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It’s not easy running a successful apparel business. Fads come and go but if you are running a sizable operation it’s difficult to change course in time for the next season.
Recently, for example, I wrote about why Lululemon Athletica (NASDAQ: LULU) is not a promising long-term investment even though some of its yoga gear is awfully cute. And yet, VF Corp. (NYSE: VFC) is going strong after a whopping 116 years in operation.
Last week the Greensboro, N.C. company reported strong second-quarter earnings that showed growth in both revenue and net income. It also raised its full-year earnings forecasts.
If you own VF Corp. shares you already know why the stock is such a good investment. Over the last five years, its shares have risen more than 260%
If you are looking for a good solid investment in a sector that is more often known for short-term trends, here are a few reasons why buying VF Corp. might make sense.
Broad Diversification
VF doesn’t come with the brand awareness of Lululemon or Under Armour (NYSE: UA) but it makes so many different brands that chances are good that you own some of them and may be even wearing some right now. The North Face, Vans, Timberland, Lee and Wrangler are just a few of the labels under which VF makes apparel.
There are enough labels under the VF umbrella that you don’t have to invest on the strength of any single one, though names like North Face seem to be as close to classic as any activewear I can think of.
Multiple Channels
In the same way it has diversified its product mix, VF has also diversified the channels through which it sells apparel, including specialty stores, major retailers, discount chains, VF-owned stores, online and e-commerce.
Retail today is a tricky business in which the majority of sales continue to take place in brick-and-mortar stores, but where online retail has transformed the playing field. By selling its merchandise in so many different outlets, VF has its bases covered.
And speaking of covering its bases, VF’s clients include Major League Baseball and the National Football League, and for those who prefer something different than spectator sports, Harley-Davidson (NYSE: HOG). These are three well-known brands that aren’t going out of style anytime soon.
Just the Right Size
VF Corp. is simultaneously massive and small. With second-quarter revenues that totaled $2.51 billion, VF is a force to be reckoned with, to put it mildly. Yet spend some time perusing all the brands it manufactures and you’ll discover some little-known designers that you could have sworn made handmade goods.
Researching this article, in fact, I discovered that one of my very favorite designer labels is made by VF. That’s what I mean by being both big and small. It runs a very large business that can take advantage of economies of scale, but it’s also doing more than churning out mass-produced items.
Guess where those small designers turn when they want to start increasing output? That’s right, to a company like VF that has a tried-and-true track record of delivering a quality product on time.
This is making ordinary people rich
Ordinary people across America are getting insanely rich. Take Gladys Holm. She never earned more than $15,000 a year as a secretary. But by making one simple move, she was able to leave an $18 million fortune to a children’s hospital when she died. There’s many more just like her. Find out how they did it right here.