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VF Corp Sees Strength, Opportunities In Jeanswear Sector

VF Corp. is seeing encouraging growth in its jeanswear sector. According to VF’s Q3 2012 report, jeanswear revenues were down 1% (up 1% in constant dollars) for the quarter, reflecting a 3% increase in U.S. sales, a high single-digit increase in Asia and a double-digit increase in the Latin/Central America. The company’s operating margin for jeanswear improved 18.3%, with operating income up 19.8% over the prior year period.

“Our jeanswear business today is in really good shape,” said Robert Shearer, senior vice president and chief financial officer of the company.
The improvements were driven by lower product costs and a significant improvement in European Jeanswear profitability. The sector continues to anticipate mid single-digit constant dollar revenue growth for the full year and operating margin expansion of more than 100 basis points, reports the company.
The world market for jeanswear is forecast to grow by US$10bn in the next six years, according to a new research report published this week by just-style. The “Global Market Review of Denim and Jeanswear–Forecast to 2018’ suggests that the most dynamic growth will come from emerging markets in Asia and Latin America, while western economies will continue to recover from the economic downturn.
With the Lee and Wrangler brands to their name and approximately $2.5 billion in annual revenues, VF sells more pairs of jeans than any other company in the world and plans to capitalize on this expected growth. VF’s Lee brand topped the ranks in terms of market share in China in 2012, according to China National Commercial Information Center, and has introduced a rapid expansion plan to increase its customer base and market representation throughout the country.

In the next five years, the company plans to increase the number of stores in China from its current approximately 2,300 to 6,000. As part of the plan, VF will launch its largest distribution center in Kunshan, Suzhou city, in the Jiangsu province in 2013 and introduce the brand to smaller cities.

The company has also instituted plans in India to customize its Wrangler brand denims for the country’s mostly motorcycle-riding population–hoping to add $1.1 billion in revenue to its Asia-Pacific business over the next five years.


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