ICRX Report: VF CEO tells how consumers have changed
Eric Wiseman, CEO of VF Corp., which owns Vans and Reef, said the retail industry should expect more store closings, bankruptcies and consolidations in 2009.
However, he was mum about his own company, which also owns other brands such as North Face and Wrangler. “Don’t ask me about our clients,” he told an audience at ICR XChange this morning.
He offered some insights into what VF is seeing with its consumers, who he says have changed dramatically in the past year:
- Shifting to buying what is needed
- Emphasis on thrift
- Conspicous consumption and flash are out of style
- Greater consideration for value
- Shift from credit to cash
On its business mix and the current environment:
- Diversity is its key to managing risk
- Our Outdoor (includes Vans, Reef) now matches its Heritage group as a percentage of projected revenue of VF at 36%.
- Manage pace of its store openings (“Not as ambitious of a plan as last year.”)
- Invest prudently (“We will pick our spots”)
Two notes related to the economy:
- VF will incur a pension expense in its next fiscal year. (In 2008, its plan had $1 billion in assets but that has changed due to market conditions)
- Currency: “In 2008, it was a tailwind, but in 2009 it will become a headwind.”
- He expects that both issues will amount to a total drag of 70 cents per share.