North Face 2005 Annual Report Download - page 5

The North Face®brand
will continue to add owned
retail stores in 2006.
Revenues in 2006
are expected to rise
4% to 5%.
The Nautica®brand’s
new positioning under the
Navigate Life™campaign
is strong, highly visible
and connecting very
well with consumers.
How is the Nautica®brand
turnaround progressing?
What opportunities are
you pursuing internationally?
What role do owned retail
stores play in your strategy?
What are your
cash flow priorities?
Where do you stand on
achieving your goal of
$100 million in cost savings?
What’sthe outlook for 2006—
and beyond?
VF Corporation 2005 Annual Report
06 07
of our revenues. At the same time, our heritage businesses—
Jeanswear, Intimates and Imagewear—will continue to be important
contributors to VF, generating solid cash flow and profits.
The Nautica®brand team has done a tremendous job. The new brand
positioning under the Navigate Life™campaign is strong, highly visible
and connecting very well with consumers. Sales are growing and
profitability is up substantially. Now we’re focusing on two launches—
women’s sportswear and Europe—each of which offers the potential
for substantial growth in the years ahead.
We have many opportunities for international growth. In addition to the
expansion of our Nautica®brand, examples include growth for our
Wrangler ®and Lee®brands in Russia, EasternEurope, Latin America
and Asia, and continued development of our Vans® ,Kipling®and
Napapijri®brands throughout Europe and Asia. India is a large and
fast-growing market wherewe’reexploring a variety of options for
reaching consumers with our brands. We’realso interested in acquiring
international brands with the potential for growth in the U.S.
Retail stores arean important component of growth for most of our
lifestyle brands. They allow us to better communicate our brands’
positioning and full range of products directly to consumers. We
expect sales from our branded retail stores to increase significantly in
the coming years. Currently we have 525 stores accounting for 12% of
our total revenues. Of those, 60% are full-price stores and the rest are
outlet stores. In five years or so, we could have more than 900 stores
accounting for 15% to 20% of total revenues, excluding any additional
acquisitions. Our Nautica®
,Vans® ,Kipling® ,Napapijri® ,The North Face® ,
Lee® ,Wrangler ®and John Varvatos®brands all have the opportunity to
expand their base of retail stores.
Acquisitions are a priority, as we believe our ability to identify, success-
fully integrate and grow new brands and businesses will continue to
contribute positively to shareholder value. At the same time we believe
it is important to consistently return cash to shareholders and are com-
mitted to doing so through the right combination of dividends and
share repurchases.
We’re making steady progress, but much of the savings will come in the
next three to five years due to the size and complexity of the programs
we’re working on. Active programs are in place to reduce costs in such
areas as distribution, inventory management, procurement, informa-
tion systems and technology.
We’re looking forward to another record year. We expect to increase
revenues by 4% to 5%, excluding any additional acquisitions. Most of
that growth will come from our Outdoor and Sportswear businesses.
Wealso anticipate earnings per sharegrowth of approximately 6%.
And we’ll continue to search for new brands to add to our portfolio. We
will manage our portfolio of businesses actively,to ensureall contribute
positively to shareholder value. Wewill take our brand and marketing
skills to new levels, as we add new tools and processes to maximize
our brands’ potential. And we will reach consumers moredirectly by
aggressively adding retail stores for our strongest lifestyle brands.
Mackey J. McDonald
Chairman, President and CEO
VF Corporation