US: VF to sell Intimates to Fruit of the Loom
The intimates business, which boasts brands such as Vanity Fair, Lily of France, Vassarette, Bestform and Curvation, made more than $800m in revenue and about $50m in operating income in 2006.
This represented 12% and 6% of VF's total 2006 revenues and operating income, respectively.
The cash transaction is expected to be completed during the first quarter of the year. It is currently subject to government approvals and customary closing conditions.
"This marks an important chapter in VF's ongoing transformation toward becoming a higher growth, higher margin lifestyle company," said Mackey J McDonald, VF's chairman and CEO.
"Our Intimates business has been a positive and important contributor to VF's success over our 100-plus year history. But the time has come to strategically rebalance our portfolio and to focus our energies and resources on the many growth opportunities across our Jeanswear, Outdoor, Imagewear and Sportswear businesses."
VF said the sale proceeds will go toward repurchasing shares in 2007.
Fruit of the Loom, meanwhile, plans to operate the businesses as a new subsidiary called Vanity Fair Brands.
VF Intimates' existing president and management firm will stay on.
"We are delighted at the prospect of adding such strong brands to our portfolio," said John Holland, CEO of Fruit of the Loom. "We were most impressed with the heritage, experience and innovative talent of the VF Intimates worldwide team."
Excluding results from intimate apparel, VF expects fourth-quarter revenue of about $1.6bn plus earnings of about $1.20 to $1.22 per share.
It also foresees full-year revenue of about $6.22bn and full-year earnings of about $4.70 to $4.72 per share.
VF expects a loss of about $45m for the sale of the intimates business.
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