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s part of its aim to build “the premier portfolio of
outdoor brands”, US retail group VF Corporation has
bought footwear company Timberland in a $2
billion cash deal. “For some time now we’ve talked about
our vision for growth in acquisitions and we’ve
consistently said that we’re squarely focused on building
our brand portfolio in the outdoor and action sports space,”
said Eric Wiseman, CEO of VF, during a recent conference
call about the deal. “The combination of VF and Timberland
will create a $10 billion apparel and footwear powerhouse
anchored in outdoor and action sports, our largest, most
profitable and fastest growing business.”
Based on pro forma revenues for 2011, said Mr Wiseman,
combining VF’s roughly $8.4 billion in revenues and
Timberland’s $1.6 billion revenues will result in a $10
billion combined company. Timberland has been VF’s
“number one acquisition priority,” according to Mr
Wiseman, as it “aligns perfectly with our strategic and
financial goals and priorities”.
As part of the deal, VF has acquired the Timberland
brand as well as its sister brand, Smartwool. The latter
began as a sock brand and now specialises in next-to skin
apparel. VF, whose portfolio of brands already includes
outdoor brand The North Face as well as Vans shoes,
believes that its ownership of Timberland will “perfectly
complement the premium, technical positioning of The
North Face brand, while the Smartwool brand will provide
us with a leadership position in a new category”.
Global concern
Aside from the possibility of increasing its apparel and
footwear empire, VF is keen to learn from Timberland’s
sustainable ethos. “VF has publicly stated that we’re
committed to developing and implementing a global
approach to sustainability across our vast enterprise,” said
Mr Wiseman. “We’re pleased with our progress to date, but
we know that we’ll benefit from Timberland’s focus on
sustainability as a driver of product innovation in its
Earthkeepers line and other products and the success in
addressing and reducing its impact on the environment.”
For Timberland’s part, CEO Jeff Swartz highlighted the
brand’s compatibility with VF. “Our company and our brand
is built on a bedrock of values that connect deeply to the
way VF operates as an enterprise,” said Mr Swartz.
“Sustainability is deeply relevant to the outdoors industry
and we’re proud to have pioneered the Green Index Label
for products and for the activities that we invest in
sustainable business. Whether it’s planting trees or
aggressively reducing our carbon footprint, stewarding the
outdoors makes good business sense for outdoor brands
like Timberland.”
Growth opportunities
“Timberland is a company with clear momentum, which
we have every intention of continuing to build on,” said
Steve Rendle, vice president of VF Corporation and group
president of Outdoor and Action Sports Americas. “We are
targeting annual revenue growth of 10%, maintaining the
growth trajectory Timberland has enjoyed over the past
year and a half.”
Footwear is to remain Timberland’s primary product
focus, and VF is aiming for a $900 million growth target for
the next five years. “The growth will be achieved by
supporting and building on the current momentum of the
fast-growing Earthkeepers and Mountain Lifestyle
collections, pursuing thoughtful growth for the iconic
Classics collection, expanding on the new fast-growing
high-end Timberland Boot Company collection with better
specialty stores around the world, and lastly, we will
support and enable high single-digit growth rates in the
unique Timberland Pro Work Boot business,” said Mr
Rendle. “The apparel and accessories category will add
$300 million in global top-line revenue over the next five
years, representing a compounded annual growth rate of
14%. Our plans for growth include enhancing the current
European apparel offering, using VF Outdoor’s proven
apparel expertise to bring an expanded collection of
outerwear and apparel that speaks to the rugged outdoor
lifestyle that this brand has been built upon.
“The North American portion of the business is expected
to deliver nearly 40% of the $900 million growth target,
reaching $1 billion in sales by 2015. The Stratham, New
Hampshire office will continue to be the global
headquarters for this business and we look to them to
continue to oversee the global Timberland brand product
and marketing strategies.”
VF also has plans to increase Timberland’s presence in
Asia, as outlined by Karl Heinz Salzburger, vice president of
the VF Corporation and group president of International.
ANOTHER STRING TO THE BOW
(From left to right) Eric C.
Wiseman, Chairman,
President and CEO of VF
Corporation, Karl Heinz
Salzburger, VP of VF and
group president,
International and Steve
Rendle, VP of VF and group
president of Outdoor and
Action Sports Americas.
CREDIT: VF CORPORATION