VF Corporation’s business segments
VF Corporation (VFC) offers a wide range of products, such as casual outerwear, footwear, jeanswear, backpacks, luggage, and sportswear. In this part of the series, we’ll evaluate the performance of VFC’s key businesses.
Outdoor & Action Sports
The company derives ~60% of its revenue from the sale of outdoor and action sports products. Vans, Timberland and The North Face are VFC’s major brands under this category.
In the second quarter of 2016, The North Face and Vans recorded revenue growth of 2% and 4%, respectively. Revenue from the Timberland brand fell 7% as the brand’s wholesale sales recorded a low double-digit fall during the quarter.
According to a recent Piper Jaffray teen survey, Vans is the second most favored footwear brand among teenagers in the United States. It has a market share of 9%. Nike (NKE) is at the top with a 51% market share. Converse (NKE), Adidas (ADDYY), and Steve Madden (SHOO) have 7%, 6%, and 2% market shares, respectively.
VFC derives around 25% of its sales from the jeanswear business. The company, which owns the famous Lee and Wrangler brands, is second in terms of the worldwide market share for jeanswear, trailing Levi Strauss & Co.
Sales of the Jeanswear segment rose 2.4% between 1H15 and 1H16. The Lee brand, in particular, delivered strong performance across all major geographies.
VFC derives around 10% of its revenue through the sales of occupational apparel such as security uniforms and licensed athletic apparel. Revenue grew 2.6% YoY (year-over-year) in 2Q16 after five consecutive quarters of negative sales growth.
VFC’s Sportswear segment includes its Nautica and Kipling brands. The performance of this segment has been under pressure from ongoing challenges in the US department store and outlet channels, and a general slowdown in demand. 1H16 sales were down 16% from 1H15. Though the company foresees these headwinds to continue in the near future, it expects 2H16 to be better than the first half of 2016. For a look at VFC’s expected performance in fiscal 2016, read the next section. ETF investors looking to add exposure to VFC could consider the ProShares S&P 500 Dividend Aristocrats ETF (NOBL), which invests 1.9% of its portfolio in VFC.