VF slipping out of jeans into yoga pants
The company that makes Wrangler and Lee jeans is breaking off its denim division to focus on its fast-growing outdoor and activewear business as Americans swap out jeans for yoga pants.
VF Corp. said Monday the non-denim division would include its other well-known brands, The North Face, Timberland, Altra, Icebreaker and Williamson-Dickie.
The preference toward activewear has fueled growth at companies like Lululemon, Under Armour and Nike. Retailers have hopped aboard, and traditional jeans makers added stretch to denim to catch up.
Despite growing slowly last year, activewear sales rose at least 10 percent for the year ended in June, according to NPD Group, a market research firm. In comparison, jeans sales climbed 4 percent, fueled by women’s denim.
The change in what people wear is playing out every quarter at VF. In the recent quarter, revenue from activewear surged 25 percent, outdoor revenue rose 6 percent and revenue from denim increased 3 percent.
VF Corp. expects 6 percent to 8 percent revenue growth in its outdoor business and and 13 percent to 14 percent growth in active , while revenue in denim is expected to be flat.
The yet-to-be-named outdoor and activewear division, which is expected to generate $11 billion annually, will move from North Carolina to Denver in the next year.
VF said it expects the tax-free spin-off of its denim business to generate $2.5 billion annually.
The separation, which needs final approval from board members, is expected to be completed in the first half of next year.