During an investor meeting in New York City, the Company established its revenue target of $17.3 billion by 2017, representing a five-year compounded annual growth rate (CAGR) of 10 percent, with 8 percent organic growth and 2 percent growth anticipated from acquisitions. VF also announced its earnings per share target of $18.00 for 2017, representing a five-year CAGR of 13 percent.
“VF’s model – consisting of powerful brands supported by powerful platforms – continues to deliver outstanding value to shareholders, as evidenced by 20 percent average annual growth in total shareholder return over the past five years,” said Eric C. Wiseman, VF Chairman and Chief Executive Officer.
“By leading in innovation, connecting with consumers, expanding geographically and growing our direct-to-consumer business, we look forward to delivering the next chapter in a long and very successful growth story.”
Summary of Key 2017 Financial Targets
In addition to new 2017 targets for revenues and earnings per share of $17.3 billion and $18.00, respectively, the Company also raised its projections for gross and operating margin.
Given the exceptional growth in its highly profitable Outdoor & Action Sports, direct-to-consumer and international businesses, VF is now targeting a gross margin of 49.5 percent in 2017, a 300 basis point improvement over the 46.5 percent gross margin achieved in 2012.
Operating margin is expected to reach 16 percent, up 250 basis points from the 2012 operating margin of 13.5 percent. Annual cash flow from operations, by 2017, is targeted at $2.4 billion, with a cumulative $9.5 billion in cash flow to be generated between 2013 and 2017.
Outdoor & Action Sports: Powerful Brands Driving Strong Growth
VF’s Outdoor & Action Sports coalition is expected to continue to be the key driver in the Company’s growth in the coming years, with revenues expected to reach $11.1 billion by 2017.
This growth represents a five-year CAGR of 14 percent comprised of 11 percent organic growth and 3 percent growth coming from acquisitions. Outdoor & Action Sports revenues are expected to reach 64 percent of VF’s total revenues by 2017, up from 54 percent in 2012. Strong growth is anticipated across all key regions: 12 percent in the Americas, 13 percent in EMEA and 24 percent in Asia-Pacific.
Steve Rendle, Vice President, VF Corporation and Group President, Outdoor & Action Sports Americas, presented global, five-year growth targets for the coalition’s largest brands, The North Face, Vans and Timberland.
-The North Face brand is anticipated to grow at a 12 percent annual growth rate, with revenues reaching $3.3 billion by 2017 from $1.9 billion in 2012.
-The Vans brand raised its average annual revenue growth projection, initially provided in June of 2012, from 13 percent to 15 percent. The brand is now targeting total revenues of $2.9 billion by 2017, up from $1.5 billion in 2012.
-The Timberland brand, now in its second full year of VF ownership, continues to anticipate growing revenues at an annual CAGR of 10 percent over the next five years, increasing to $2.3 billion by 2017 from $1.5 billion in 2012.
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