North Face 2011 Annual Report Download - page 6

1009 11
Dividends Per Share
1009 11
Cash Flow From
Operations (Millions)
$2.43
$2.37 $2.61
$1,001
$973
$1,081
1009 11
Earnings Per Share
*Excludes a noncash
impairment charge
$6.46*
$5.16*
$7.98
1009 11
Revenues
(Millions)
$7,703
$7,220
$9,459
$5.18
$4.13
brands enjoy high levels of awareness despite
limited distribution in some key regions. “We’ve
demonstrated time and time again that when we
focus on a specic region and invest in telling our
brand stories, we have great success,” says Shearer.
“So when we look at regions where we do little or
no business today, and think about the strength
of our brands, we see tremendous opportunity.”
Over the next ve years, VF estimates it will
grow its Asian business by  billion, with China
providing by far the biggest opportunity. “We
have more than  years of experience and success
in China, yet our business there is still in the
very early stages of growth,” says Shearer. VF
also expects to add  billion in revenues from
Europe by . While VF has large businesses
in some countries, it remains small in others. “As
we focus country by country, market by market, we
see a lot of runway for our brands which time
and time again demonstrate that they resonate
across dierent countries and across cultures,”
says Shearer. And Timberland, which sells more
products overseas than in the U.S., will play an
important role in VF’s international expansion.
In , Timberland should help boost VF’s overall
percentage of international revenues to .
Fueled by aggressive plans for new retail stores and
e-commerce growth, VF’s direct-to-consumer
business should comprise  of the company’s
total revenues by . To Shearer, retail stores and
e-commerce are essential to growing lifestyle
businesses. ey provide immersive environments
that help consumers understand a brand’s story
and allow them to experience the full breadth
of a brand’s product oering.
Shearer underscores the company’s intensifying
focus on innovation as pivotal to achieving its top
line goals. “Our innovation platform will drive
the development of new and unique products—
products that no one else has,” he says.
e next component of VF’s TSR model is margin
expansion. VF has set a  operating margin
target of , up from . in . VF is known
for its focus on managing costs, but the biggest
factor behind VF’s margin improvement will be
the growth of its lifestyle businesses, particularly
Outdoor & Action Sports, which should reach
 of VF’s total revenues by . “As our higher
margin Outdoor & Action Sports businesses get
bigger—fueled through international growth, retail
expansion and breakthrough innovation—they’ll
help drive VF’s overall operating margin expansion,”
says Shearer. With strong, consistent earnings
growth targeted at  annually, VF expects its
P/E ratio to improve as investors continue to gain
condence in the company’s ability to deliver
industry-leading results and achieve its nancial
targets. is P/E ratio expansion is the third
component of VF’s TSR model.
A projected dividend yield of  to . percent
is the nal component of the company’s TSR
model. “We pay such a healthy dividend is
because we generate such strong cash ow” says
Shearer. “Our cash ow is strong enough to fund
additional acquisitions while at the same time
allowing us to pay an industry-leading dividend.”
VF has transformed not only its portfolio, but also
how it does business. It has built highly protable
lifestyle, international and direct-to-consumer
businesses with the infrastructure, scale and
experience to reach new consumers wherever they
live. And it has built an innovation platform that
will allow its trusted brands to evolve based on
the ever-changing needs of consumers. “When
we use the word transformation, that is exactly
what we’re talking about,” says Shearer. “Our
portfolio is stronger than it has ever been, and
that’s transforming the return we provide to
our shareholders.” 
 |  
ccording to nance textbooks, total
shareholder return (TSR) is the
result of a formula that combines
share price appreciation and
dividend yield to get a true picture
of a company’s performance. At VF,
TSR is a philosophy that drives decisions made
every day. Management and brand leaders are
trained to understand the components of TSR—
what creates it, and how daily decisions must align
with it. From evaluating where and how to invest
behind its brands to planning the pace of new
store growth, VF explicitly makes decisions based
on what will deliver the most consistent returns
to shareholders over the longest period of time.
“If all of our employees are totally aligned with
our shareholders’ best interests, it’s got to be a
good thing,” says Shearer. In , VF achieved
total shareholder return of .
For the next ve years, VF aims to deliver an annual
TSR of  or higher to its shareholders. Achieving
this is based on several dierent components. First
and foremost is revenue growth of  annually.
In March , VF announced plans to add
 billion in revenues by , fueled by geographic
expansion, strong growth in its direct-to-consumer
business and leading-edge product innovation.
VF has a long track record of using its global
infrastructure to bring its brands to consumers
in international markets. In ,  of VF’s
revenues came from outside the U.S. In , that
gure was . By , VF’s goal is . anks
to careful brand-building eorts and the explosion
of social media and digital marketing, VF’s iconic
Revenue
growth
TSR
2.5%
15%+
Margin
change
P/E
change
Dividend
yield
TSR
15%+
10 %
2%
2.5% 2.5%
Total shareholder return
Dividend yield
14%Change in share price
S&P 500 Index
VF Corporation
1110
3%
09
2%
34%
23%
37%
25%
3%
2%
18%
13%
21%
15%
2%
2%
47%
49%
2%
0%
Total shareholder return
Capital gain
Dividend yield
  | 
Other
350
300
250
200
150
100
50
0
Napapijri
Kipling
lucy
7 For All Mankind
Lee/Wrangler
The North Face
Nautica
Timberland
Vans
Store count
VF’s long-term Total Shareholder Return
(TSR) model is built on four components:
strong revenue growth, improving
operating margins, expansion in the
company’s price-to-earnings (P/E) ratio,
and an industry-leading dividend yield.
Retail stores and e-commerce
are essential to growing lifestyle
businesses. They provide immersive
environments that help consumers
understand a brand’s story and allow
them to experience the full breadth of
a brand’s product offering.
Our portfolio is
stronger than it has
ever been, and that’s
transforming the
return we provide
to our shareholders.
 
—
Senior Vice President &
Chief Financial Ocer
1009 11
Dividends Per Share
1009 11
Cash Flow From
Operations (Millions)
$2.43
$2.37 $2.61
$1,001
$973
$1,081
1009 11
Earnings Per Share
*Excludes a noncash
impairment charge
$6.46*
$5.16*
$7.98
1009 11
Revenues
(Millions)
$7,703
$7,220
$9,459
$5.18
$4.13
brands enjoy high levels of awareness despite
limited distribution in some key regions. “We’ve
demonstrated time and time again that when we
focus on a specic region and invest in telling our
brand stories, we have great success,” says Shearer.
“So when we look at regions where we do little or
no business today, and think about the strength
of our brands, we see tremendous opportunity.”
Over the next ve years, VF estimates it will
grow its Asian business by  billion, with China
providing by far the biggest opportunity. “We
have more than  years of experience and success
in China, yet our business there is still in the
very early stages of growth,” says Shearer. VF
also expects to add  billion in revenues from
Europe by . While VF has large businesses
in some countries, it remains small in others. “As
we focus country by country, market by market, we
see a lot of runway for our brands which time
and time again demonstrate that they resonate
across dierent countries and across cultures,”
says Shearer. And Timberland, which sells more
products overseas than in the U.S., will play an
important role in VF’s international expansion.
In , Timberland should help boost VF’s overall
percentage of international revenues to .
Fueled by aggressive plans for new retail stores and
e-commerce growth, VF’s direct-to-consumer
business should comprise  of the company’s
total revenues by . To Shearer, retail stores and
e-commerce are essential to growing lifestyle
businesses. ey provide immersive environments
that help consumers understand a brand’s story
and allow them to experience the full breadth
of a brand’s product oering.
Shearer underscores the company’s intensifying
focus on innovation as pivotal to achieving its top
line goals. “Our innovation platform will drive
the development of new and unique products—
products that no one else has,” he says.
e next component of VF’s TSR model is margin
expansion. VF has set a  operating margin
target of , up from . in . VF is known
for its focus on managing costs, but the biggest
factor behind VF’s margin improvement will be
the growth of its lifestyle businesses, particularly
Outdoor & Action Sports, which should reach
 of VF’s total revenues by . “As our higher
margin Outdoor & Action Sports businesses get
bigger—fueled through international growth, retail
expansion and breakthrough innovation—they’ll
help drive VF’s overall operating margin expansion,”
says Shearer. With strong, consistent earnings
growth targeted at  annually, VF expects its
P/E ratio to improve as investors continue to gain
condence in the company’s ability to deliver
industry-leading results and achieve its nancial
targets. is P/E ratio expansion is the third
component of VF’s TSR model.
A projected dividend yield of  to . percent
is the nal component of the company’s TSR
model. “We pay such a healthy dividend because
we generate such strong cash ow” says Shearer.
“Our cash ow is strong enough to fund additional
acquisitions while at the same time allowing us
to pay an industry-leading dividend.”
VF has transformed not only its portfolio, but also
how it does business. It has built highly protable
lifestyle, international and direct-to-consumer
businesses with the infrastructure, scale and
experience to reach new consumers wherever they
live. And it has built an innovation platform that
will allow its trusted brands to evolve based on
the ever-changing needs of consumers. “When
we use the word transformation, that is exactly
what we’re talking about,” says Shearer. “Our
portfolio is stronger than it has ever been, and
that’s transforming the return we provide to
our shareholders.” 
 |  
ccording to nance textbooks, total
shareholder return (TSR) is the
result of a formula that combines
share price appreciation and
dividend yield to get a true picture
of a company’s performance. At VF,
TSR is a philosophy that drives decisions made
every day. Management and brand leaders are
trained to understand the components of TSR—
what creates it, and how daily decisions must align
with it. From evaluating where and how to invest
behind its brands to planning the pace of new
store growth, VF explicitly makes decisions based
on what will deliver the most consistent returns
to shareholders over the longest period of time.
“If all of our employees are totally aligned with
our shareholders’ best interests, it’s got to be a
good thing,” says Shearer. In , VF achieved
total shareholder return of .
For the next ve years, VF aims to deliver an annual
TSR of  or higher to its shareholders. Achieving
this is based on several dierent components. First
and foremost is revenue growth of  annually.
In March , VF announced plans to add
 billion in revenues by , fueled by geographic
expansion, strong growth in its direct-to-consumer
business and leading-edge product innovation.
VF has a long track record of using its global
infrastructure to bring its brands to consumers
in international markets. In ,  of VF’s
revenues came from outside the U.S. In , that
gure was . By , VF’s goal is . anks
to careful brand-building eorts and the explosion
of social media and digital marketing, VF’s iconic