North Face 2005 Annual Report Download - page 20

Wehave extended our
partnership with award-
winning actress and singer
Queen Latifah, whose pro-
motion of the Curvation®
brand has been pivotal
to its success.
2005 was a difficult year
for our Intimates coalition,
but we are making decisive
changes to turn the busi-
ness around this year
and anticipate a return
to growth in 2007.
Innovative new products
will ensure that our Vanity
Fair ®brand retains its
strong position in depart-
ment and mid-tier stores.
How did the Intimates
coalition perform in 2005?
What are you doing
to improve results in
2006 and beyond?
How is your newest brand—
Curvation®—performing?
What about the
Vanity Fair ®brand?
What’s happening in your
international businesses?
What arethe
priorities for 2006?
What’s your future
vision for Intimates?
VF Corporation 2005 Annual Report
36 37
It was a difficult year, with declines in both revenues and profits. We
were up against a record year in 2004, driven largely by a big new
product launch with one of our specialty store customers. Our mass
market business, with our Vassarette® ,Bestform®and Curvation®
brands, performed well, but inconsistent product performance ham-
pered results in our department and chain store business. On the plus
side, our Mexican and Canadian joint ventures contributed to both the
top and bottom lines.
We’re making decisive changes to turn the business around. We have
new leadership in place in both the U.S. and in Europe, and we’ve
upgraded our talent in critical skill areas such as design, business
development, strategy and marketing. We’re attacking cost in all areas
and have initiated a new global innovation process to ensure a more
consistent pipeline of winning products.
Our Curvation®brand is doing very well. Designed to meet the unique
needs of curvaceous women, it is now in its thirdyear. We’recapitalizing
on the brand’smomentum by adding new products. We’ve extended
our partnership with award-winning actress and singer Queen Latifah,
whose promotion of the Curvation®brand has been pivotal to its
success. In 2006 we’ll launch the Queen Latifah SignatureSeries in
mass market stores, with a new control pant and daywear concept in
the works for next year. We believe the Curvation®brand can extend to
abroader range of products that provide fit solutions, and we’re in the
process of developing our first apparel collection.
The Vanity Fair®brand is the leading national brand in U.S. department
and mid-tier stores. With a century-long history of meeting women’s
intimate apparel needs, it has a large and loyal consumer base. Based
on this strong heritage, we’re leveraging the Vanity Fair ®brand equity
in innovative ways. A revamped look and feel for the brand will launch
this fall. New products that incorporate seam-free technology are in the
works. And a premium collection, BodyBreathe® ,which successfully
launched last year with one of our department store customers, will be
expanded with the launch of BodyBreathe®Silver this summer.
Our Mexican and Canadian joint ventures are doing well. We completed
asuccessful launch of our Vassarette® ,Curvation®and Lily of France®
brands in Mexico and will add our Vanity Fair®brand there in 2006. We
plan to fuel growth in Canada by adding new product categories,
including pants, daywear and shapewear. Business in Europe has
been more challenging. We have a strong position in Spain and
Portugal, particularly in boutique stores, but changing retail dynamics
have hindered growth there. A new Vanity Fair ®brand retail store con-
cept is showing promise, with a 7% increase in comparable store
sales in 2005. We’re also encouraged by the healthy increase in spring/
summer bookings for our licensed Nike®brand swimwear business.
Our first priority is to stabilize the top line. Weareconfident we can
do so, given the good response we expect from all our brands’ new
product offerings. Second, we plan to improve profitability from 2005
levels. The actions we took in 2005 to resolve capacity issues should
result in higher profit levels this year.Third, we need to establish strong,
sustainable growth platforms for all our corebrands. Weexpect to see
the results of this work reflected in a return to growth in 2007.
We will continue to utilize our superior product innovation process,
best-in-class marketing, great people and strong operational skills
to grow our market share and leverage our brand strength into new
categories and markets. This will enable us to deliver consistent top
and bottom line growth to our shareholders.
Intimates