VF announces growth plan - North Face and Vans are keys

Expanding Margins and Strong Cash Generation

The profitability of VF’s Outdoor & Action Sports, international and direct-to-consumer businesses are substantially above the corporate average. Higher growth in these highly profitable businesses will fuel expansion in both gross margins and operating margins over the next five years. By 2015 operating margins are expected to rise to 15 percent from 13.3 percent in 2010.

Cash flow from operations reached $1 billion in 2010; continued strong cash flow generation is anticipated over the next five years, reaching a cumulative total of $6 billion over the period.

“We are confident we have the brands and infrastructure in place to support these growth plans,” continued Wiseman.

“We have well-established platforms not only in the United States, but also in Europe, Asia and Latin America that will be leveraged to grow our existing portfolio of powerful brands. We also have the financial strength and cash flow to build significant shareholder value. Our priority for cash flow continues to be acquisitions, primarily in the outdoor and action sports category.”

Also to be presented at the meeting will be an update to VF’s Growth Drivers, which include a new focus on innovation.

“Innovation is our newest Growth Driver, and will play a significant part in our plans to drive organic growth and higher gross margins,” said Wiseman. “We will foster a global culture of innovation across brands and functions, supported by new processes, new skills and talent, and new collaborative networks to accelerate the pace of breakthrough product introductions.”

VF’s other Growth Drivers include:

• Build Lifestyle Brands: Emphasizing activity-based lifestyle brands that speak authentically to consumers’ needs and aspirations.

• Go Global: Growing in both established and emerging markets, with efforts concentrated in Europe, China, India, Brazil and Mexico, with a goal of 40% of total VF revenues from international markets by 2015.

• Serve Consumers Directly: Growing direct-to-consumer revenues to 22% of total revenues by adding branded retail stores and building stronger consumer relationships through brand websites and social media.

• Enable VF’s Future. Investing in people through tools, training and development opportunities, and in supply chain capabilities that reduce cost and provide speed, flexibility and value.

• Win with Winning Customers. Leveraging consumer knowledge and global brand expertise to grow market shares and bring exclusive brands to key retail customers.