Industry reaction to VF acqusition of Timberland mixed

Big isn’t always better. Some retailers and manufacturers told SNEWS they’re skeptical whether VF’s bid to buy Timberland is good for the outdoor industry.
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The recent news of VF Corp.’s plan to buy Timberland Co. for $2 billion was a surprise to most of the outdoor industry.

While it wasn’t a shock the $8.4-billion parent company of The North Face, JanSport and Vans was looking to grow through acquisition, it surprised many that VF Corp. was able to land a company the size of Timberland which includes the SmartWool brand.

The acqusition should have no affect on the GoLite brand. In 2006, Timberland purchased the GoLite trademark along with the rights produce GoLite footwear, which it later sold. Everything from the ankle up remained in the hands of Demetri (Coup) and Kim Coupounas in Boulder, Colo., with the company just licensing the GoLite trademark back from Timberland.

There’s no indication the relationship will change if VF takes over Timberland, Coup told SNEWS. “We had no inkling of the deal beforehand, nor would we really need to. We have no idea what their (VF) plans are, but there’s no obvious way it would effect us.”

Coup said Timberland officials have since echoed his thoughts – the arrangement between the two companies is expected to continue.

Wall Street analysts have said they suspected VF saw its best opportunity to buy after Timberland’s stock plunged nearly 30 percent in early May, following disappointing first-quarter 2011 results. Those poor results were largely due to increased production costs, and VF officials said they can help Timberland lower costs and increase margins by leveraging VF’s collection of outdoor brands. The combination will create a $10 billion company with more than $5 billion projected to come from the outdoor brands.

SNEWS reached out to various retailers and manufacturers who told us big isn’t always better. Some told us they’re skeptical whether the merger is best for the outdoor industry and its consumers. Others say the deal makes sense and could help with increasing Timberland business.

Mixing apparel and footwear

Timberland and VF both manufacture apparel and footwear, but it’s no secret to the industry that VF’s game is apparel, while Timberland is mostly about footwear.

“I think it’s a good match, and from personal experience VF is very well-managed, but I’m not sure how Timberland will react when there’s a new parent company that isn’t steeped in footwear,” said Peter Engel, director of marketing and communications at Redwing Shoe Co., parent of the Vasque footwear brand.

Officials with Columbia Sportswear, one of VF’s main competitors in the outdoor segment had reserved reaction.

“We don’t generally comment on competitors’ acquisitions,” Columbia spokesman Scott Trepanier told SNEWS. “That being said, this acquisition clearly highlights the opportunities that exist in outdoor footwear, and we have three brands well-positioned to capitalize on those opportunities.”

Perhaps lost in the headlines is the fact that the VF deal includes the acquisition of the SmartWool brand, sold to Timberland in 2005.

SmartWool co-founder Peter Duke, who left the company in 2003, said he doesn’t expect much of a change for the brand going from Timberland to VF.

“From an outsider looking in, it’s one big company to yet another big company,” Duke said. “They take advantage of the brand name to put out as much product to increase sales. The mentality is the same.”

After five years on the sidelines, Duke and his wife Patty, are now competitors with SmartWool – starting a new merino wool sock company, Point6, in early 2008. Consolidation tends to breed innovation elsewhere, Duke said.

Some retailers skeptical

Tanner Jackson, assistant manager at San Diego, Calif.-based Adventure 16, said he doesn’t like the thought of VF Corp. buying Timberland, and he’s not alone.

“Generally consolidation in the outdoor industry has been going in the direction that we as outdoor enthusiasts don’t generally like to see,” Jackson said. “It’s probably easier from a retailer perspective … but as far as the quality of the product and a diverse marketplace, I’m not necessarily a big fan.”

In Jacksonville, Fla., Keith Keller, a manager at Black Creek Outfitters, agreed that the quality of the product might suffer.

“I have personally noticed that within The North Face products, the quality has gone down since VF bought them several years ago,” said Keller, who is also in charge of the store’s warranty department. “I don’t think the quality is there when they get so big and lose touch with their roots.

“(Outdoor enthusiasts) are pretty independent-minded and we like having a lot of different specialized and highly differentiated options,” Jackson added. “For the most part – at least until evidence is given against this – people assume any kind of mergers, or more conglomeration, is going to limit options and result in a less specialized products.”

Cindy Cast, assistant store manager and footwear buyer for The Basecamp in Billings, Mont., said she was not completely surprised by the news of the deal.

“I know VF is expanding quite a bit. It could be a very good thing (for Timberland) to have that marketing power behind them, and I know Timberland has struggled a little bit with their identity to create a perfect niche, and I think this could help them,” Cast said.

The news wasn’t a surprise for Kevin Campbell, a store manager for Ramsey Outdoor Stores in Succasunna, N.J.

“It’s par for the course,” Campbell said. “It seems like everyone is looking for some money, and … Timberland might have been in trouble and needed some money fast and the quickest way to do that is to sell to a bigger company.”

Jackson said there are ways for the companies to make retailers feel more at ease. That includes paying attention to research and development and producing cutting-edge products.

“So long as the companies are merging with the customer in mind," he said, "I think people will be receptive."

--David Clucas and Ana Trujillo

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