VF Corp. announced on Monday that it planned to spin out its denim brands into a separate publicly traded business so it can better focus on its faster-growing activewear and lifestyle clothing lines like The North Face and Vans.
Michael de la Merced of the New York Times had the news:
Still, spinning out the jeans business, particularly two brands with such long histories, is a big step. The company bought Lee in 1969 and Wrangler in 1986, and the division was responsible for $2.7 billion of VF’s $11.8 billion in sales last year.
But as consumers’ preference for activewear has increased in recent years, the denim division’s sales have fallen.
On a conference call with analysts, VF executives said the spinoff would let each business focus on its own strategy.
Shareholders appeared skeptical of the move. Shares in VF were down more than 3 percent as of Monday afternoon to $92.82.
Aldo Svaldi of The Denver Post reported that the activewear operation will move to Denver from Greensboro, North Carolina:
The Colorado Economic Development Commission on Wednesday provided the company, using the codename Project Cardinal, with $27 million in job growth incentive tax credits, its second largest award ever. Of those credits, $13 million are transferable, meaning they can be sold to other companies.
“We are thrilled to welcome a new partner that embodies the values that define Colorado,” said Gov. John Hickenlooper. “VF’s move underscores the critical driver that the outdoor recreation industry plays in our economy where business meets lifestyle.”
About 85 VF executives will move to the new Denver headquarters starting next spring. The company is currently based in Greensboro, N.C. Over the following two years, several of VF’s outdoor brands, including The North Face, JanSport, Eagle Creek, Altra and Smartwool will follow and relocate their management teams. Smartwool currently employs 70 people in its Steamboat Springs headquarters.
Richard Barron of The Greensboro News & Record reported that most jobs will stay in North Carolina:
Company Chairman, President and Chief Executive Officer Steve Rendle said in an email to Mayor Nancy Vaughan that the new company will maintain most of its jobs in Greensboro and add to that total when the Lee brand moves from Kansas City to Greensboro.
A company spokeswoman said about 80 jobs will move from Greensboro to Denver.
“Approximately 1,300 people are currently employed in Greensboro, which includes associates at VF’s World Headquarters and at our Jeanswear location,” said company spokeswoman Vanessa McCutchen. Combined with the relocation of the Lee brand from Kansas City, total VF and NewCo employment in Greensboro will remain at about current levels.”
McCutchen said VF employs 70,000 people worldwide.
“We are proud of our Greensboro, N.C., roots and remain very committed to the community,” Rendle told Vaughan in the email. “VF will retain a strong employment presence in Greensboro, including continuing leadership for certain corporate functions, and the company will continue with planned investments at its Greensboro office. With the move of VF’s Lee brand to join the new Jeanswear company VF is creating Greensboro, coupled with the move of approximately 85 VF staff to metro Denver, we anticipate related employment in the city will remain largely unchanged.”
