Beruflich Dokumente
Kultur Dokumente
Forest David
A.
Case Abstract
VF Corp. is a comprehensive strategic management case that includes the companys year -end 2010 financial statements, organizational chart, competitor information and more. The case time setting is the year 2011. Sufficient internal and external data are provided to enable students to evaluate current strategies and recommend a three-year strategic plan for the company. Headquartered in Greensboro, North Carolina, VF Corps common stock is publicly traded under the ticker symbol VFC. VF Corp. is a global leader in branded apparel with more than 30 brands. The companys top six brands are The North Face, Wrangler, Timberland, Vans, Lee, and Nautica. As the #1 jeans maker worldwide, VF has leading denim brands, such as Lee, Riders, Rustler, Wrangler, 7 For All Mankind, and Rock and Republic. Other VF brands include JanSport and Eastpak (backpacks), The North Face and Eagle Creek (outdoor gear), Red Kap and Bulwark (work clothes), Nautica (sportswear), Lucy Activewear (athletic apparel), John Varvatos (menswear), and Vans (footwear). VF's Majestic label features licensed MLB, NFL, and NBA apparel. VF operates excellent e-commerce sites for its brands and owns more than 750 stores worldwide. VF brands are sold in department and specialty stores, mass merchants, and discounters.
B.
C.
5. 6. 7. 8. 9.
Concern for survival, growth, and profitability Philosophy Self-concept Concern for public image Concern for employees
D.
External Audit
Opportunities 1. 2. 3. 4. 5. 6. 7. 8. 9. Eastern Europe is a fast growing market with Ukraine leading the way. Baby boomers are the largest per capita consumers of apparel. 71 million teens in the US are maturing into young adults. Consumers 20-34 account for 24% of the appeal spending in the US. Consumers make choices at the last second and styles must be adaptable. Social media enables retailers to listen to customers in real time. US consumers spent $192 billion in 2010 on apparel. Southeast Asia has many skilled workers trained in apparel. There continues to be reduced trade regulations and elimination of tariffs.
Threats 1. 2. 3. 4. 5. 6. 7. Gap, Timberland, Nike, Adidas, and Reebok are all strong competitors. Product life cycles are short and fashion trends can change quickly. Timely delivery and low cost transportation and oil from supply chain being over seas. US is still suffering from high unemployment around 9% and low home prices. Cotton prices are up over 100% from 2009. Many consumers are obsessed with promotional pricing. Volatile nature of world currency rates.
EFE Matrix
Weight Rating Weighted Score Opportunities Eastern Europe is a fast growing market with Ukraine leading the 0.10 4 0.40 way. Baby boomers are the largest per capita consumers of apparel. 0.04 2 0.08 71 million teens in the US are maturing into young adults. 0.07 3 0.21 Consumers 20-34 account for 24% of the appeal spending in the 0.07 4 0.28 US. Consumers make choices at the last second and styles must be 0.06 3 0.18 adaptable. Social media enables retailers to listen to customers in real time. 0.04 2 0.08 US consumers spent $192 billion in 2010 on apparel. 0.07 3 0.21 Southeast Asia has many skilled workers trained in apparel. 0.06 2 0.12 There continues to be reduced trade regulations and elimination 0.05 3 0.15 of tariffs.
1. 2. 3. 4. 5. 6. 7. 8. 9.
Threats 1. Gap, Timberland, Nike, Adidas, and Reebok are all strong competitors. 2. Product life cycles are short and fashion trends can change quickly. 3. Timely delivery and low cost transportation and oil from supply chain being over seas. 4. US has high unemployment around 9% and low home prices. 5. Cotton prices are up over 100% from 2009. 6. Many consumers are obsessed with promotional pricing. 7. Volatile nature of world currency rates. TOTALS
Weight Rating Weighted Score 0.10 0.09 0.05 0.05 0.06 0.05 0.04 1.00 2 3 2 2 2 2 1 0.20 0.27 0.10 0.10 0.12 0.10 0.04 2.64
E.
Internal Audit
Strengths 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Diversity of products (more than 25 brands). Largest branded apparel company in the world. Excellent organizational structure with 5 distinct SBUs. Produces around 34% of what it sells. International revenues account for 30% of revenues. Opened 15 new stores in first quarter 2011 bringing total number of owned retail stores t o788. Weathered the 2008-2009 recession better than competitors. EPS of $6.20. Stock price increased from $40 to $140 or 140% from 2009 to year end 2011. Detailed mission statement.
Weaknesses 1. 2. 3. 4. 5. 6. 7. 8. Current Ratio of 1.5 compared to 3.0 for the industry suggests VF is more highly leveraged than competition. Receivables turnover is only 6.7 compared to 38 for the industry. Revenues have not increased in the last 3 years. Property, Plant, & Equipment remained the same. Approximately $2.5 billion or 40% of assets come from goodwill or intangibles. Many consumers know the brands but not the company (VF). Sportswear, Contemporary Brands and Other segments are not operating efficiently. Currently paying over 18% of revenue for labor.
Financial Ratio Analysis Growth Rate Percent Sales (Qtr vs year ago qtr) Net Income (YTD vs YTD) Net Income (Qtr vs year ago qtr) Sales (5-Year Annual Avg.) Net Income (5-Year Annual Avg.) Dividends (5-Year Annual Avg.) Profit Margin Percent Gross Margin Pre-Tax Margin Net Profit Margin 5Yr Gross Margin (5-Year Avg.) Liquidity Ratios Debt/Equity Ratio Current Ratio Quick Ratio Profitability Ratios Return On Equity Return On Assets Return On Capital Return On Equity (5-Year Avg.) Return On Assets (5-Year Avg.) Return On Capital (5-Year Avg.) Efficiency Ratios Income/Employee Revenue/Employee Receivable Turnover Inventory Turnover VF Corp. 23.20 NA 23.90 6.38 3.50 17.18 Industry 26.10 NA 48.30 15.36 25.71 8.24 S&P 500 14.40 NA 48.60 8.29 8.71 5.64
IFE Matrix
Weight Rating Weighted Score Strengths Diversity of products (more than 25 brands). 0.10 4 0.40 Largest branded apparel company in the world. 0.10 4 0.40 Excellent organizational structure with 5 distinct SBUs. 0.07 4 0.28 Produces around 34% of what it sells. 0.05 4 0.20 International revenues account for 30% of revenues. 0.04 4 0.16 Opened 15 new stores in first quarter 2011 bringing total number 0.03 4 0.12 of owned retail stores to 788. Weathered the 2008-2009 recession better than competitors. 0.03 4 0.12 EPS of $6.20. 0.04 4 0.16 Stock price increased from $40 to $140 or 140% from 2009 to year 0.06 4 0.24 end 2011. Detailed mission statement. 0.03 4 0.12
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
1. 2. 3. 4. 5. 6. 7. 8. 9.
Weight Rating Weighted Score Weaknesses Current Ratio of 1.5 compared to 3.0 for the industry suggests 0.04 1 0.04 VF is more highly leveraged than competition. Receivables turnover is only 6.7 compared to 38 for the industry. 0.06 1 0.06 Revenues have not increased in the last 3 years. 0.05 1 0.05 Property, Plant, & Equipment remained the same. 0.05 1 0.05 Approximately $2.5 billion or 40% of assets come from goodwill 0.08 1 0.08 or intangibles. Many consumers know the brands but not the company (VF). 0.07 1 0.07 Sportswear, Contemporary Brands and Other segments are not 0.04 2 0.08 operating efficiently. Currently paying over 18% of revenue for labor. 0.06 2 0.12 0.00 0 0.00 0 TOTALS 1.00 2.75
F.
SWOT
SO Strategies 1. 2. 3. Build 100 new stores in Eastern Europe (S1, S2, S5, S6, O1, O9). Develop line of products attractive to Baby boomers (S1, S2, O2). Increase from 34% to 50% production of own products (S4, O5).
WO Strategies 1. 2. 3. Build 100 new stores in Eastern Europe (W4, O1, O9). Introduce and advertising campaign to ensure customers associate all of VF Corps brands with the VF Corp. (W6, O6, O7). Acquire Bebe Stores (W4, O3, O4, O7).
ST Strategies 1. 2. Increase from 34% to 50% production of own products (S4, T2). Open 5 new production plants in the United States (S1, S2, S3, T2, T3).
WT Strategies 1. 2. Expand accounting staff to aid in collections (W2, T1). Liquidate Sportswear, Contemporary Brands, and Other segments (W7, T1).
G.
SPACE Matrix
FP 7 6 5 4 3 2 1
Conservative
Aggressive
CP
-7
-6
-5
-4
-3
-2
-1 -1 -2 -3 -4 -5 -6 -7
IP
Defensive
SP
Competitive
Internal Analysis: Financial Position (FP) Return on Equity (ROE) Leverage Liquidity Working Capital Cash Flow Financial Position (FP) Average
4 5 3 3 3 3.6
External Analysis: Stability Position (SP) Rate of Inflation Technological Changes Price Elasticity of Demand Competitive Pressure Barriers to Entry into Market Stability Position (SP) Average
-2 -2 -2 -4 -2 -2.4
Internal Analysis: Competitive Position (CP) Market Share Product Quality Customer Loyalty Technological know-how Control over Suppliers and Distributors Competitive Position (CP) Average
-3 -2 -2 -3 -2 -2.4
External Analysis: Industry Position (IP) Growth Potential Financial Stability Ease of Entry into Market Resource Utilization Profit Potential Industry Position (IP) Average
4 3 4 4 4 3.8
H.
VF Corp.
Quadrant IV
I.
High
3.0
IV Outdoor/Action
VI
Imagewear
2.0
VII
Jeanswear VIII
IX
Low
Sportswear
1.0
(in millions) Product Class Outdoor/Actionwear Jeanswear Imagewear Sportswear Contemporary Brands Other
J.
QSPM
Add 100 stores in Eastern Europe
AS 4 1 1 1 0 2 1 3 4 TAS 0.40 0.04 0.07 0.07 0.00 0.08 0.07 0.18 0.20
Threats 1. Gap, Timberland, Nike, Adidas, and Reebok are all strong competitors. 2. Product life cycles are short and fashion trends can change quickly. 3. Timely delivery and low cost transportation and oil from supply chain being over seas. 4. US has high unemployment around 9% and low home prices. 5. Cotton prices are up over 100% from 2009. 6. Many consumers are obsessed with promotional pricing. 7. Volatile nature of world currency rates.
AS 2 0 0 1 0 0 1
AS 3 0 0 2 0 0 3
1. 2. 3. 4. 5. 6. 7. 8. 9.
Weight Weaknesses Current Ratio of 1.5 compared to 3.0 for the industry suggests 0.04 VF is more highly leveraged than competition. Receivables turnover is only 6.7 compared to 38 for the industry. 0.06 Revenues have not increased in the last 3 years. 0.05 Property, Plant, & Equipment remained the same. 0.05 Approximately $2.5 billion or 40% of assets come from goodwill 0.08 or intangibles. Many consumers know the brands but not the company (VF). 0.07 Sportswear, Contemporary Brands and Other segments are not 0.04 operating efficiently. Currently paying over 18% of revenue for labor. 0.06 0.00 0 TOTALS
AS 0 0 0 1 0 3 0 0 0
AS 0 0 0 4 0 1 0 0 2
2.38
0.00 0.00
2.92
0.00 0.00
K.
Recommendations
1. Build 100 new stores in Eastern Europe at $1.5M each for $150M. 2. Acquire Bebe Stores for $350M. 3. Increase advertising by $100M.
L.
Common Stock Financing Recession Normal $700 $900 0 0 700 900 168 216 532 684 114 114 4.65 5.98
M.
Epilogue
V.F.s third-quarter 2011 adjusted earnings of $2.87 per share surpassed earnings of $2.22 per share in the prior-year quarter. V.F. Corp.'s third quarter revenue of $2,750.1 million exceeded the prior year figure by 23.0 percent. Double-digit revenue growth at all V.F. Corp.'s coalitions led to the overall climb. The companys operating income increased 21.3 percent compared to the prior year, to reach $430.1 million. V.F. is a well managed company performing nicely in an uncertain economic environment. Revenue at V.F.s Outdoor & Action Sports jumped 37 percent in the third quarter of 2011 from the yearago quarter to $1,436.8 million, of which Timberland acquisition contributed $163.6 million. Timberland was acquired in 2000 as a bankrupt business but has become V.F. leading brand. Business from both the Americas and beyond contributed to V.F.s revenue increase in the third quarter. The companys America's revenue grew by 13 percent while International revenue increased 38 percent. V.F.s Jeanswear revenue increased 8 percent to $613.4 million. The companys Imagewear revenue increased 14 percent in the quarter to $277.6 million while revenue at the companys Sportswear division improved 18 percent in the third quarter to $151.8 million. The companys Contemporary Brands revenue rose 11 percent to $126.2 million. In total for the third quarter of 2011, V.F. Corp.s international revenues increased 44.0 percent, largely driven by solid growth in the Outdoor & Action Sports and Jeanswear businesses, along with strength across the biggest brands in Asia and Europe. Timberland contributed 15.0 percent to this growth. Also doing well, the companys direct-to-consumer revenue increased 21.0 percent in the quarter, driven by new store openings and Timberland acquisition. During that quarter, VF Corp. opened 32 stores across diverse brands, bringing the total number of owned retail stores to 1,077.
V.F.s Board of Directors recently declared a quarterly cash dividend of $0.72 per share, an increase of 14 percent. The dividend is payable on December 19, 2011. This marks the 39th consecutive year of higher dividend payments to shareholders of V.F. Corp.