Delta Galil to buy VF Corp's premium brands for $120m
The agreement includes upscale denim brand 7 For All Mankind, and women's sportswear brands Splendid and Ella Moss – and is projected to add more than US$300m to Delta Galil's top line annual sales. It is also expected to be accretive to Delta Galil's earnings in 2017.
"This transaction reflects our strategic efforts to grow Delta Galil's branded business and expand our global footprint," said Isaac Dabah, CEO of Delta Galil.
"We are thrilled to be adding three renowned premium brands to our portfolio, as they further diversify our product offering and distribution channels, while adding significant strength to our structure.
"We see tremendous opportunity to expand the brands' platform for growth through continued focus on superior quality, design and innovation."
Last year the company significantly increased its capital expenditures to support and drive global growth, adding a factory in Vietnam and a dye house in Egypt, and consolidated its headquarters and invested in new offices and showrooms in New York and Israel.
The brands will join the existing Delta Galil portfolio, which includes PJ Salvage, Schiesser, KN Karen Neuberger, Nearly Nude, LittleMissMatched and Fix.
"We are pleased to have reached this agreement," added VF's chairman and CEO Eric Wiseman. "The brands included in this transaction are leaders in their sectors, and have talented, passionate people who are motivated by serving the marketplace with distinctive apparel design and exceptional service."
Wiseman added that the sale comes after the company earlier this year decided to take a proactive look at its composition "to ensure VF's portfolio is aligned with our strategic objectives and positioned to maximise growth and return to our shareholders."
And in March, the US clothing giant said it was exploring options for its Licensed Sports Group (LSG) business.
UBS Investment Bank analyst Michael Binetti believes the sale "is likely just the first transaction in a larger portfolio transformation for VFC" toward higher growth/higher margin businesses.
He adds: "In our view, selling Contemporary makes strategic sense. While the coalition is just 3% of VFC's total revenue base, Contemporary has been a distraction to management."
Help test our new apparel sourcing tool.
VF Corp emphasises its Outdoor and Action Sports division to capitalise on the lucrative sportswear category, which has seen significant growth in the US apparel market over the past few years....
In the most recent fourth-quarter filings from US apparel and footwear brands and retailers, VF Corporation revealed a fall in both sales and earnings for the fourth quarter, Kate Spade says it is exp...
US sportswear has benefited the most from the continued growth of the “athleisure” movement....
The overall apparel market is largely driven by the growing “athleisure” wear trend....
Jeans continued to experience a decline in 2015, with current value sales down by 4% to reach US$17.3 billion....
- US apparel sector braces for potential cost hikes
- China leads US apparel sources with falling prices
- Vietnam grows share of US apparel imports in 2016
- Trade Tracker – Trump's first weeks, Brexit agenda
- Key trade issues facing US textiles and apparel
- Bangladesh "high threat" for terrorist activity
- VF Corp sees Q4 and FY earnings tumble
- Sales at US clothing retailers jumped in January
- Ralph Lauren new execs to support Way Forward Plan
- US Q4 in brief – VF Corp, Kate Spade, Rocky Brands
- When Things Go Wrong - A Practical Guide to Managing Common Problems in Apparel Sourcing
- Outdoor performance apparel 2016: A broader perspective
- Technical textile markets: product developments and innovations, December 2016
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Global market review of lingerie – forecasts to 2022