VF Corporation announced details on its goal to add $1.1 billion in revenues to its Asia Pacific business over the next five years. At an investor meeting held in Shanghai, China, the company discussed its strategic plans to reach $2.0 billion in revenues by 2017, primarily through growth from its five largest brands in the region – Timberland, Lee, The North Face, Vans and Kipling. This represents an annual growth rate of 17 percent from 2012 forecasted revenues of approximately $900 million.
The company also confirmed its previous 2012 expectation given on July 27 for revenues in Asia to increase about 20 percent, and for revenues in Europe to grow at a low double-digit rate.
"Our Asia Pacific revenues have grown nearly five-fold since 2007 and we continue to see tremendous opportunities for growth in all our brands," said Eric Wiseman, VF Corporation Chairman and Chief Executive Officer. "That's the power of VF's diversified global portfolio."
Aidan O'Meara, President, VF Asia Pacific, noted, "Our strategies for growth in Asia Pacific – winning big in China, expanding our footprint within other countries in the region, leveraging our scale and focusing on our largest brands – give us confidence in our ability to reach $2.0 billion in revenues by 2017 in this growing and dynamic market. 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, Group 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 percent 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 percent of total revenues by 2017."
Geographic Growth
The company expects substantial growth in each major Asia Pacific country during the next five years. China currently comprises about half of the region's total revenues, and is expected to account for 60 percent of total revenues by 2017, growing at an annual rate of approximately 21 percent over the five-year period. Driving leadership across four key categories – outdoor, youth culture, jeanswear and casual bags – VF expects to expand its door count in China from approximately 2,300 currently to 6,000 by 2017.
India, where VF currently markets its Lee, Wrangler and, most recently, its Vans brands, is expected to grow at an annual rate of 22 percent, and increase from 8 percent to 10 percent of total Asia Pacific revenues by 2017. Revenues in Japan, strengthened by the addition of the Timberland brand, are expected to grow at an annual rate of 8 percent over the next five years. Korea, where VF announced that it is opening a new subsidiary office, should represent the fastest-growing region, with revenues expected to grow at an annual rate of 52 percent. The subsidiary will initially support the Vans brand, with the expectation of adding the Timberland brand sometime in the middle of next year.
Brand Growth
During the meeting, VF executives provided an overview of five-year growth targets and strategies for its largest brands in Asia.
The Timberland brand aspires to be the largest, most sustainable casual outdoor lifestyle brand in Asia. Timberland, currently VF's largest brand in the region, is targeting revenue growth of $230 million in Asia Pacific over the next five years, with an annual growth rate of 13 percent. 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 $150 million over the next five years, with a 12 percent annual growth rate. Continued investments in consumer research, innovative localization, growing the brand's women's business and expanding door distribution are expected to fuel the Lee 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 $340 million over the next five years, representing an annual growth rate of 26 percent. 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 localization and digital innovation.
The Vans 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 Vans brand anticipates adding $200 million to its Asia Pacific business, with a 22 percent 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 casual bags and accessories market in the Asia Pacific region. Over the next five years, the brand expects to add $80 million in revenues in the region, representing an annual growth rate of 18 percent. Accelerated investments in marketing and story-telling to connect with its core consumers, combined with an expanding network of retail stores, will support the brand's growth.
VF Corporation is a global leader in branded lifestyle apparel and footwear with more than 30 brands. The company's largest five brands are The North Face, Wrangler, Timberland, Vans, and Lee. Other brands include 7 For All Mankind, Bulwark, Eagle Creek, Eastpak, Ella Moss, JanSport, Kipling, lucy, Majestic, Napapijri, Nautica, Red Kap, Reef, Riders, Splendid and Smartwool.