GREENSBORO, N.C. & LOS ANGELES -- VF Corporation (NYSE: VFC) and Mo Industries Holdings, Inc. announced today that VF has acquired the remaining two-thirds of the capital stock of Mo Industries, owner of the Splendid® and Ella Moss® contemporary sportswear brands. VF had previously purchased one-third of Mo Industries stock from its owners -- founder Moise Emquies and Summit Partners, a private equity and venture capital firm for growth companies -- in June 2008.
The Splendid® brand is known for its use of luxurious fabrics in a wide range of contemporary knit products incorporating modern fit and styling. The Ella Moss® brand is an ultra-feminine collection of casual knit tops and dresses featuring bold colors, whimsical styling and fashion silhouettes. Both brands are distributed primarily through better department and specialty stores. Combined revenues of the two brands were $95 million in 2008 and have more than tripled since 2004. The brands also enjoy strong profitability, with operating margins expected to exceed 20%.
The Splendid® and Ella Moss® brands will become part of VF’s Contemporary Brands coalition, which also includes the 7 For All Mankind® and lucy® brands. In addition, VF has decided to shift responsibility for its John Varvatos® luxury men’s sportswear business from its Sportswear coalition to its Contemporary Brands coalition, further underscoring its commitment to growing its Contemporary Brands portfolio.
Mr. Emquies, who has been serving as Chief Executive Officer and President, will continue as Founder/Chief Executive Officer, reporting to Mike Egeck, President – Contemporary Brands. Jonathan Saven, who has been serving as Chief Financial Officer and Chief Operating Officer of Mo Industries, has been promoted to President. Pamella Protzel Scott will continue in her role as Creative Director for Splendid® and Ella Moss®.
"We're very pleased to be adding two strong and growing brands to our portfolio," said Mr. Egeck. "These brands not only complement each other well, but they also complement our 7 For All Mankind® and lucy® brands. The addition of the Splendid® and Ella Moss® brands and the move of the John Varvatos® business to our coalition provide us with the ability to service the contemporary consumer and lifestyle in many different ways."
“We’re excited to become part of the VF family of brands,” said Mr. Emquies. “This is a great opportunity for both our business and our associates, and we look forward to partnering with VF to leverage their size, scale and resources to continue to grow our business both domestically and internationally.”
The Splendid® and Ella Moss® brands should contribute approximately $70 million to 2009 revenues and be slightly accretive to earnings per share; these expectations were incorporated into VF’s revenue and earnings guidance provided on February 10. While these brands are not immune to the current economic downturn, VF expects that over the long-term their revenues could grow 10% to 15% annually.
The cost to VF to acquire the remaining two-thirds of the capital stock was $161 million, plus the repayment of $47 million in existing net debt, and will be funded through VF’s strong cash flow from operations.
Statement on Forward-Looking Statements
Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting VF and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of VF to differ materially from those expressed or implied by forward-looking statements in this release include the overall level of consumer spending on apparel; disruption and volatility in the global capital and credit markets; general economic conditions and other factors affecting consumer confidence; VF's reliance on a small number of large customers; the financial strength of VF's customers; changing fashion trends and consumer demand; increasing pressure on margins; VF's ability to implement its growth strategy; VF's ability to grow its international and direct-to-consumer businesses; VF's ability to successfully integrate and grow acquisitions; VF's ability to maintain the strength and security of its information technology systems; stability of VF's manufacturing facilities and foreign suppliers; continued use by VF's suppliers of ethical business practices; VF's ability to accurately forecast demand for products; continuity of members of VF's management; VF's ability to protect trademarks and other intellectual property rights; maintenance by VF's licensees and distributors of the value of VF's brands; fluctuations in the price, availability and quality of raw materials and contracted products; foreign currency fluctuations; and legal, regulatory, political and economic risks in international markets. More information on potential factors that could affect VF's financial results is included from time to time in VF's public reports filed with the Securities and Exchange Commission, including VF's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
VF Corporation is a global leader in lifestyle apparel with a diverse portfolio of jeanswear, outdoor, imagewear, sportswear and contemporary apparel brands. Its principal brands include Wrangler®, Lee®, The North Face®, Vans®, Reef®, Eagle Creek®, Eastpak®, JanSport®, Napapijri®, Nautica®, Kipling®, John Varvatos®, 7 For All Mankind®, lucy®, Ella Moss®, Splendid®, Majestic® and Red Kap®.
VF Corporation's press releases, annual report and other information can be accessed through the Company's home page, www.vfc.com.
About Summit Partners
Summit Partners (www.summitpartners.com) provides private equity and venture capital for growth companies. Founded in 1984, Summit has raised more than $11 billion in capital and has provided growth equity, recapitalization, and management buyout financing to more than 300 growing companies across a range of industries. These companies have completed nearly 125 public offerings and more than 110 have been acquired through strategic mergers and sales. Summit Partners has offices in Boston, Palo Alto, and London.