VF Corp. is spinning off its Wrangler and Lee jeans business into a new company it is calling -- for now -- NewCo, to focus on its activity-based lifestyle and workwear brands such as The North Face, Dickies, JanSport, Timberland and Eagle Creek.
The first of five bullet-pointed reasons for the split cited in the news release announcing the deal is that “both companies will benefit from enhanced strategic and management focus.”
“It’s striking to hear a rallying cry of simplification and focus out of a company like VF,
whose business model has historically been predicated on accumulating new brands in a range of areas. This suggests a new level of depth to the assault on the conglomerate model. The
‘synergies’ that bind various divisions together are getting more tenuous even at companies that by some measures would already be considered focused,” points out Bloomberg Opinion columnis
There’s that. Then there’s the even-more-unsettling development Michael J. de la Merced expresses in his lede for the New York Times: “Denim is out. Athleisure is in.”
“The move to ditch the identifiably American Wrangler and Lee brands comes as consumers have increasingly opted for alternatives to jeans, such as yoga pants,” confirms USA Today’s Nathan Bomey.
“Though the brands are closely associated with an American way of life, the new company will seek to ‘extend its geographic footprint with a sharp focus on Asia, building on its established presence in China,’ VF said,” Bomey writes.
“People are wearing athletic apparel now for all kinds of occasions -- work, play, and school -- without any intention of using them for athletic purposes,” NPD Group’s Matt Powell previously told CNN, according toCNN Money’s Jordan Valinsky. “The more casual, lifestyle categories have been on fire.”
Indeed, “jeans sales in the U.S. fell to $16.2 billion from $18.8 billion just five years ago,” Valinsky adds, pointing out that VF’s offerings also have been losing traction to premium brands, in-house brands from the likes of Walmart -- and, of course, Amazon.
Not that the change hasn’t been a long time in the making. VF itself “has spent much of the past two decades diversifying away from denim through acquisitions, including its $2 billion takeover of Timberland in 2011, and shedding slower-growing businesses,” The Times’ de la Merced continues. “The company sold its Vanity Fair Intimates line of underwear over a decade ago, and more recently has sold off brands like Seven for All Mankind, one of the first premium denim labels, and Nautica.”
Steve Rendle, who is VF’s chairman, president and CEO, will continue in his present positions. Scott Baxter, who led VF’s jeans business from 2011 through 2015, will lead the new company.
VF also also announced yesterday that it is moving its global headquarters from Greensboro, N.C. to Denver, which will become be the new home to the athleisure and workwear brands. NewCo will remain in Greensboro, and Lee will move its headquarters from Kansas City to join Wrangler, according to its news release.
Why the move?
“Colorado is an area with an unrivaled heritage and culture of outdoor and activity-based lifestyles, as well as a thriving business environment,” says VF CEO Rendle. “It is a great strategic fit for our business.… We believe that the creation of our new headquarters in the area will help us to unlock collaboration across our outdoor brands, attract and retain talent, and accelerate innovation.”
Denver is, in fact, No. 8 on the lists of cities attracting the most millennials, according to census data analyzed by the fintech firm SmartAsset, USA Today reports.
“Come next spring, VF Corp. will be neighbors with GearJunkie.com, Outdoor Retailer, and a flurry of other outdoor brands,” writes Amelia Arvesen for SNEWS, with about 800 jobs moving there over the next two years, reportedly with “a net zero job loss” in North Carolina.
“This is growing the overall outdoor industry economy, and not just taking from one state to make another state better,” says Luis Benitez, director of the Colorado Office of Outdoor Recreation Industry, Arvesen adds.
And, apparently, not just taking from denim to feed athleisure.