Leading apparel, footwear and accessories company V.F. Corporation (VFC Quick QuoteVFC - Free Report) recently signed a deal to divest its Licensed Sports Group (LSG) business to Fanatics Inc., which is a leading name for officially licensed sports merchandise. Terms of the transaction, which is anticipated to conclude in the second quarter of 2017, remained under covers.

This divestment will include sale of the Majestic brand, which offers apparel and fanware via licensing deals with domestic and global professional sports leagues and teams. In fact, some sources revealed that Majestic is the biggest licensee of Harley-Davidson-brand apparel, alongside possessing rights for Major League Baseball, the National Football League, the National Basketball Association and the National Hockey League and NASCAR.

Well, in 2016, V.F. Corp. revealed that it was in talks with MLB, to manufacture on-field uniforms for the league under its Majestic brand, through its facility in Easton, PA. This facility, which employs about 600 workers, will now be used by Fanatics to produce MLB jerseys and fanwear, and in turn fulfill the aforementioned commitment.

V.F. Corp. has been looking for strategic alternatives for its LSG business from 2016. Apart from Fanatics, the company was also considering sportswear maker Under Armour Inc. (UAA Quick QuoteUAA - Free Report) as a potential buyer for the LSG business. Incidentally, Under Armour recently entered into a 10-year long partnership with Fanatics. Per the deal, Fanatics will manufacture Under Armour on-field jerseys from 2020, as part of the latter’s 10-year long uniform deal with the MLB.

The LSG business forms part of V.F. Corp.’s Imagewear coalition, which witnessed a 15% jump in revenues in the last reported quarter. This was mainly driven by an over 20% rise in Licensed Sports Group operations and a high single-digit improvement in the work wear business.

However, sale of this business comes as part of the company’s effort to optimize and utilize its strengths in the best possible ways, to pave for a more efficient and sturdy setup. In fact, as part of this goal, the company also sold its Contemporary Brands unit (in Aug 2016) to Delta Galil Industries, which included the 7 For All Mankind, Splendid and Ella Moss brands.

We believe that V.F. Corp.’s practice of regularly checking its composition and ensuring that its portfolio is well aligned with the strategic plans positions it well for boosting growth and increasing shareholders' value.

However, this Zacks Rank #4 (Sell) stock slumped 13.6% in the last one year, underperforming the Zacks categorized Consumer Discretionary sector’s increase of 18.6%.

Nonetheless, better-ranked stocks in the apparel space include The Children’s Place, Inc. (PLCE Quick QuotePLCE - Free Report) with a Zacks Rank #1 (Strong Buy) and Coach, Inc. with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Children's Place has an average positive earnings surprise of 39% in the trailing four quarters. The stock has a long-term growth rate of 8%.

Coach, with long-term earnings per share growth rate of 10.6%, has delivered positive earnings surprise in the last four quarters.

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