VF Corp's stock hit a 52-week high on Monday (2 April) after the company took the license for The North Face brand in China in-house and closed the divestiture of its intimate apparel unit to Fruit of the Loom.

Shares of the Greensboro, North Carolina-based apparel marketer topped out at US$83.47 in intraday trading on the New York Stock Exchange before closing at $83.24, up $0.62 or 0.8%.

In announcements that were less than two hours apart, VF said that it had completed the sale of its global intimate apparel business to Berkshire Hathaway's Fruit of the Loom subsidiary for $350m, plus an adjustment for working capital, and later that it had acquired the license for The North Face branded business in China from Youngone Corp, its South Korean-based licensee.

"The North Face brand continues to be one of VF's premier growth vehicles," said Karl Heinz Salzburger, VF's president of Europe, Middle East, Africa and Asia. "This move will allow us to directly control the brand's destiny in this dynamic and fast-growing market."

Frank Cancelloni, general manager of the brand in Asia/Pacific, will oversee The North Face's expansion in China, which will be managed from offices in Shanghai, Beijing and Guangzhou.

VF estimated that the brand, which operates a freestanding retail store in Beijing in addition to its wholesale business, has the potential to generate $40m in volume in five years.

Financial details of the transaction with Youngone weren't disclosed.

VF said that proceeds from the sale of its intimates business would be used to repurchase shares this year. Brands included in the deal are Vanity Fair, Lily of France, Vassarette, Bestform and Curvation in the US and Lou, Gemma and Belcor in Europe.

Within Fruit of the Loom, the labels will operate as Vanity Fair Brands, a wholly owned subsidiary.

In VF's 2006 annual report, Mackey McDonald, chairman and chief executive officer, called the sale of the intimates business "part of our ongoing transformation toward becoming a higher-growth, higher-margin lifestyle brand company.

"Contributing revenues of over $800m and operating income of $50m in 2006, Intimates has played an important and positive role in our success over our 100-year-plus history.

"However, the time has come to rebalance our portfolio strategically and focus our energies and resources on the many growth opportunities within our Jeanswear, Outdoor, Imagewear and Sportswear businesses instead."

The benefits of the sale, he continued, included improvement in the company's margins and a better fit as lifestyle businesses, such as its numerous outdoor brands, had grown to more than 40% of its revenues.
 
By Arnold J Karr.