Blog: Leonie BarrieGlobal growth in VF's sights

Leonie Barrie | 24 September 2012

Apparel giant VF Corporation aims to leverage leading brands such as Timberland, Lee, The North Face, Vans and Kipling to more than double its revenues in the Asia Pacific region to US$2bn by 2017.

Unveiling the expansion strategy at an investor meeting in Shanghai last week, the US company said its goal was to add $1.1bn in revenues from the region over the next five years. The target, if reached, would represent an annual growth rate of 17%, based on forecast revenues of $900m from the region this year.

But Adidas has been forced to make dramatic cuts to the long-term revenue targets for its Reebok brand, which has been impacted by lost business in the US and fraud allegations in India. The group now expects Reebok to post revenues of EUR2bn in 2015, down from a target of EUR3bn.

The company has also been dealt another blow after Cornell University said it would end its eight-year contract with the sportswear firm over what it describes as a "gap" in the approach to worker rights following the non-payment of severance to workers at former Indonesian supplier PT Kizone.

There have also been changes to a sourcing deal inked more than two years ago between Li & Fung and Wal-Mart Stores. The shift from a buying agent agreement to a supplier relationship allows the global supply chain manager to offer a range of new services to the retail giant's international markets, including design and replenishment.

The European Commission has taken a step towards reinstating trade preferences for Burma/Myanmar, in a move that would give clothing duty and quota-free access to the European market for the first time since 1997. The plan is to bring the country back into the EU's Generalised System of Preferences (GSP).

But the European textiles industry has expressed concern about the potential impact of an EU decision to temporarily waive import duties on a range of textiles, apparel and footwear products from Pakistan. The move, which is aimed at helping Pakistan's recovery following floods in 2010, would "boost the exports of an industry that doesn't need it," critics claim.

And the Indian government has finally eased rules for foreign ownership in multi-brand store chains - despite widespread protests throughout the country and opposition from within India's ruling coalition. The moves will allow overseas investors to own 51% of multi-brand retail outlets - but come with so many restrictions they may well deter overseas firms from investing in the country.


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