Timberland Turnaround to Quicken Under VF

 


The industry is expecting a quicker turnaround for The Timberland Co. under its new parent, VF Corp.

Analysts are confident VF’s scale and expertise as a sourcing giant will help Timberland expand its apparel line and direct-to-consumer network.

And for their part, retailers are looking forward to continuing their already-strong relationships with the brand, which makes 75 percent of its money in footwear and will now doubles VF’s footwear business.

While Timberland is seeing some of its best growth in years, “VF has a history of taking brands, waving their magic wand [at them] and creating a lot of value in those businesses, especially in [the] outdoor [segment],” said Susquehanna Financial analyst Christopher Svezia.

He added that VF will let “brands continue to develop on their own while influencing things behind the scenes. You’ll see back-office synergies begin to unfold, and that will start to have a more-immediate impact on the margin.”

Kenneth Stumphauzer, analyst at Sterne Agee, said Timberland has a lot of brand momentum right now and most of the disappointment with the firm in the last six months was related to sourcing and manufacturing, so more of the near-term changes will be related to improving costs.

“One alteration we will see in the way things are planned at Timberland is VF will probably exit or de-emphasize some of the more performance [product] of Timberland’s offerings,” said Stumphauzer. “That’s where [there is] the most direct competition with The North Face, which is viewed as having a more authentic claim to outdoor performance.”

Kate McShane, analyst at Citi Investment Research, noted, “VF seems very excited on growing Earthkeepers and Mountain Athletics, and obviously overall business in China. Timberland today has a much more developed brand, a much more established retail business and good opportunities in Asia.”

Steve Rendle, president of VF’s Outdoor & Action Sports Americas business, told Footwear News that VF plans to help Timberland build on its retail success in Europe, expand that network in the Americas and ramp up the brand’s apparel lines.

“We also see the Timberland Boot Co. collection as a really, really strong opportunity [given its style of] beautiful, everyday footwear anchored in the rugged outdoor lifestyle that’s sold in better specialty footwear points of sale around the world. The North Face [has] a desire to be a great footwear brand as well, so we’ll be able to leverage Timberland’s expertise in sourcing footwear,” said Rendle, adding that VF’s footwear business has gone from 10 percent of revenue to 20 percent after the acquisition.

Rendle also said both companies will help each other in key Asian markets.

“We’ll work with Timberland on [their] growth initiatives in China. Timberland is the stronger company in Japan. [We’ll look to] mobilize [VF brands] around what they’ve learned, and the relationships they have with Japanese partners today to help the brands we have,” he said. “[Finally], Timberland has such a rich heritage around sustainability, and their global community philanthropy will really supercharge VF’s efforts to be more mindful of social responsibility.”
 
Retailers, too, cheered the growth prospects for Timberland now that the firm has a powerful backer and costs will be streamlined. VF has said it expects to save $35 million a year from cost synergies.

“Timberland has made big investments in its outdoor specialty business in the short year we’ve been doing business with them, and I’m thrilled to have VF now backing them with their resources and genius,” said Chris Dunn, assistant footwear buyer at Backcountry.com.

Tony Penner, owner of Intermountain Safety Shoe Stores in Golden, Colo., also looks forward to Timberland scaling up. “VF is so diverse and has so much money behind them. They can take what [Timberland] has — the product design and creativity is unbelievable as far as comfort goes — and run with the ball and make it bigger and better,” he said.

Meanwhile, Tarek Hassan, co-owner of The Tannery in Boston, called Timberland a perfect brand for VF because VF knows the outdoor business very well. “A lot of North Face footwear, outerwear and accessories speak to what Timberland does. They will have a home run,” he said.

 

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