VF Corporation - Company Profile, Information, Business Description, History, Background Information on VF Corporation

1047 North Park Road
Wyomissing, Pennsylvania 19610

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History of VF Corporation

VF Corporation is one of the world's largest publicly owned fashion apparel manufacturers, designing and producing a diverse array of clothing products for both the U. S. and international markets. The company consists of numerous divisions, each of which is responsible for a different set of product lines, including jeans, sportswear, intimate apparel, and occupational clothing. Lee Apparel, the firm's largest division, along with Wrangler and Marithé & François Girbaud, manufacture denim and other casual apparel for adults and children. Bassett-Walker specializes in activewear, such as sweatshirts, jogging suits, and jackets, while JanSport, Jantzen, Nutmeg, and H. H. Cutler manufacture the company's different sportswear lines. Vanity Fair produces lingerie and loungewear items for women, and Healthtex is a leading producer of children's wear. The Red Kap division markets a wide variety of occupational apparel for industrial use.

The Early Years

The company's beginnings can be traced to the year 1899, when six men formed the Reading Glove and Mitten Manufacturing Company in Reading, Pennsylvania, and began producing and selling knitted and silk gloves. Of the founders, two men had previous experience in the garment industry as hosiery manufacturing executives, while a third, John Barbey, was a banker and controlled the company's financial operations. After 12 years of slow growth, John Barbey purchased his partners' interests in the company in 1911 and changed its name to Schuylkill Silk Mills. The following year, Barbey's son joined the firm as general manager.

In 1914 the company expanded into the manufacture of silk lingerie, and after three years of successful sales, the Barbeys decided to conduct a contest to find a brand name for their lingerie line. The winner received a $25 prize for the name "Vanity Fair." With hopes of establishing a national reputation for the company's merchandise, the Barbeys launched an extensive advertising campaign that emphasized the superior quality and style of Vanity Fair lingerie. This direct-to-the-consumer approach was considered innovative in that time period, because most other lingerie was of mediocre quality and was sold without brand names primarily through jobbers. The Barbeys' campaign was successful, and as the Vanity Fair brand name became more well known, the company once again changed its name to Vanity Fair Silk Mills, Inc. in 1919.

By the early 1920s, the rising success of the lingerie product line prompted Vanity Fair to discontinue its glove manufacturing operation and devote itself exclusively to the business of making lingerie. In 1937 it moved its manufacturing operation from Reading to Monroeville, Alabama.

Innovation and Expansion in the Mid-1900s

Upon his father's death in 1939, J. E. Barbey assumed the presidency of Vanity Fair, a position which he held for the next quarter century. During that time, he led the company through turbulent times, such as the economic changes that came with World War II. In 1941, the war brought about an embargo on silk, and the company began using rayon in the production of its lingerie. Throughout the rest of the 1940s, Vanity Fair perfected the use of other new types of lingerie fabrics, and subsequently introduced products made from a nylon tricot material in 1948.

These innovations changed the face of the lingerie industry. Nylon tricot was soon considered to be an ideal lingerie fabric due to its strength, wearing power, elasticity, and ease-of-care features. Its use also enabled the company to produce lingerie with a variety of fashionable features and in many popular colors. As a result, in 1950 Vanity Fair became the first lingerie manufacturer to receive the Coty Award for Design. Throughout the next decade, the company achieved steady growth through its production of lingerie and foundation garments. Then in 1969, as sales growth for these items was beginning to top off, Vanity Fair attempted to offset the effects by expanding into the robe and loungewear market.

Vanity Fair made two major acquisitions in 1969, including the purchase of the H. D. Lee Company, Inc., a manufacturer of men's and boys' jeans and casual pants. Also acquired at that time was Berkshire International, one of the world's largest producers of women's hosiery.

H. D. Lee had been established in the midwestern United States in 1860 as a wholesaler called the H. D. Lee Mercantile Company. In the early 1900s, the firm began selling overalls that it obtained from a supplier in the eastern United States. Because deliveries from this supplier were often unreliable, Lee began manufacturing its own overalls, jackets, and dungarees in a factory in Salina, Kansas. It also introduced the Lee Union-All, a garment designed to protect an entire suit or uniform. The Union-All became the official doughboy fatigue uniform during World War I. Beginning in the 1920s, Lee launched a series of innovative fabrics and apparel, including heavy-duty denim and Lee Rider cowboy pants. In the 1940s, Lee improved its cowboy pants with a tighter fit and the Tighter Rider brand became the best fitting cowboy pants available. The company established its International Division in 1959, and was rewarded a Presidential "E" citation in 1964 for making an outstanding contribution to the export expansion program of the United States.

Berkshire International also traced its roots back to the early 1900s, when it was founded as Berkshire Knitting Mills, a manufacturer of cotton stockings. The company's production process applied paraffin wax to cotton thread to give the woven stockings the luster of silk. Berkshire developed into the world's largest manufacturer of women's hosiery, thanks in part to the popularity of motion pictures featuring beautiful actresses in short skirts and stockings, as well as to the outbreak of World War I, which fueled domestic production.

After acquiring the Lee Company and Berkshire International, Vanity Fair changed its name to VF Corporation as a means of reflecting its expansion into these new areas. VF Corporation was designated the parent company of H. D. Lee and Berkshire International, and a new subsidiary was formed under the Vanity Fair name to house the intimate apparel business. In 1971, VF acquired Kay Windsor, Inc., a manufacturer of budget-priced, ready-to-wear women's dresses and sportswear. This business encountered difficulties during the 1970s due to the growing popularity of women's pantsuits, however, and its division was discontinued in 1982.

In 1979, VF established an International Division to manage its growing operations overseas. The need for this new division had arisen as the export of Vanity Fair intimate apparel to Europe and the Far East soon grew to include many of the products from the Lee Company and Berkshire International.

An Industry Leader in the 1980s

Although the jeans market was beginning to experience diminished demand, VF entered the 1980s in a more profitable position than either of the two other major jeans makers, Levi Strauss or Blue Bell, Inc. VF's success was attributed to less dependence on foreign markets; earnings from other areas, such as lingerie; million-dollar investments in capital improvements; and tighter inventory controls. VF also benefited from Levi Strauss's decision to expand the distribution of its products to mass-merchandise outlets. Independent retailers that had previously carried the Levi's brand angrily responded to this development by stocking the Lee brand instead. Due to the rising demand for Lee's products, several of VF's Berkshire International sites were converted to jeans manufacturing facilities, as Lee became VF's largest operating division.

In 1982, Lawrence Pugh joined VF as president and chief executive officer, and became its chairman the following year. At that time, Robert Gregory was the president of the Lee division, and joined Pugh in an effort to inject new life into the sluggish jeans market. The two men embarked upon a marketing strategy to set Lee apart from other jeans industry leaders by segmenting production into men's and women's lines. VF became one of the first producers to manufacture stretch jeans for women, as well as dressier, more expensive jeans, which began competing with the designer lines that had become popular. VF developed the Ms. Lee brand, which soon became the best-selling line of women's jeans in the United States.

Meanwhile, VF was also segmenting and upgrading its Vanity Fair lingerie lines with more fashionable items to appeal to younger women. In addition to introducing new products, Pugh increased spending for advertising, expanded the company's retail distribution channels, and increased the size of the VF sales force.

Continuing to diversify, in 1984 VF acquired Modern Globe, Inc., a manufacturer of men's and women's cotton undergarments since 1917. VF also purchased Troutman Industries, Inc., a manufacturer of men's casual slacks, and Bassett-Walker, Inc., a producer of fleece activewear. Bassett-Walker had been founded in 1936, and by 1960 had become one of the largest manufacturers of knitted outerwear in the United States. The addition of these companies to VF's corporate portfolio helped the parent company continue to diversify, which allowed it to avoid reliance upon any one product or market segment.

In 1986, VF became the United States' largest apparel manufacturer and domestic jeans supplier when it acquired the Blue Bell Holding Company, a competitor that was the producer of Wrangler jeans. Blue Bell was also a major manufacturer of work clothes, and after acquiring the H. D. Bob Company in 1940 and Casey Jones in 1943, Blue Bell had begun manufacturing garments for the military in World War II. After the war, the company had applied the production methods it used in making military garments to the manufacture of casual clothing and western-style wear. In 1947, the brand name Wrangler was developed for this rapidly growing product line.

VF's friendly purchase of Blue Bell was viewed as an ideal marriage between two companies that had similar manufacturing cultures. The merger offered VF an opportunity to expand more deeply into menswear, while also having available resources to broaden its distribution channels to include mass merchants and discount stores. Furthermore, when VF acquired Blue Bell, it purchased not only the Wrangler product line, but also Blue Bell's other holdings: the Rustler jeans product line, Jantzen and JanSport swimwear and sportswear, Red Kap occupational apparel, and licenses to the Marithé and François Girbaud upscale sportswear collections.

Although VF had grown considerably in size due to its many acquisitions throughout the 1980s, declining jeans sales finally caught up to it in 1989. In the past, whenever one division's sales had slowed, VF had managed to survive the slump by relying on strong sales in its other divisions. This time, however, the company was paying the price for its decision three years earlier to begin marketing its Lee jeans through mass merchandisers and discount outlets. Just as competitor Levi Strauss had found when it attempted the same thing, the marketing error of moving into the discount realm ended up alienating department store buyers, who began refusing to carry the Lee line due to the lower-quality image it now possessed. Without the aid of department and specialty stores, VF found itself amidst a marketplace already dominated by low-cost importers with widely recognized brand names and large consumer advertising budgets. The Lee division traditionally had not given retail stores significant advertising support and found itself at a sizable disadvantage. As a result, both sales and profits in the jeans area fell significantly.

Compounding the company's problems was the growing popularity of a new line of casual men's apparel called Dockers, which had recently been introduced by Levi Strauss. The Dockers brand cut severely into VF's sales of jeans. VF had not changed its basic Lee Rider style, and had been so involved in rejuvenating its jeans business that it had neglected to notice that other manufacturers had expanded into different trouser lines that took advantage of new apparel trends.

The 1990s and Beyond

In the early 1990s, VF not only began taking further measures to rejuvenate its jeans sales, but also started focusing on the market segment of women aged 25 to 44. It continued to offer increased marketing for its women's jeans lines, while also emphasizing support for other women's apparel such as the JanSport and Jantzen lines. In 1990, the company purchased the manufacturing operations of intimate apparel brands Vassarette and Form-O-Uth from Munsingwear, and added them to the intimate apparel division. The following year marked the acquisition of Healthtex, Inc. a leading manufacturer of children's wear.

With a diverse array of products under its corporate umbrella, as well as numerous distribution options, VF instituted a program to strengthen relationships with its retailers and better understand the needs of its consumers. First, VF began investing more time and money into researching the buying patterns, needs, and lifestyles of its consumers, so as to better serve them. The company then offered its retailers increased advertising and merchandising support based on the results of its consumer research. The information obtained through market research was also helpful in determining which brands to emphasize at any given point in time. Furthermore, VF's proprietary Market Response System was introduced, providing an electronic link between retailers' sales floors and corresponding VF divisions and allowing VF to keep its products in stock at all times.

VF also saw continued growth as a result of its ongoing acquisition program. In 1992, the company purchased three European intimate apparel companies: Valero, Vivesa and Jean Bellanger Enterprises, which together added eight new international brand names to the VF portfolio. These additions, combined with the success of newly developed products throughout the year, helped VF break the $3 billion mark in annual sales for the first time in the company's history.

Following that record year, Lawrence Pugh handed down his role as president to M. J. McDonald, while still remaining at the company's helm as chairman and chief executive. Together, the two led VF through a year of rejuvenated jeans sales, with the exception of the Girbaud division, which began experiencing a decline. Also engineered in 1993 were the acquisitions of Nutmeg Industries, Inc. and the H. H. Cutler Company, both of which helped VF become a leading supplier of licensed sports apparel. VF's Bassett-Walker division actually benefited from these acquisitions as well, as it became the main supplier of knitwear for the two companies, and therefore increased its output for the year.

1994 was a year characterized by cooperative endeavors between different VF divisions and other well-known companies. For example, H. H. Cutler teamed up with Disney to create playwear featuring characters from the movie The Lion King, all of which sold out quickly and prompted the creation of similar items the following year featuring Pocahontas. Also, H. H. Cutler and Healthtex combined to introduce a Fisher-Price brand of children's discount clothing. Jantzen worked with Nike, Inc. to develop a new line of performance swimwear, while Nutmeg readied itself to launch some of its 1995 sports apparel under the Lee Sport name.

Unique projects and ideas such as those above, coupled with VF's conservative financial strategies and high level of brand name recognition by consumers, enabled the company to break the $5 billion mark in annual sales for 1995. At the end of the year, Pugh once again handed down one of his roles at VF to M. J. McDonald, who added the responsibilities of being chief executive officer to his list of duties as company president. Pugh remained with the company as its chairman.

Entering the late 1990s, a good majority of VF's products were competing in mature markets, which dictated that the company's future growth was contingent on deriving ways to gain market share. In VF's favor was the evolving trend in many businesses toward dressing more casually at work. But rather than rely solely on such consumer trends and buying patterns, VF began actively formulating new methods to reach consumers and provide them with the best customer service possible, while at the same time increasing name brand recognition. For example, the company began testing a new interactive touch-screen computer program in stores called the Lee FitFinder, aimed at helping customers determine the best sizes and styles for their individual body types.

The company continued focusing on a combination of new product development, cost reduction, and inventory management measures to further strengthen relationships with retailers and enable the firm to respond more effectively to market needs. VF's goal had long been to provide the right styles and quantities of products at the right prices on the retail shelf at all times. The ability to meet this goal will be a key determinant in the success of VF's future activities, as it strives to maintain its leadership position, build market share, and increase shareholder value. With products available in almost every type of distribution channel, and with a history of being extremely adept in reacting to industry occurrences in positive and productive manners, VF Corporation entered the end of the century with potential for continued growth and success.

Principal Divisions: Bassett-Walker; H. H. Cutler; Marithé & François Girbaud N. A.; Healthtex; JanSport; Jantzen; Lee Apparel; Nutmeg; Red Kap; Vanity Fair; Wrangler; VF Intimate Apparel--Europe; VF Jeanswear--Europe; VF Asia/Pacific.

Additional Details

Further Reference

Agins, Teri, "Bottom Line: Once-Hot Lee Jeans Lost Their Allure In a Hipper Market," The Wall Street Journal, March 7, 1991.Eklund, Christopher S., and Christine Dugas, "Lee + Wrangler + Rustler = A New Blue-Jeans King," Business Week, August 11, 1986.Ozzard, Janet, "Mackey McDonald: Positioning VF for the Next Century," Daily News Record, April 25, 1996, p. 5.People, Product, Pride ... The History and Heritage of VF Corporation and Its Divisions, Wyomissing, Penn.: VF Corporation, 1991.

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