VF completes spin-off of Kontoor Brands
Following the report of its disappointing financial results for fiscal 2019, American lifestyle group VF Corporation announced on Thursday that it has finalized the separation of its denim business as Kontoor Brands, Inc.
The new publicly traded company is composed of the Wrangler, Lee and Rock & Republic brands, as well as VF Outlet, while VF Corporation has retained its outdoor, active and workwear brands, which include Vans, The North Face, Timberland and Dickies.
First announced in August 2018, the spin-off is meant to allow both of the resulting companies to “focus investment on strategic priorities.” In particular, the creation of Kontoor Brands is intended to better position VF’s underperforming denim business to benefit from the jeans renaissance currently getting underway.
11-year VF veteran Scott Baxter has been chosen to lead the new company, which will continue to operate out of VF’s home state of North Carolina.
At the end of last month VF released a presentation revealing five strategic priorities for Kontoor and providing financial guidance for a three-year period.
According to this document, the company’s focus will initially be on scaling its core men‘s denim business, strengthening its position in high-value segments, channels and geographies, attracting new customers, and implementing a TSR/ownership mindset among employees.
In terms of financial objectives, the company will be prioritizing margin expansion and capital efficiency, seeking to take advantage of margin accretive opportunities and streamline its operations.
Kontoor is expected to report a low-single-digit compound annual growth rate (CAGR) in revenue from 2020 to 2021, while its adjusted EBITDA is predicted to grow at a mid-single-digit CAGR.
Following the separation, VF’s shareholders have been assigned one share of Kontoor Brands common stock for every seven shares of VF stock held by them at the close of business on May 10, 2019.
Kontoor Brands common stock began trading on the New York Stock Exchange on Thursday under the ticker symbol “KTB.”
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