In the face of what it calls a "very challenging retail climate" and
with continued expectation for continued soft apparel sales, apparel
giant VF Corporation (Lee, Wrangler, Vanity Fair, The North Face,
Eastpak, and Jansport, among other holdings) has announced that it will
quit three lines of business and undertake other strategic initiatives
that will terminate 13,000 employees, or 18 percent of the workforce.
According to wire service reports, the company hopes to reduce
inventory to $100 million below 2000 levels and reduce annual costs by
$115 million. The business units affected are private label knitwear,
swimwear, and specialty work wear.
VF Chairman and CEO Mackey McDonald stated in a CNBC interview that the
company is now "exiting those businesses that offer a significantly
lower margin" so it can "focus on the businesses that give us the
McDonald added that even though VF is trimming costs, it would continue
to position itself aggressively for future growth. To that end,
McDonald stated that the company would be pouring additional marketing
resources, up to10 percent, into the company's key brands including The
North Face and Vanity Fair.
During the interview, McDonald also stated that VF would also be
looking at acquisitions to strengthen the company's position in the
jeans market (where it now has 27 percent of the U.S. market), outdoor
market, intimate market, and "lifestyle brands, including those that
provide a crossover appeal" into the other three categories.
Holly Stewart, VF's manager of corporate communications, told SNEWSÂ®Â
that to the best of her knowledge, the layoffs do not affect the
company's outdoor business group consisting of The North Face, Eastpak,
About 3,800 of the layoffs will come from the businesses VF is
quitting. The company said the balance of the 13,000 is spread
throughout the organization. Ninety jobs are being cut at VF's
Greensboro, North Carolina headquarters. Two plants in that state are
also being closed. The company is planning to sell its Jantzen swimwear
division based in Portland, Ore. Jantzen accounted for $100 million is
sales, a 5th of that coming from a licensing agreement with Nike. VF
officials say the seasonality of Jantzen's business hurt overall
The private-label knitwear business headquartered in Martinsville,
Virg., had about $200 million in sales in 2001. The FibroTek small
specialty work wear business based in Nashville, Tennessee has annual
sales of about $10 million.
VF will reduce domestic production and move to lower-cost manufacturing
locations or to independent contractors in Mexico and the Far East.