Long-time shareholders of the V.F. Corporation (VFC) are familiar with the company’s 17×17 plan, which was unveiled in 2013 and aimed at generating $17 billion in revenues by fiscal 17. Other components of the plan included margin expansion and $18.00 in earnings-per-share (which was before a 4-for-1 stock split announced later in 2013).
Unfortunately, V.F. failed to deliver on most of the company’s stated growth targets. Performance goals compared to realized performance is displayed below.
Source: V.F. Corporation Investor Presentation
V.F.’s performance over the long-term, however, has been very strong. The company’s 14% dividend increase last October made 2016 its 44th year of consecutive annual dividend increase. This makes V.F. a member of the Dividend Aristocrats – companies with 25+ years of consecutive annual dividend increases.
You can see the list fo all 51 Dividend Aristocrats here.
Recently, V.F. announced a new 5-year plan, complete with capital allocation priorities, merger & acquisition guidelines, and technology guidance. Investors might be wary of this plan, since the company’s recent performance fell short of its 17×17 performance plan. This article will analyze V.F. Corporation’s new 5-year plan in detail.
Business Overview
The V.F. Corporation is a leader in the apparel industry with more than 60,000 associates and $12.4 billion in revenue for 2016. V.F. is divided into four operating segments, which it calls ‘coalitions’:
The company is well-known for its portfolio of iconic apparel brands. Particularly important is the ‘Big 3’. brands, which include Vans, The North Face, and Timberland. Each of these brands (along with Wrangler and Lee) generate at least $1 billion in annual sales. Some of V.F.’s other brands can be seen below.
Source: V.F. Corporation Investor Presentation
V.F. is also remarkably shareholder-friendly. The company consistently earmarks a large proportion of its earnings for dividend payments and share repurchases, including a $5 billion share repurchase authorization announced along with the 2021 plan. The rest of this article will discuss V.F.’s 2021 plan in detail.
A Focus On Technology
Like most other apparel and retail companies, V.F’s business model is changing dramatically because of the impact of technology on consumer behavior. V.F. reacted to this secular trend by rolling out the ‘V.F. Digital Lab’ in 2012, for which there are three locations: San Fransisco, China, and Europe. These locations are digital incubators focused on improving V.F.’s efficiency through technology. More specifically, V.F. is aiming to improve their e-commerce offerings, make better use of data analytics, and improve their online marketing presence. More details about the V.F. Digital Lab can be seen below.
