North Face 2005 Annual Report Download - page 8

Our Latin American busi-
ness continues to grow,
with a steady expansion
of owned and franchised
retail stores.
Lee®brand market
research showed that
women strongly prefer
the look and fit of our
new lines.
Our relationship with
one of NASCAR’s most
popular drivers, Dale
Earnhardt, Jr., is driving
increased revenues of our
Wrangler Jeans Co.
™line.
What were the
highlights of 2005?
Why did Lee®brand
sales decline?
What are you doing to
reinvigorate Lee®brand sales?
What’s driving growth in
Latin America and Mexico?
What arethe priorities for 2006?
VF Corporation 2005 Annual Report
12 13
Despite intense competition, we saw growth across most of our busi-
nesses, including Mass Market, Specialty, Latin America, Mexico and
Canada. One of our newest lines, Wrangler Jeans Co.
™
,continued its
success in 2005, benefiting from a marketing partnership with popular
NASCAR driver Dale Earnhardt, Jr. We also extended the Wrangler ®
brand into a new product category by successfully launching a line of
knit and woven shirts with our largest mass market customer. Another
successful brand extension was accomplished with our Riders®brand
through the Riders®Coppercollection™line, which is targeted to
younger female consumers. Our Riggs Workwear by Wrangler™line,
launched two years ago, posted steady growth by meeting the needs
of hard-working men with exceptionally durable, practical products.
Additional expansion resulted from our Aura from the Women at
Wrangler™line, a Western-inspired offering for women designed to
complement our powerful Wrangler ®brand men’sbusiness in Western
specialty shops.
Market conditions in mid-tier department stores wherethe Lee®brand
is primarily sold weresoft in 2005. In addition, the brand lost floor
space and programs due to consolidation among key retail customers.
Our Lee®brand men’sbusiness stalled, despite its previous strong
growth track since the launch of the Lee®Dungarees program in 1998.
And while we recently strengthened our women’sproduct line with the
launch of our One True Fit®and Ultimate 5™programs, we didn’t pro-
vide the right level of marketing support to drive consumer awareness
and purchase.
Lee®is one of the world’s great authentic jeans brands, and we are
enthusiastic about the brand’s prospects and our efforts to renew its
growth. We began last year with a comprehensive audit of the Lee®
brand and its consumer targets. An extensive study confirmed that
women strongly preferred the look and fit of our new lines to those of
many of our key competitors. Armed with this data, we launched an
extensive print and in-store marketing campaign during the second
half of 2005, which highlighted the range of flattering, comfortable
styles the Lee®brand offers. Toward the end of 2005, we named a new
advertising agency to develop strong new positioning for the Lee®
brand in 2006.
Growth is being driven primarily by new product launches in our core
Lee®and Wrangler ®brands and by the expansion of our owned retail
stores. We’re pleased by the initial response to the launch of our
Lee X-Line™products, targeted to younger and more fashionable
consumers. We also will continue to build the Wrangler ®brand as a
powerful Western lifestyle brand in these markets. We’re using owned
and franchised retail stores across Latin America and Mexico to
increase volume and to underscore our brands’ strong equity. At year-
end 2005, we had 31 owned and 22 franchised retail stores.
Getting the Lee®brand back on track for growth is a major focus
Another is maintaining our strong position with mass market customers
by continually providing updated fits and styles under our Wrangler®
Five Star Denim, Wrangler Jeans Co.
™
,Riders® ,Rustler®and Timber
Creek by Wrangler®lines. Wewill also continue the momentum behind
Wrangler®brand extensions into categories such as shirts and a
licensed line of home furnishings. The strong heritage of our Lee®and
Wrangler ®brands is providing us opportunities in upscale specialty
stores under the Lee X-Line™and Wrangler 47™lines. Finally, we intend
to leverage more aggressively the Wrangler ®brand’s unique Western
lifestyle and reach new consumers with additional products and line
extensions.
Jeanswear
Americas