V.F. Corporation’s VFC subsidiary, TBL Licensing LLC has extended its licensing agreement with the leading eyewear maker, Marcolin Group, till December 2023. This licensing agreement includes renewal of contract for the designing, manufacturing and distribution for the Timberland optical frames and sunglasses. This partnership dates back to 2003, and is now expanded for another five-year span.
Timberland (excluding Timberland PRO), part of V.F. Corp’s Outdoor segment, is the major designer and marketer of premium footwear, apparel and accessories. Also, it is one of the V.F. Corp’s high-performing brands, contributing significantly to the company’s revenues. In fact, the North Face, Vans and Timberland brands have emerged as the company’s core brands in recent years, generating a major share of its revenues.
In first-quarter fiscal 2019, the North Face, Timberland and Vans reported a 21% growth in revenues, on a combined basis. The upside was mainly driven by a 35% growth at Vans and an 8% improvement at the North Face. Meanwhile, Timberland delivered modest growth in the quarter, courtesy of strength in Timberland PRO and Europe. Also, the company is witnessing improved results for the brand across various regions. In the fiscal first quarter, the Outdoor segment reported revenues of $568.6 million, which improved 6% year over year (up 3% in constant dollars). For the fiscal year, management expects revenue growth of 6-8% at the same segment.
In August this year, V.F. Corp also revealed plans to spinoff its Outlet business and Jeans division, including the iconic denim brands like Lee and Wrangler. As part of the spinoff, management intends to create two independent publicly traded companies. One of the companies will be V.F. Corporation, which will include its global apparel and footwear businesses. The second will be a newly formed entity comprising V.F. Corp’s Jeans and Outdoor businesses. This company is likely to be a leader in the Jeans category. The company’s decision to spinoff the denim unit is to focus more on its outdoor and activewear businesses.
Management stated that the spinoff of its denim unit will help V.F. Corp to generate higher revenues and margins over the long term by strictly focusing on high-growth consumer segments and categories. The non-denim business after the spinoff will comprise V.F. Corp’s popular labels such as The North Face and Timberland, Altra, Icebreaker and Williamson-Dickie.
Coming back to the news of Timberland- Marcolin Group’s extended alliance, we believe this move will continue enhancing Timberland’s portfolio with iconic lifestyle products, including trendy and unique eyewear collections.
Price Performance
Following the news of renewal of the licensing agreement, shares of V.F. Corp increased 1.8% yesterday. In the past three months, this Zacks Rank #2 (Buy) stock has gained 14.1%, outperforming the industry’s 4.5% rally.
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