Consumer Products

Why VF Corp Is Planning to Spin Off Its Jeans Business

VF Corp. (NYSE: VFC) announced early on Monday that it plans to split the firm into two separate publicly traded companies. Ultimately, VF Corp. will hold on to its main operations while spinning off its jeans and outlet businesses. The transaction is expected to be completed in the first half of 2019.

This yet-to-be-named company will be created through a tax-free spinoff. It will operate VF’s jeans business, which including the brands Wrangler, Lee, Rustler and Rock & Republic, and also its 80 VF outlet operations. These businesses generate roughly $2.5 billion in annual revenue.

Management believes that this split will allow the company to focus on its active and outdoor brands, including North Face, JanSport and Eagle Creek. VF estimates the core company will generate over $11 billion in annual revenue.

VF plans to move its global headquarters to the Denver metro area from Greensboro, N.C., while the new company will be headquartered in Greensboro.

Steve Rendle, board chair, president and chief executive, commented:

As shown by our recent quarterly results, VF continues to gain momentum on our transformation journey, marked by strong progress on our strategic initiatives and portfolio management. With these strong foundations in place, we are now ideally positioned to create two independent, leading, global companies. In alignment with our strategic plan, the decision to separate these businesses will allow VF to sharpen its focus as a consumer-centric and retail-minded organization anchored in activity-based lifestyle brands. Our Jeans platform is a successful, sustainable business with iconic global brands and a clear path to value creation as a standalone entity. This exciting step forward will mean that both VF and NewCo have the resources, management focus and financial flexibility to thrive in a dynamic consumer marketplace, creating an even brighter future for both organizations and all of their stakeholders.

Shares of VF Corp. closed Friday at $96.29, with a consensus analyst price target of $100.86 and a 52-week range of $61.56 to $97.00.

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.