North Face 2005 Annual Report Download - page 14

The North Face®brand
continues to be one of
VF’s most successful
acquisitions, with
revenues growing at
adouble-digit rate.
Revenues increased 47%
in 2005, resulting from a
combination of organic
growth and acquisitions.
Our JanSport®brand is
the number one daypack
brand in the world.
What were the key
accomplishments in 2005?
Why did VF acquire
the Reef ®brand?
How will you sustain
futuregrowth for
The North Face®brand?
What will drive growth
for the Vans®brand?
How is the JanSport®
brand performing?
What areyour plans for
launching the Napapijri®
brand in the U.S.?
What is your main
focus for 2006?
VF Corporation 2005 Annual Report
24 25
We posted a record year in both revenues and profits. Revenues rose
47% in 2005, drawing on strong growth across our core The North
Face® ,Vans®and JanSport®brands and our acquisition of the Reef ®
brand. The Vans®and The North Face®brands both had an outstanding
year, with double-digit top line growth. Higher profits resulted from a
significant improvement in the profitability of our Vans®brand, which
we acquired in mid-2004.
We wanted to expand our portfolio with a great surf brand. The Reef ®
brand is an authentic lifestyle brand with a 20-year heritage in the surf
industry, and it gives us a strong portal into a very attractive market.
The Reef ®brand projects a unique and distinctively exotic brand posi-
tion—a mix of surf and sensuality—expressed through innovative
products that have earned a very loyal consumer base and leading
market position. Wealso see a strong opportunity for future growth,
particularly with the launch of Reef®brand apparel and further expan-
sion into Europe.
Wehave several initiatives underway that continue the successful
formula behind our outerwear and equipment business, while fueling
growth in newer categories such as footwear and sportswear.As
always, the focus is to provide consumers and retailers the most tech-
nical and innovative products in the market. Our footwear business is
growing at a double-digit rate, with the potential to account for a third
of total The North Face®brand sales in the future. To support this
growth, we’ve doubled our research, design and development staff,
added category-specific sales people and launched new footwear-
oriented marketing and advertising programs. We’re also selectively
adding new retail stores, including store openings in Portland, Oregon
and Tysons Corner, Virginia in 2005, and we plan to open three addi-
tional stores in 2006.
The Vans®Classic line was a huge driver of revenues in 2005, and we
expect it to continue to fuel growth this year as well. Momentum is also
increasing in our core skate shoe business. Expanding our base of
owned retail stores is a significant opportunity, as we expect to add 15
new stores in 2006 and remodel over 30 existing stores. Our revamped
store format is a big success, resulting in double-digit increases in
comparable store sales. Although we’re still in the early stages of
launching Vans®brand sportswear and snow apparel, we have seen a
very encouraging initial response to both. Our snow apparel line got off
to a strong start, due partly to the expertise of our The North Face® ,
brand team, which is a great example of how we’re leveraging our
coalition’s strengths.
JanSport®brand revenues picked up in 2005, and we expect another
good year in 2006. Its success will depend on our ability to continually
reinvent the daypack category. We’redoing this in two ways. First, we
areleveraging the technology “halo” that our LiveWire®product series
inspired, which incorporates Bluetooth®and iPod®compatible tech-
nology.Second, we’restrengthening the fashion quotient of the brand-
with moredynamic colors and styles.
While currently a very small business in the U.S., the Napapijri®brand
offers tremendous potential, based on its distinctive brand positioning
and unique outdoor-inspired products. Three Napapijri®brand stores
will open in 2006, in New York City, Miami and San Francisco. We’re
also expanding our wholesale business with upscale specialty stores.
To achieve another great year, we are focused on continuing the strong
momentum in our brands’ core businesses, executing our new growth
initiatives and identifying and acquiring additional authentic outdoor
brands to add to our portfolio.
Outdoor
Americas