Bloomberg News

VF’s North Face Brand See Growth in Europe

June 05, 2012

VF Corp. (VFC:US)’s North Face, the outdoor brand that forecasts sales will rise to $3 billion by 2015, plans to gain market share in Europe even amid the region’s economic turmoil, division president Todd Spaletto said.

The North Face, which brought in $1.7 billion in sales last year, the most of Greensboro, North Carolina-based VF’s brands, anticipates growth in Europe and Asia will help drive international sales to more than 40 percent of revenue by 2015 from about 35 percent in 2011, Spaletto said today in an interview at Bloomberg headquarters in New York. VF, whose brands include Vans skateboarding shoes and Reef swim trunks, posted revenue (VFC:US) of $9.46 billion last year.

“We haven’t changed our outlook on Europe,” said Spaletto, 40, who was promoted to president of Americas for North Face in February 2011. “Certainly we’re watching it really closely based on everything that’s in the news, but I will tell you there’s a big opportunity for us in Europe based on the fact that it is such an active market.”

Retailers such as teen clothier Abercrombie & Fitch Co. (ANF:US) and watch-maker Fossil Inc. have been penalized by investors this year after sales slowed in Europe, hurt by the region’s debt crisis and slumping consumer spending. While the North Face sells $120 fleece jackets and $149 backpacks, the brand has proven it can flourish in a recession, Spaletto said.

Staycations

“We’re lucky in that the cost of entry for most of our sports is really low,” he said. “If you’re living in Munich and you want to go on a vacation, you can go backpacking for a really low amount of money. We saw it in 2008, 2009, in recessionary time periods, things like backpacking or hiking or as we call it, staycations. It’s just the same thing with running, a pair of shoes and a shirt and shorts and you’re on your way.”

VF, which also owns Timberland and 7 For All Mankind, has gained (VF:US) 7.2 percent this year through yesterday, outpacing the 1.6 percent gain in the Standard & Poor’s 500 Index. The shares gained 0.5 percent to $136.78 at 1:36 p.m. in New York.

The North Face traces its roots to 1966, when it was founded by two hiking enthusiasts in San Francisco’s North Beach neighborhood, and was acquired by VF for about $25.4 million in 2000. After boosting sales to $1.5 billion in 2010 from $220 million a decade earlier, the division projected doubling revenue while maintaining its authenticity and connection with athletes and outdoor activity enthusiasts.

Airbag Backpack

The “lifestyle” brand has a stronger base in Europe than in Asia, and because Europeans are so active, there’s a good opportunity to take market share from competitors including country-specific outdoor retailers, Spaletto said. France, Germany and Italy are examples of nations where North Face isn’t the No. 1 brand, he said.

North Face also produces technically advanced gear such as a backpack with an airbag inside that skiers can deploy during an avalanche, Spaletto said.

While the appeal of the pack, which costs about $1,000, may be to a small section of consumers, it helps North Face sell clothing and shoes to customers looking for “premium products that work,” Spaletto said.

“It’s transferrable to someone who maybe lives in Manhattan and commutes from the train station and is facing 20 below temperatures and has to walk a mile to work,” he said.

To contact the reporters on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net; Chris Burritt in New York at cburritt@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • VFC
    (VF Corp)
    • $64.12 USD
    • 0.30
    • 0.47%
  • ANF
    (Abercrombie & Fitch Co)
    • $41.8 USD
    • -0.07
    • -0.17%
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