Outdoor financials: VF Corp. acquisition and Deckers

VF Corp. acquires Italy-based Green Sport Monte Bianco

VF Corp. has entered into an agreement to acquire Italy-based Green Sport Monte Bianco S.p.A., maker of premium casual outdoor apparel under the Napapijri (pronounced Napa – Peery) brand. The brand will join fellow outdoor brands, The North Face, JanSport and Eastpak, as part of VF’s Outdoor Coalition. With 80 percent of Green Sport’s sales in Europe, 2003 sales for the company were $76 million (63 million euros), up 18 percent from 2002 levels.

“We see the opportunity for continued double-digit growth for the Napapijri brand, both throughout Europe and in the U.S.,” said Eric Wiseman, vice president and chairman of VF’s Sportswear and Outdoor Coalitions. “Under Guiliana’s (Rosset, CEO of Green Sport) leadership, we look forward to using the great design talent behind the Napapijri brand to strengthen our sportswear platform in Europe, enabling additional growth for The North Face brand and assisting in the European launch of the Nautica brand. At the same time, VF’s well-established base in Europe will support future sales growth and ensure an efficient business model.”

Sales of Napapijri products are evenly distributed among sporting goods, department and urban lifestyle stores. The company, founded in 1987, has both wholesale and retail operations, with three owned retail stores located in Paris, Milan and Chamonix. An additional 14 stores are operated in partnership with retailers in Europe and Japan. Goods are currently produced in Tunisia, Italy, Romania and Hong Kong according to sources in Italy. At present, the company employs 180 worldwide, we are told.

Rosset will report to Karl Heinz Salzburger, president of VF’s International Outdoor division. Mike Egeck, president of The North Face, will have responsibility for the Napapijri brand in the United States.

The sale will be finalized in late June, funded with existing cash balances. VF expects the acquisition to be neutral to its earnings in 2004 and slightly accretive in 2005. Terms of the deal were not disclosed.

SNEWS View: Napapijri — www.napapijri.com — is a highly regarded European brand, well-known in Italy and Germany for a label that closely reproduces the Norwegian flag. The brand has very strong growth potential making it a very healthy acquisition for VF and one that will certainly strengthen TNF’s position as the company moves to expand its play in Europe and Japan and more firmly solidify its position in the United States.

Deckers 1Q net sales up over 22 percent

Deckers Outdoor Corp. (Nasdaq: DECK) reported that net sales for the first quarter ending March 31, 2004, increased 22.6 percent to a record $44.3 million from the previous year’s $36.1 million. Net earnings for the quarter increased 28.1 percent to $5.4 million compared to 2003’s $4.2 million and diluted earnings per share increased 32.4 percent to $0.49 from $0.37 last year. Including sales from its wholesale divisions and Internet and catalog retailing business, Teva sales for the first quarter increased 18 percent to $37.4 million (its biggest Q1 ever) compared to $31.7 million last year.

CEO Doug Otto said in the earnings conference call on April 15 that Teva’s closed-toe footwear represents 12 percent to 13 percent of its business, with hopes that down the line it’ll be as much as 30 percent. He added that the company is pursuing more licensing deals for bags, packs, socks and other apparel.

Ugg sales for the quarter increased 226 percent (!) to $5.1 million from $1.6 million — its sixth consecutive year of double-digit growth, according to Otto. Due to the seasonality of the Ugg business, the first quarter is generally a lower volume quarter (not the case this year), while the third and fourth quarters are generally the highest volume quarters for the division.

Sales of the Simple brand were down again — $1.7 million for the quarter compared to 2003’s $2.8 million.

Sales for the Internet and catalog retailing business, which are included in the previous brand sales numbers, aggregated approximately $3.6 million for the first quarter of 2004, up 226 percent from $1.1 million for the first quarter of 2003.

International Q1 2004 sales for all brands went up 21 percent to $12.9 million from 2003’s $10.6 million.

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