The brands’ current owner, VF Corp., said Thursday that Kontoor Brands Inc. will be the name of the independent, publicly traded company that will result from its planned separation of VF’s Jeanswear organization.
That split is expected to be completed in the first half of 2019, subject to final approval by VF’s board of directors, customary regulatory approvals, and tax and legal considerations. The new company will comprise the Wrangler, Lee and Rock & Republic brands, and the VF Outlet business.
“This is an exciting next step in our work to establish our Jeanswear organization as an independent, publicly traded company,” said Steve Rendle, VF’s chairman, president and CEO. “Kontoor Brands–a creative variation of the word ‘contour’–is a compelling company name that will preserve each brand’s unique identity while also providing the opportunity to evolve the company in the years ahead.”
VF said further information about Kontoor Brands, including the makeup of its board of directors, executive leadership team, stock symbol and strategic vision will be shared before the completion of the separation.
“In choosing a name for the new company, it was important for us to select something that serves as an umbrella for our iconic jeanswear brands and provides us with the opportunity to advance our portfolio in the future,” said Scott Baxter, who has been named CEO of the new company. “The selected name was inspired by the idea of a perfect fit, which speaks to the rich legacy and storied history of our brands. This name establishes a strong foundation for our future growth as a global leader in the denim and apparel categories, and I’m excited about the opportunities that lie ahead for Kontoor Brands as an independent, publicly traded company.”
Analysts and industry executives see many challenges and opportunities for the jeans business. It could look to consolidate and strengthen its supplier base, while enhancing its supply chain with more strategic initiatives.
The new company could also seek to grow distribution through mergers and acquisitions, and broaden the reach of its core brands internationally, digitally and with a wider product array. Ike Boruchow, managing director of retailing/department stores and specialty softlines at Wells Fargo Securities, said in a report that “the post-split jeanswear business will be a slow-growth, high-dividend business.” It will have “an implied valuation at 10 to 11 times projected earnings before interest, taxes, depreciation and amortization of $450 million to $475 million,” and an estimated $5 billion to $5.1 billion in sales based on multiples of other apparel manufacturers highly exposed to the U.S. mass channel, according to Boruchow.
This month, VF selected Revolution Mill in Greensboro, N.C., as the future home for select functions of its Kontoor Brands. VF signed a five-year lease with Revolution Mill, a historic textile mill that has been transformed into a mixed-use campus that includes commercial, residential, restaurant and studio space. Certain functions of the new company, including aspects of merchandising, design, and product development and innovation, will occupy the 43,000-square-foot space on the campus.
Located north of downtown Greensboro, Revolution Mill is within three miles of VF Jeanswear’s 400 N. Elm Street location, which will be the future corporate headquarters for Kontoor Brands.
VF is currently based in Greensboro, but will be moving its headquarters to Denver along with its diverse portfolio of brands that includes Vans, The North Face and Timberland.