NEW YORK — The voracious VF acquisitions machine is scooping up Vans Inc.
VF Corp. said Tuesday it has agreed to acquire the sneaker and “skate-shoe” specialist in a deal valued at about $396 million. VF officials said they expect to build the Vans brand’s presence in the apparel arena and noted that the deal gives the $5.2 billion apparel giant a significant foothold in the sneaker business.
“This represents another big new growth avenue for VF,” said Mackey McDonald, chairman and chief executive of the Greensboro, N.C.-based firm. Speaking in a conference call with financial analysts, he added that the deal would give VF “greater access to a younger, more contemporary consumer, the 10- to 24-year-old active-sports enthusiast.”
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McDonald said Vans has the potential to hit the $500 million revenue mark within the next three to five years, with growth coming both in its core shoe business and in apparel, which currently represents about 10 percent of its sales.
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Vans apparel business consists of a joint venture with Pacific Sunwear of California, of which Vans owns 51 percent. That venture designs and produces apparel that is sold at Pacific Sunwear locations, Vans’ 155 retail stores and some independent retailers.
Schoenfeld said Vans and VF had not yet discussed the future of that deal with Pacific Sunwear. While no specifics have been set on the type of apparel that will bear the Vans label, Wiseman said it will carry a clear skateboarding influence.
“It’s real casual stuff,” he said. “They’re skating in jeans and baggy cargo pants, and T-shirts and sweaters.”
VF’s brand lineup currently includes Lee, Earl Jean and Wrangler jeans; Vanity Fair intimate apparel, and Nautica, The North Face and Jansport outdoor gear.
The Vans deal is the second acquisition agreement VF has reached this month. Two weeks ago, it agreed to acquire the Napajiri brand of outdoor sportswear.
VF officials said they expect Vans and Napajiri together to add $230 million to the company’s top line this year, and to have a neutral effect on earnings.
Also on Tuesday, VF reported first-quarter income of $103.9 million, or 93 cents a diluted share, up 12.8 percent from $92.1 million, or 83 cents a share, a year earlier. Sales were $1.43 billion, up 14.6 percent.
The company noted that the recently acquired Nautica brand gave a stronger-than-expected boost to first-quarter results, although executives cautioned that this came as a result of a shift of what had previously been second-quarter sales into the first quarter.
Jeanswear sales were up 2.2 percent to $704 million, outdoor goods sales rose 25 percent to $125 million and intimate apparel sales rose 7.3 percent to $249 million. Nautica contributed $146 million in sales.
Eric Wiseman, chairman of VF’s outdoor coalition — who will be overseeing the Vans brand — said the label will bring the firm a strong inroad into the youth market.
“We haven’t had a lot of brands that have been terribly successful there,” he said in a phone interview. While Lee and Nautica sell products into the youth market, he said, “we don’t have a brand that’s completely dedicated to it.”
Gary Schoenfeld, president and ceo of Santa Fe Springs, Calif.-based Vans, said in a phone interview, “One of our next opportunities for the Vans brand is to make a more substantial commitment to the apparel business, and they add a lot of resources to make that happen.”
In its last fiscal year, ended May 2003, Vans reported a net loss of $30 million — which worked out to $1.67 a share — on revenues of $330.2 million. Last month the company said it expected to report earnings per share of 62 cents to 64 cents on sales of $346 million to $349 million for fiscal 2004.
Stock analysts on the call expressed some skepticism about the growth estimates for Vans provided by McDonald, given Vans’ relatively flat sales in recent years, which followed a stronger growth tack for the company in the mid-Nineties.
Schoenfeld acknowledged, “We did hit a roughly two-year period of stagnant growth,” but he said the company had returned to a growth track, reflected in a 7.2 percent sales gain through the first nine months of its current fiscal year.
VF offered $20.55 a share for Vans outstanding stock. Vans shares closed at $20.29 in Tuesday’s Nasdaq trading, up $4.48, or 28.3 percent. Over the past year, the shares have traded between $4.40 and $16.35. VF shares gained 23 cents Tuesday to close at $47.55 on the New York Stock Exchange.
VF officials said Vans headquarters will remain in California. Both companies said they had not yet worked out whether Schoenfeld will remain with the company past the closing of the deal.
Schoenfeld said, “I am very passionate about this company. I am very much a believer in the merits of this transaction.”
McDonald added, “We are extremely impressed with the talent and caliber of the Vans people.”
Earlier this month, VF disclosed it was searching for a new president for the Nautica brand, which it acquired in August. Harvey Sanders, who served as chairman, president and ceo of the business, left after the company was purchased by VF. David Chu, Nautica’s founding designer, currently holds the ceo post.