VF succeeded in bolstering its intimate apparel lines by acquiring Bestform Group Inc. in February 1998. VF had had only two U.S. intimate apparel brands--Vanity Fair and Vassarette--but now gained such well-known brands as Bestform, Exquisite Form, Lily of France, Josie, Natori, and Oscar de la Renta (Bestform had purchased the license for the latter from Maidenform in October 1997). The addition of the privately held Bestform, which was founded in 1924 and had annual revenues of about $270 million, would push VF's intimate apparel revenues past the $1 billion mark, making it one of the top three intimate apparel makers in the United States, with about 11 percent market share. There were three other significant developments in 1998: VF divested its license for the Girbaud designer clothing line; Pugh retired in October from his position as chairman, which was assumed by McDonald, who remained president and CEO as well; and VF acquired Penn State Textile Manufacturing, Inc., maker of restaurant apparel as well as table linens and restaurant supplies. Three more workwear companies were acquired in 1999: Horace Small (public safety and postal apparel), Todd Uniform (custom-designed business uniforms), and Fibrotek (clean-room apparel).
VF's acquisition spree continued in 2000. Eastpak, a maker of backpacks and daypacks, was purchased from Sunbeam Corporation. VF also purchased the Chic and H.I.S. jeans brands from Chic by H.I.S., Inc. and the Gitano jeans brand from Fruit of the Loom, Inc., which was in bankruptcy proceedings. The 2000 purchases were rounded out with the buyout of The North Face, Inc., which was in financial trouble and on the verge of filing for bankruptcy. North Face, which had annual revenues of approximately $240 million, produced outerwear and high-tech sporting gear. All told, VF spent $206.5 million and assumed $107.7 million in debt on these 2000 purchases.
The acquisitions of the late 1990s and 2000 brought about a need for a fine-tuning of the coalition organizational structure. In late 2000 a new Outdoor coalition was created to house North Face, Eastpak, and JanSport brands. An Imagewear coalition combined the company's uniform and knitwear arms. At the same time, VF announced that it was discontinuing the nonapparel operations of the four recently acquired workwear businesses, closing another six higher-cost North American manufacturing operations, and consolidating its distribution centers in North America and Europe. The actions involved 2,700 employees losing their jobs. The company recorded restructuring charges of just under $120 million in association with these moves.
Even with the string of acquisitions, VF fell well short of its $7 billion sales goal for 2000, although revenues that year did reach a record $5.75 billion. Net income for the year fell thanks to the restructuring charge. Profits would fall still further the following year, and revenues would decline as well, as the retail market was hit hard by the economic recession in the United States and as another late-year restructuring was launched. In November 2001 VF announced that it would close down or divest three underperforming businesses: the company's private-label knitwear operation, the Fibrotek workwear unit, and the Jantzen swimwear business; the latter was sold to Perry Ellis International in March 2002 for $25 million. The restructuring also involved the closure of more than 30 U.S. plants and the elimination of more than 13,000 jobs, or 18 percent of the total workforce. When the plant closures were complete, only about 15 percent of the company's merchandise would be made in the United States, as another wave of production was shifted to Mexico, Central America, and the Far East. Restructuring charges for 2001 totaled $236.8 million, as the company aimed to cut its yearly operating costs by $115 million.
Continuing to focus on cost containment in the difficult economic environment of the early 2000s, VF announced in October 2002 that it would close five more U.S. plants and lay off about 3,000 more workers, thereby reducing its U.S. manufacturing to 10 percent of the overall total. The cost-cutting efforts resulted in improved profitability for nearly every VF business in 2002, although all told the firm posted a net loss of $154.5 million as a result of restructuring charges and a $527.3 million charge taken for a change in accounting policy for goodwill. With a low level of long-term debt and nearly $500 million in cash on hand, VF was poised to return to the acquisition arena, with prime targets including makers of jeanswear, intimate apparel, and outdoor apparel as well as "lifestyle" brands that might encompass several product categories. Having reacted quickly to reign in costs in the highly competitive marketing environment of the early 21st century, and with a history of being extremely adept in reacting to industry occurrences in positive and productive ways, VF Corporation appeared to possess the potential for continued growth and success.
Principal Subsidiaries: Bestform Inc.; Bulwark Protective Apparel, Ltd. (Canada); H.I.S. Sportswear AG (Germany; 97%); JanSport, Inc.; Lee Bell, Inc.; Les Dessous Boutique Diffusion S.A. (France); The H.D. Lee Company, Inc.; The North Face, Inc.; The North Face (Europe) Limited (U.K.); Vanity Fair, Inc.; Vanity Fair Intimates, LP; Vives Vidal Vivesa, S.A. (Spain); VF Chile S.A.; VF Diffusion S.a.r.l. (France); VF de Argentina S.A.; VF do Brasil Ltda. (Brazil); VF Ege Soke Giyim Sanayi ve Ticaret A.S. (Turkey); VF Europe B.V.B.A. (Belgium); VF Factory Outlet, Inc.; VF Germany Textil-Handels GmbH; VF Imagewear (East), Inc.; VF Imagewear (West), Inc.; VF Investments S.a.r.l. (Luxembourg); VF Luxembourg S.a.r.l.; VF Italia, S.r.l. (Italy); VF (J) France, S.A.; VF Jeanswear Limited Partnership; VF Lingerie (France) S.A.; VF Northern Europe Ltd. (U.K.); VF Playwear, Inc.; VF Polska Sp. z.o.o. (Poland); VF Scandinavia A/S (Denmark); VFJ Credit Corp.; Wrangler Apparel Corp.; Wrangler Clothing Corp.
Principal Operating Units: Imagewear Coalition; International Jeanswear Coalition; North & South America Jeanswear Coalition; Playwear Coalition; Global Intimate Apparel Coalition; Outdoor Coalition.
Principal Competitors: Levi Strauss & Co.; Sara Lee Corporation; J.C. Penney Company, Inc.; The Gap, Inc.; The Warnaco Group, Inc.; Fruit of the Loom, Inc.; Russell Corporation; Limited Brands, Inc.
Further Reading:
- Abend, Jules, "VF: View from the Top," Bobbin, December 1994, pp. 74+.
- Agins, Teri, "Bottom Line: Once-Hot Lee Jeans Lost Their Allure in a Hipper Market," Wall Street Journal, March 7, 1991.
- Barrett, Paul M., "VF Agrees to Acquire Blue Bell Holdings in a Transaction Valued at $775 Million," Wall Street Journal, July 28, 1986.
- Bary, Andrew, "Bye-Bye, Blue-Jeans Blues," Barron's, October 4, 1993, pp. 15+.
- Brown, Eryn, "VF Corp. Changes Its Underware," Fortune, December 7, 1998, p. 115.
- Catanoso, Justin, "VF to Relocate to Greensboro," Greensboro (N.C.) News and Record, October 17, 1997, p. A1.
- Cunningham, Thomas, "VF in Major Restructuring," Daily News Record, November 19, 2001, p. 6.
- ------, "VF Looks to Hook Its Biggest Fish Yet," Daily News Record, May 1, 2000, p. 1.
- David, Gregory E., "VF Corp.: No Respect," Financial World, July 6, 1993, p. 13.
- Eklund, Christopher S., and Christine Dugas, "Lee + Wrangler + Rustler = A New Blue-Jeans King," Business Week, August 11, 1986.
- Eklund, Christopher S., and Sandra D. Atchison., "Can VF Find Growth in a Tight Jeans Market?," Business Week, September 16, 1985, pp. 70+.
- Erhinger, Gavin, "It's All in the Jeans: Wrangler's History Guides Its Future," Western and English Today, May/June 2002, pp. 18-23, 77.
- Gordon, Mitchell, "Jeans and Things: VF Corp. Has Fashioned a Stylish Growth Record," Barron's, August 17, 1981, pp. 34+.
- ------, "Zipping to Profits: VF Corp. Gains As Jeans Market Fades," Barron's, January 24, 1983, pp. 42+.
- Heisler, Eric, "VF Corp. to Close Five Plants," Greensboro (N.C.) News and Record, October 18, 2002, p. B8.
- ------, "VF to Slash 13,000 Jobs: Restructuring Calls for Closing More Than 30 Plants," Greensboro (N.C.) News and Record, November 15, 2001, p. A1.
- Henricks, Mark, "VF Seeks Global Brand Dominance," Apparel Industry Magazine, August 1994, pp 20+.
- Jaffe, Thomas, "Try This On for Size," Forbes, August 30, 1982, p. 166.
- Koenig, Richard, "VF Corp. Hopes Planned Acquisition Will Protect It from Jeans Doldrums," Wall Street Journal, October 3, 1984.
- Lappen, Alyssa A., "Jeans Giant," Forbes, October 3, 1988, p. 8.
- Malone, Scott, "VF Extends Its Mass Appeal," Women's Wear Daily, June 22, 2000, p. 12.
- McCarthy, Joseph L., "Man of the Cloth," Chief Executive, June 1996, p. 20.
- Monget, Karyn, "Keeping VF on Track," Women's Wear Daily, August 24, 1994, pp. 8+.
- ------, "VF Set to Buy Bestform," Women's Wear Daily, November 26, 1997, p. 2.
- ------, "Wiseman's Global Plan for VF," Women's Wear Daily, April 15, 2002.
- Ozzard, Janet, "Mackey McDonald: Positioning VF for the Next Century," Daily News Record, April 25, 1996, p. 5.
- ------, "VF's McDonald Plans to Continue Strategies Set by Pugh," Daily News Record, August 29, 1995, p. 4.
- Pena, Susan L., "VF Refocuses Vision in Response to Increased Global Competition," Eastern Pennsylvania Business Journal, January 15, 1996, p. 1.
- People, Product, Pride ... The History and Heritage of VF Corporation and Its Divisions, Wyomissing, Penn.: VF Corporation, 1991.
- Picard, Diane E., "VF Launches Plan to Add $2 Billion in Sales by 2000," Daily News Record, February 12, 1997.
- Rodengen, Jeffrey L., The Legend of VF Corporation, Fort Lauderdale, Fla.: Write Stuff Enterprises, 1998, 191 p.
- Slutsker, Gary, "Simple Is As Smart Does," Forbes, March 10, 1986, pp. 88+.
- Stankevich, Debby Garbato, "VF: Life with the Boys," Discount Merchandiser, November 1997, p. 86.
- Walzer, Emily, "Pack It Up: Eastpak Acquired by VF/JanSport," Sporting Goods Business, April 14, 2000, p. 22.
Source: International Directory of Company Histories, Vol. 54. St. James Press, 2003.
