VF Corporation, the parent company of apparel and footwear brands such as Vans, The North Face, Dickies, Reef and Timberland, is spinning off its Wrangler and Lee brands into a separate public company. According to a WSJ report, VF Corp. had been exploring strategic alternatives for its jeans business, including a possible spinoff or sale.
The newly formed company will hold VF’s jeans business, which includes Wrangler, Lee, Rustler and Rock & Republic, and its 80 VF outlet store operations. These businesses generate approximately $2.5 billion in annual revenue, the company said.
VF, which has a market valuation of $38 billion, has been paring back its wide-ranging portfolio to focus on its fastest-growing brands. In recent years this strategy has included the acquisition of the Dickies, Icebreaker and Altra brands, and the divestitures of Nautica and the Licensed Sports Group, including the Majestic brand.
On its most recent earnings call in July, VF forecast growth this year for most divisions except jeans, where revenue is expected to be unchanged from last year. Sales for the company’s denim jeans division have fallen nearly 5% since 2015, while profit in the division is down 2% over that period. The jeans category in general is less popular with consumers across the board, with total U.S. jeans sales dropping from $18.8 billion in 2013 to $16.2 billion in 2017.
VF sells its jeans through mass merchants such as Walmart and major department stores, many of which have curtailed orders in recent months as they sell off excess supply.
The apparel giant will move its global headquarters to the Denver metropolitan area, which will also serve as the home for The North Face, JanSport, Smartwool and Eagle Creek brands, and both VF’s Global Innovation Center for technical fabrics and Digital Lab. Meanwhile, the new company will remain headquartered in Greensboro, N.C.
VF Corp. also announced the anticipated designation of Scott Baxter as CEO of the new company and Rustin Welton as CFO, effective upon completion of the transaction.