VF Corp unveils five-year growth strategy, cuts FY23 guidance on weak Q2
VF Corp. announced on Wednesday a new strategy to accelerate revenue growth by a compound annual growth (CAGR) rate of mid- to high-single digits by 2027, as it looks to expand into new categories and markets.
The owner of Vans, Supreme, The North Face, Timberland, and Dickies said strategic growth forecast will come as as result of growth across all brands, regions and channels over the next five years.
VF Corp. said its new strategy includes the following four pillars: expanding into "adjacencies" that complement its current brands and tap into consumer growth spaces; managing brands at different stages of growth, as well as through mergers and acquisitions, and business development; and connecting directly with consumers and operating more efficiently, using consumer data and analytics, direct-to-consumer centric supply chains, for a digitally enabled consumer experience that also caters to international shoppers.
Lastly, to mobilise its new strategy, VF said it will be allocating capital and deploying people to drive its growth.
“Our new five-year growth plan demonstrates how we will leverage VF’s proven strengths and distinct model to deliver superior returns to shareholders over the long term,” said VF Chairman, president and CEO, Steve Rendle.
“The global economic environment has dramatically changed since we held our last Investor Day in late 2019. Despite significant disruptions during the past three years, VF has successfully navigated the challenges to become a more agile and focused enterprise that is advancing a clear vision to be the world’s most dynamic portfolio of iconic, deeply loved, active-lifestyle brands.”
By brand, VF said it expects its The North Face and Supreme brands to post CAGR revenue growth by high single to low double-digits, respectively, by 2027, while Vans and Timberland brand revenues, respectively, are expected to be up mid-single digits. Dickies brand revenue five-year CAGR is expected to up high single digits, while the company's outdoor emerging brands are expected to up mid- to high teens over the next five years, it added.
Coinciding with the five-year growth plan, VF Corp announced on Wednesday it has cut its full-year 2023 guidance, on the back of a disappointing second quarter. The company cited the current environment, weaker than anticipated back-to-school performance at Vans and increasing inventories leading to a more promotional environment in North America in the fall, for the lower-than-expected results.
Looking ahead, it now expects total VF revenue to be up about 5% to 6%, versus its previous outlook of at least 7% growth.
“While economic uncertainties persist, we are actively addressing challenges within our business, and we remain confident in our ability to generate consistent, sustainable growth across our brand portfolio over the long term," added Rendle.”
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