American VF explains how to double its international business
The VF Corporation (Vanity Fair) is, according to in-house information, a global leader in branded lifestyle apparel and footwear with more than 30 brands and reveals now details on how it plans to add USD 1.1 billion in revenues to its Asia Pacific business over the next five years
At a recent investor meeting held in Shanghai, China, representatives of the VF Corporation discussed its strategic plans to reach USD 2.0 billion in revenues by 2017: primarily through growth from its five largest brands in the Asian region, namely Timberland®, Lee®, The North Face®, Vans® and Kipling®. This represents an annual growth rate of 17 % from 2012 forecasted revenues of approximately USD 900 million.
Eric Wiseman,VF Chairman and CEO, stated that the company’s Asia Pacific revenues have grown nearly five-fold since 2007, and is continuing to see tremendous opportunities for growth in all our brands thanks to the power of VF’s diversified global portfolio.
The strategy follows winning big in China, expanding the footprint within other countries in the region, leveraging its scale and focusing on the largest brands. According to Aidan O’Meara, President VF Asia Pacific, VF has invested heavily and consistently in consumer research in China, which has helped us better understand Chinese consumers and position our brands in a way that speaks to their desires and aspirations.
Karl Heinz Salzburger, Goup President VF International provided a longer-term view on VF’s international mix of business: In 2012, we expect international sales to comprise about 37 % of VF’s total revenues. With the addition of Timberland and the continued strong growth expected in our Asia Pacific and European businesses, we now believe international revenues could account for 45 % of total revenues by 2017.
China currently comprises about half of the region’s total revenues, and is expected to account for 60 % of total revenues by 2017, growing at an annual rate of approximately 21 % over the five-year period. Driving leadership across four key categories – outdoor, youth culture, jeans wear and casual bags – VF expects to expand its door count in China from approximately 2300 currently to 6000 by 2017.
In India, VF currently markets its Lee®, Wrangler® and most recently Vans® brands, is expecting to grow at an annual rate of 22 %, and increase from 8 % to 10 % of total Asia Pacific revenues by 2017.
The revenues in Japan are being strengthened by the addition of the Timberland® brand, and are expected to grow at an annual rate of 8 % over the next five years.
In Korea VF announced that it is opening a new subsidiary office, and this should present the fastest growing region, with revenues expected to grow at an annual rate of 52 %. The subsidiary will initially support the Vans® brand, with the expectation of adding the Timberland® brand sometime in the middle of 2013.
The brand’s particular growth
In the next five years Timberland® aspires to be the largest, most sustainable casual outdoor lifestyle brand in Asia and represents already now the largest VF brand in the region and is targeting a revenue growth of USD 230 million in Asia Pacific. The envisioned annual growth rate will be 13 %. The brand’s growth strategies include leveraging consumer insights to strengthen its position with consumers, leading in sustainability and community engagement, and building its spring and summer women’s and direct-to-consumer businesses.
The Lee® brand’s Asia Pacific vision is to be the iconic premium denim brand of choice for a new Asian generation. The brand expects to grow its business in the region by USD 150 million over the next five years, with a 12 % annual growth rate. Continued investments in consumer research, innovative localisation, growing the brand’s women’s business and expanding door distribution are expected to fuel the brand’s growth.
The North Face® brand aims to be the indisputable leader in Asia’s outdoor market, and the category-defining brand that inspires and enables a movement to explore the outdoors. The brand expects to grow its Asia Pacific revenues by USD 340 million over the next five years, representing an annual growth rate of 26 %. The brand will benefit from very strong growth in the outdoor category, with key strategies for growth including grassroots outdoor community engagement, growing brand awareness with its core “aspiring adventurer” consumer, expanded door distribution, brand relevant localisation and digital innovation.
The Vans(r) brand seeks to be the number one action sports and youth culture brand in Asia, helping consumers embrace, elevate and unlock their creative self expression. During the next five years the brand anticipates adding USD 200 million to its Asia Pacific business, with a 22 % annual growth rate. Growth is expected to come from leveraging the brand’s authenticity and deep connectivity with youth culture, focusing on its skate and music brand pillars, expanding its direct-to-consumer business and delivering locally relevant product innovation.
The Kipling ® brand aims to be the clear market leader and a growth catalyst for the premium causal bags and accessories market in the Asia Pacific region. Over the next five years, the brand expects to add USD 80 million in revenues in the region, representing an annual growth rate of 18 %. Accelerated investments in marketing and story-telling to connect with core consumers, combined with an expanding network of retail stores, will support the brand’s growth.