We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
V.F. Corp to Spinoff Jeans Segment, 2021 Strategy Underway
Read MoreHide Full Article
Apparel and footwear maker, V.F. Corporation (VFC - Free Report) revealed plans to spinoff its Outlet business and Jeans division, including the iconic denim brands like Lee and Wrangler. As part of the spinoff, V.F. Corp intends to create two independent publicly traded companies. One of the companies will be V.F. Corporation, which will include its global apparel and footwear businesses. The second will be a newly formed entity, which is still not named (NewCo), comprising V.F. Corp’s Jeans and Outdoor businesses. This new company will be a leader in the Jeans category.
The spinoff of the jeans division, which is expected to be completed in the first half of 2019, is subjected to final approval by the company’s board, customary approvals besides tax and legal considerations.
Following the news, shares of V.F. Corp decreased 3.6% during the trading hours on Aug 13. However, this Zacks Rank #3 (Hold) stock has gained 18.1% in the past three months, ahead of the industry’s 12.7% rally.
Notably, the company’s decision to spinoff the denim unit is to focus more on its outdoor and activewear businesses, which have been gaining traction lately. The American denim brands (Lee and Wrangler) have been a part of V.F. Corp’s portfolio for more than a decade. We note that maturing of V.F. Corp’s Jeans division has led to volatile sales at this segment for quite a while now. In addition, the segment is struggling with the shift of its key customer, Walmart Inc. (WMT - Free Report) toward its own private label brands. This, in turn, has been hurting the V.F. Corp’s iconic Wrangler and Lee brands performance. Also, intense competition from Amazon (AMZN - Free Report) owing to increasing activewear offerings has hurt the performance of this business.
Moreover, the jeans business in the United States is witnessing a considerable decline since last few years as women are preferring yoga pants over denims. A yoga-inspired athletic apparel leader, lululemon athletica inc. (LULU - Free Report) , has been benefiting from increased demand for its apparel including fitness pants, shorts, and jackets designed for athletic pursuits, such as yoga, dance, running.
In the most recent quarter, organic revenues (excluding acquisitions) at the Jeans segment grew just 3%. Further, the company’s guidance reveals nearly flat revenues for the Jeans segment in fiscal 2019.
Management stated that the spinoff of its denim unit will aid V.F. Corp to generate higher revenues and margins over the long term by strictly focusing on high-growth consumer segments and categories. The non-denim business after the spinoff will comprise V.F. Corp’s popular labels such as The North Face and Timberland, Altra, Icebreaker and Williamson-Dickie. The Vans, The North Face and Timberland brands that have emerged as the company’s core brands in recent years generating a major share of its revenues.
Following the completion of spinoff, V.F. Corp is expected to realize revenues of over $11 billion annually and a mid-teen total shareholder return target, with a robust dividend yield in line with the S&P 500. Moreover, the company will be able to pursue its M&A strategy with higher flexibility besides exploring new growth opportunities and meaningful investments to enhance its portfolio. This apart, V.F. Corp will shift its global headquarters to the metro Denver area, thereby serving home for The North Face, Smartwool, JanSport, Altra and Eagle Creek brands as well as the company’s Global Innovation Center and Digital Lab.
The yet-to-be-named company, alias NewCo is anticipated to generate annual revenues of more than $2.5 billion along with high single-digits total shareholder returns. While NewCo’s global headquarters will remain in Greensboro, N.C., Lee brand’s headquarters will be shifted from Kansas City to Greensboro.
Management expects this tax-free spinoff of the denim business to help realize significant cost efficiencies by streamlining operations and evaluating strategic alternatives. NewCo is expected to possess robust supply chain capabilities and management expertise along with diversified geographic exposure and scope for further expansion with main focus on Asia, particularly China. Further, the company is likely to widen its distribution channels as well as focus on owned and wholesale digital partners.
While Scott Baxter is expected to be the NewCo’s chief executive officer, Rustin Welton will assume the role of chief financial officer. NewCo’s executive team members and the composition of its board of directors are expected to be announced prior to the completion of the transaction.
The decision to spinoff the jeans segment is in sync with the V.F. Corp’s five-year strategic growth plan or 2021 growth strategy, which focuses on rapidly responding to the changing marketplace while targeting fantastic shareholder returns.
On completion of the spinoff, both companies are expected to gain from lessen managerial and operational activities, better management focus as well as flexible capital and operational structure. Further, they will benefit from optimized capabilities and investments in higher profitable projects, thus positioning themselves for sustainable value creation.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
V.F. Corp to Spinoff Jeans Segment, 2021 Strategy Underway
Apparel and footwear maker, V.F. Corporation (VFC - Free Report) revealed plans to spinoff its Outlet business and Jeans division, including the iconic denim brands like Lee and Wrangler. As part of the spinoff, V.F. Corp intends to create two independent publicly traded companies. One of the companies will be V.F. Corporation, which will include its global apparel and footwear businesses. The second will be a newly formed entity, which is still not named (NewCo), comprising V.F. Corp’s Jeans and Outdoor businesses. This new company will be a leader in the Jeans category.
The spinoff of the jeans division, which is expected to be completed in the first half of 2019, is subjected to final approval by the company’s board, customary approvals besides tax and legal considerations.
Following the news, shares of V.F. Corp decreased 3.6% during the trading hours on Aug 13. However, this Zacks Rank #3 (Hold) stock has gained 18.1% in the past three months, ahead of the industry’s 12.7% rally.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, the company’s decision to spinoff the denim unit is to focus more on its outdoor and activewear businesses, which have been gaining traction lately. The American denim brands (Lee and Wrangler) have been a part of V.F. Corp’s portfolio for more than a decade. We note that maturing of V.F. Corp’s Jeans division has led to volatile sales at this segment for quite a while now. In addition, the segment is struggling with the shift of its key customer, Walmart Inc. (WMT - Free Report) toward its own private label brands. This, in turn, has been hurting the V.F. Corp’s iconic Wrangler and Lee brands performance. Also, intense competition from Amazon (AMZN - Free Report) owing to increasing activewear offerings has hurt the performance of this business.
Moreover, the jeans business in the United States is witnessing a considerable decline since last few years as women are preferring yoga pants over denims. A yoga-inspired athletic apparel leader, lululemon athletica inc. (LULU - Free Report) , has been benefiting from increased demand for its apparel including fitness pants, shorts, and jackets designed for athletic pursuits, such as yoga, dance, running.
In the most recent quarter, organic revenues (excluding acquisitions) at the Jeans segment grew just 3%. Further, the company’s guidance reveals nearly flat revenues for the Jeans segment in fiscal 2019.
Management stated that the spinoff of its denim unit will aid V.F. Corp to generate higher revenues and margins over the long term by strictly focusing on high-growth consumer segments and categories. The non-denim business after the spinoff will comprise V.F. Corp’s popular labels such as The North Face and Timberland, Altra, Icebreaker and Williamson-Dickie. The Vans, The North Face and Timberland brands that have emerged as the company’s core brands in recent years generating a major share of its revenues.
Following the completion of spinoff, V.F. Corp is expected to realize revenues of over $11 billion annually and a mid-teen total shareholder return target, with a robust dividend yield in line with the S&P 500. Moreover, the company will be able to pursue its M&A strategy with higher flexibility besides exploring new growth opportunities and meaningful investments to enhance its portfolio. This apart, V.F. Corp will shift its global headquarters to the metro Denver area, thereby serving home for The North Face, Smartwool, JanSport, Altra and Eagle Creek brands as well as the company’s Global Innovation Center and Digital Lab.
The yet-to-be-named company, alias NewCo is anticipated to generate annual revenues of more than $2.5 billion along with high single-digits total shareholder returns. While NewCo’s global headquarters will remain in Greensboro, N.C., Lee brand’s headquarters will be shifted from Kansas City to Greensboro.
Management expects this tax-free spinoff of the denim business to help realize significant cost efficiencies by streamlining operations and evaluating strategic alternatives. NewCo is expected to possess robust supply chain capabilities and management expertise along with diversified geographic exposure and scope for further expansion with main focus on Asia, particularly China. Further, the company is likely to widen its distribution channels as well as focus on owned and wholesale digital partners.
While Scott Baxter is expected to be the NewCo’s chief executive officer, Rustin Welton will assume the role of chief financial officer. NewCo’s executive team members and the composition of its board of directors are expected to be announced prior to the completion of the transaction.
The decision to spinoff the jeans segment is in sync with the V.F. Corp’s five-year strategic growth plan or 2021 growth strategy, which focuses on rapidly responding to the changing marketplace while targeting fantastic shareholder returns.
On completion of the spinoff, both companies are expected to gain from lessen managerial and operational activities, better management focus as well as flexible capital and operational structure. Further, they will benefit from optimized capabilities and investments in higher profitable projects, thus positioning themselves for sustainable value creation.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>