V.F.
Annual Report 2010

Plain-text annual report

VF CORPORATION 105 Corporate Center Blvd. Greensboro, NC 27408 336.424.6000 vfc.com ® For additional content visit: RePORTINg.VFC.COm I n t e r n a t i o n a l o p p o r t u n i t i e s Best-of-breed social media Direct-to-consumer touch points i e n c e s D e e p e r b r a n d e x p e r Beyond the numbers I n n o v a t i v e p r o d u c t s VF CORPORATION ANNuAl RePORT 2010 ® Financial Highlights $7,643 $7,703 $7,220 $6.46** $5.42* $5.16** $5.18 $4.13 $2.33 $2.37 $2.43 *Includes $.30 per share in expenses to reduce costs **Excludes impairment charges 46.7% 43.9% 44.3% $1,001 $973 25.2% 23.7% 20.2% $678 �08 �09 �10 �08 �09 �10 �08 �09 �10 �08 �09 �10 �08 �09 �10 �08 �09 �10 Revenues (Millions) Earnings Per Share Dividends Per Share Cash Flow from Operations (Millions) Debt to Total Capital Ratio Gross Margins 1 To our Shareholders: Early in 2010 we made the decision to intensify our brand investments to drive revenues in our highest growth, highest profit markets and opportunities. The result was $100 million in additional brand marketing over 2009 levels. Our investments were designed to build stronger connections with consumers, heighten brand awareness in key markets, and grow market share. While over half the increase in spending was behind The North Face® and Vans® brands, where brand investments doubled during the year, nearly every brand in our portfolio received additional marketing support in 2010. We also made significant investments to support our rapidly growing and highly profitable businesses in China. Those investments paid off handsomely. In 2010 revenues rose 7% to $7.7 billion and gross margins reached an all-time high of 46.7%. Earnings per share were $6.46 (excluding a noncash impairment charge for goodwill and intangible assets), up 25% from 2009. During the year we generated $1 billion in cash from operations —another record—and our financial position is stronger than ever. We enter 2011 with great momentum, con- fident in our brands’ ability to generate substantial growth, and well-positioned to deliver another year of outstanding results to our shareholders. Key Growth Enablers: International and Direct-to-Consumer Extending the reach of our brands internationally is one of our core growth strategies, and in 2010 international revenues grew 8% in constant dollars. Asia is a tremendous growth market for our brands, and 2010 revenues in Asia grew by 31%. We now have four primary platforms established in Asia to support growth: jeanswear, primarily with our Lee® brand; outdoor with The North Face® brand; action sports with the Vans® brand; and handbags and accessories with the Kipling® brand. Each of these businesses is growing rapidly, giving us confidence in our ability to achieve our target of $1.3 billion in revenues from Asia within the next five years. Another core growth strategy is expanding our direct-to- consumer businesses, through our brands’ retail stores and e-commerce. In 2010 our direct-to-consumer revenues grew by 13%. At year-end we had 786 stores across our portfolio of brands, and expect to open about 100 new stores in 2011. Strong Brands Fueling Strong Performance With revenues rising 14% in 2010, our Outdoor & Action Sports businesses continue to fuel both our top and bottom lines. Our focus on expanding our Outdoor & Action Sports businesses, The North Face® and Vans® brands in particular, has resulted in exceptionally strong growth. In 2010 Outdoor & Action Sports accounted for 42% of total revenues, up from only 22% five years ago. By 2015, Outdoor & Action Sports should account for at least half of VF’s revenues. Jeanswear coalition revenues were up slightly in 2010, with growth accelerating as the year progressed. The key brands in our Jeanswear coalition —Wrangler® and Lee®—are as strong as they have ever been. Our brands’ use of consumer research and new processes to drive innovation has greatly strength- ened our product pipeline and is resulting in market share gains and positive momentum for both brands within their respec- tive channels of distribution. Revenues and margins of our Imagewear coalition, comprised of our Image (or uniform) and Licensed Sports Group busi- nesses, rebounded strongly in 2010. While they serve different consumers, these businesses share outstanding service and inventory replenishment capabilities, providing them with a competitive advantage to expand their market shares. 3 Results of our Sportswear coalition, which consists of our Nautica® brand and our Kipling® business in the U.S., were sta- ble in 2010. Through extensive consumer research conducted during the year, the Nautica® brand has clarified and strength- ened its brand position, bringing to life its heritage as a brand that takes its inspiration from the water. This cohesive message has been activated globally across all facets of the business, including product design, marketing and e-commerce, within our stores and with our licensees. Our Contemporary Brands coalition grew revenues by 5% in 2010, but soft market conditions in the premium denim market affected our 7 For All Mankind® brand, resulting in lower profit- ability for this coalition in 2010. We’re excited about the opportunities that lie ahead. Strong platforms are in place to support our growth plans, as is a passionate and talented team that is committed to delivering superior results to our shareholders. Eric C. Wiseman Chairman, President and Chief Executive Officer 4 Lead in innovation We have declared innovation as VF’s newest Growth Driver. Innovation, which we define as “something new that creates value,” will require every functional area across VF to think dif- ferently about how to enhance success. It’s also about going outside for new ideas in terms of what we provide to consum- ers and how we make, create and deliver it. Enable our future A crucial part of our success is to continue investing in our people through a variety of strategically aligned training and development opportunities. Another aspect of enabling our future is investing in supply chain capabilities that reduce cost and provide speed, flexibility and value. Win with winning customers At VF, we have a long history of creating successful retail partnerships, in part because of our extensive knowledge of consumer needs and global brand expertise. We’ll build on these capabilities to expand our market share and bring exclu- sive new brands to our top customers. Looking forward: The next $5 billion Over the past few years, we’ve significantly strengthened our portfolio of global lifestyle brands. The result is an opportunity for top-and-bottom line growth at rates beyond those we have previously envisioned. In short: over the next five years we aim to add $5 billion to revenues and $5 to earnings per share over 2010 levels. The VF of 2015 will be more innovative, more international, more diversified and more profitable. Success will be fueled by our six Growth Drivers: Build lifestyle brands We will continue to build powerful brands both globally and regionally. Our focus will be on activity-based brands that speak authentically to their consumers’ lifestyles, particularly in the outdoor and action sports categories. Go global Our goal is to generate 40% of revenues from international markets by 2015, with growth concentrated in Europe, China, India, Brazil and Mexico. Serve consumers directly We need to be where our consumers are – both in-store and online. Growth in our retail stores and in e-commerce will pro- vide more opportunities for our brands to tell their compelling stories directly to consumers. Our goal is to generate 22% of revenues through branded retail stores and e-commerce by 2015, while increasing our focus on building stronger rela- tionships with consumers through our brands’ websites and social media. J e a n S w e a R 3 3 % Coalition Revenues As % of VF Total Revenues Other 1% i M a G e w e a R 1 2 % % R 6 a e w S T R O p S C O n T e M p O R a R y B R a n D S 6 % % 2 4 S T R O p S n O i T C a & R O O D T U O i n T e R n a T i O n a l 2 6 % * % 8 l 1 i a T e R % S 3 e R O T T. S p e e D lin ain M e D l a C S p U % S 6 % S 3 e R O T a i n h T . S C p e Channels of Distribution As % of VF Total Revenues ROyalTy/OTheR 11% S p e Cia lT y ST O R e S 19 % M a S S 1 4 % *Includes International Retail 7 Coalitions at a glance (Millions) $3,205 $2,807 $2,806 $2,765 $2,522 $2,538 $642 $443 $493 $379 $371 $432 $991 $909 $865 $571 $498 $498 $386 $418 $439 $132 $87 $111 42 $52 $52 $63 $51 $14 �08 �09 �10 �08 �09 �10 �08 �09 �10 �08 �09 �10 �08 �09 �10 Revenues profits Outdoor & action Sports Jeanswear imagewear Sportswear Contemporary Brands 9 Investing for growth In 2010, we invested an additional $100 million to drive top-line growth across our portfolio. With the opportunity to scale their innovative marketing efforts like never before, our brands did more with more, driving solid organic growth. Our investments were guided by an approach to brand building that allows our brands to remain authentic, independent and nimble while giving them the support of VF’s global reach, supply chain expertise and deep resources. Strengthen direct-to-consumer touch points Today’s fragmented media environment has made building direct relationships with consumers more challenging—and more critical. That’s why we’re investing heavily to “own” our relationship with every consumer, particularly in our retail stores, online and with events. Every touch point is an impor- tant opportunity. We make the most of every one. Design innovative products that delight consumers Whether it’s athlete-inspired The North Face® products, Wrangler people working with real cowboys, or Vans® brand collaborations with young designers and pop culture creators, VF’s brands listen to their core constituencies. It’s the only way to create new products that consumers will embrace as authentic. Our investments were designed to: Create deeper brand experiences Our brands are more than just a label and a back story. They have a life of their own that our customers can feel. This au- thenticity is no accident. It’s a growth strategy that comes from a company-wide commitment to create brands that have real meaning in the lives of our consumers. We create emotional bonds with consumers based on shared passions. Maximize international opportunities In the last five years, we have seen significant growth in our international businesses, where revenues have grown at a rate of 10% annually. Yet many of our brands still have relatively low penetration in key international markets. Given their strength, heritage and authenticity, our brands have substantial runway for growth not only in Europe, but in fast growing markets such as China, India and Brazil. Build best-of-breed social media capabilities Social media encompasses an ever-growing ecosystem of video sharing, pictures, reviews and blogs that is fast becoming the world’s favorite media channel. Over the next five years, our consumers will spend more time using social media to interact with the content and brands they care about most. In 2010, we made strategic investments to make sure that we are where consumers are today and will be tomorrow. 11 Birmingham, AL / Boston, MA / Chicago, IL Denver, CO / hartford, Ct / Billings, Mt / New York, NY Portland, Or / raleigh-Durham, NC / Seattle, WA St. Louis, MO / Washington, D.C. Focused on 12 markets where passion runs deep DEEpER bRAnD ExpERIEncEs aCTiviTy BaSeD MeDia MODel The north Face® brand’s Activity based Model is fueling growth through products tailored for specific categories: outdoor, action sports, performance and youth. In 2010, the brand applied the same philoso- phy to its marketing spending with an approach to traditional marketing that’s anything but traditional. With targeted investments in 12 key markets, consum- ers saw The north Face® brand messages customized for their city, their favorite activity, and even their local dealer. The result was higher traffic to the specialty stores that support the brand experience—and drive higher revenues. 13 13 Experience life well-lived at the water’s edge The new OCean TO OCean CaMpaiGn In 2010, the nautica® brand team traveled to American coastal communities to find the authentic people, places and values that exemplify life at the water’s edge. From these visits to san Francisco, the pacific northwest, chesapeake bay, and the coasts of Maine and Florida came Ocean to Ocean, a new platform for product development and brand communica- tion. Living on the water is more than just a lifestyle. It’s a tradition passed on by generations of coastal families. With video and journal content that cre- ates an emotional connection to the nautica® brand, Ocean to Ocean tells the true stories of real people whose everyday passion and deep connection to the water is an inspiration to millions of consumers. DEEpER bRAnD ExpERIEncEs 14 DEEpER bRAnD ExpERIEncEs Brand. Building. A 25,000 sq. ft. mecca for art, skateboarding, music and street culture. hOUSe OF vanS, BROOklyn 11222 To bring to life the iconic southern california Vans® brand on the East coast, a multifaceted event space named The House of Vans opened last fall in Williamsburg, brooklyn. This invitation-only space is not a pop-up store, and no products are sold there. In fact, the only way into The House of Vans is via an invitation from Vans, through a local skate shop or at events sponsored by the brand’s media partners. The House of Vans features an indoor concrete bowl and skatepark and outdoor street course; a perma- nent, professional stage for concerts, and custom art by Mike Giant and Dennis Mcnett. The House of Vans is a blank canvas to bring the brand’s stories to life, and allows the brand to create deeper relationships with its consumers and retailers. 17 Lights. Camera. Vans. DEEpER bRAnD ExpERIEncEs s i n c e i t s n o v e m b e r l a u n c h : OFFThewall.Tv In the past 60 days, more content was uploaded to YouTube than has been created by major broadcasters in the past 60 years. Offthewall.tv, a new media outlet developed by Vans, allows the brand to build upon its rightful place among the leaders and tastemakers in youth culture by telling its stories directly to con- sumers. This online platform (available on the web, on smartphones, and on tablets) functions like a TV channel and includes compelling video series created by professional documentary filmmakers and action sports talent. 19 DEEpER bRAnD ExpERIEncEs A storybook ending to a “Salute to Dad” naSCaR FaTheR’S Day pROMOTiOn On July 2, 2010, Dale Earnhardt Jr. drove to victory at the Daytona International speedway in a piece of Wrangler® brand history. His throwback #3 Wrangler Jean Machine was a special tribute to his legend- ary father’s posthumous induction into the nAscAR Hall of Fame. It was all part of a “Wrangler salute to Dad” marketing program in which more than 3,000 consumers submitted stories about their dads for a chance to win a trip to see the race and meet Dale Earnhardt Jr. His win gave the program tens of millions of consumer impressions and millions of dollars worth of additional pR value. 21 InTERnATIOnAL OppORTunITIEs Flattery will get you everywhere new DiaMOnD CUT JeanS For years, the Lee® brand in the united states has been raising the bar on product innovation with breakthroughs in stretch fabrics and new styles that are form fitting yet flattering. These lessons helped in the design of our most innovative jean yet for the Asia market. The Lee® Diamond cut jeans include key design features that lift the hip, slim and lengthen the legs, and make women look and feel fabulous. To launch the product, a Diamond cut road show set up pop-up shops in shopping centers in 12 cities. Each diamond-shaped shop gave consumers a mini-make- over with an on-site fitting room and photographers on-hand to take before and after pictures. 23 Southern California cool reaches new heights around the world aGGReSSive inTeRnaTiOnal expanSiOn With more and more youth consumers around the world responding to its brand message of originality and self-expression, the international momentum be- hind the Vans® brand continues to build. In 2010, Vans opened more than 149 new stores and shop-in-shops in china, bringing its retail presence to 260, including a flagship store in the trendy Joy city Mall in beijing, and a total of 21 stores throughout the Asia pacific region. The brand is also expanding into new markets such as Israel and Eastern Europe, launching aggres- sive outdoor campaigns and grassroots events to build awareness for Vans and the brand DnA of action sports, music and street culture, including holding “Off the Wall Music nights” with local bands. 24 InTERnATIOnAL OppORTunITIEs VAns LOcATIOns 500,000 WeB VISItOrS s r e b s n m of 18 clim ntain; millio 010: a b a r 2, 2 d H mite e b cto m A te u O s d V, dia. e rint, T c n n e rie ditio e m e h p p nlin e x p g re e x u d o e e ro o n th m th a u o M a Creating an outdoor culture in China InTERnATIOnAL OppORTunITIEs haBa MOUnTain expeDiTiOn In china, there is no strong tradition of outdoor par- ticipation, so The north Face® brand is creating one. In 2010, over 70% of the brand’s marketing budget there was invested in events that encouraged consumers to get outside and experience the spirit of the brand firsthand. During the year The north Face® brand used social media and an online contest to recruit for an expedition to climb china’s legendary Haba Mountain. From nearly 2,000 entries, an online vote allowed consumers to help choose three winners to join a team of the brand’s sponsored chinese athletes as well as famous bloggers, who documented the entire trip up the mountain. 27 Listening to consumers online in real time USinG SOCial MeDia TO BUilD TRUST ThaT SpReaDS Online Every day, consumers around the world give valuable suggestions via online reviews and comments, but capitalizing on them means knowing how to listen. so when the Lee® brand’s social media team noticed consumers writing online about how to improve the fit of the premium select jeans line, they were ready. The brand identified a group of 50 consumers and con- tacted them to hear their opinions, which were shared with the product design team. After a new prototype was developed, the brand went back to this group to ask for feedback before the jeans were introduced in retail stores. This close connection between the brand and its consumers helped make a better product and built trust with the brand’s most active loyalists. bEsT-OF-bREED sOcIAL MEDIA Mike Rowe, launch spokesman for Lee’s premium select jeans line. 29 Celebrating 10 years with loyal fans e-COMMerCe SALeS Up 20% in 2010 bEsT-OF-bREED sOcIAL MEDIA a USeR-GeneRaTeD BiRThDay paRTy The 7 For All Mankind® brand used its 10th anniversary as an opportunity to engage with its most devoted fans, whose word-of-mouth stories of the brand’s unique fits have made it a household name. The brand asked its Facebook® fans for stories about their first pair of 7 For All Mankind® jeans. After an overwhelm- ing number of responses, the brand used the best ones on in-store posters to promote a new collection of 10 special limited edition styles based on its 10 most iconic fits to be sold exclusively at 7 For All Mankind® retail stores. 31 DIREcT-TO-cOnsuMER TOucH pOInTs 32 887 thOuSAND 562 MILLION 418 thOuSAND 1.1 MILLION A wide world of content for consumers to explore and share a DiGiTal eCOSySTeM OF BRanDeD MeDia passionate outdoor consumers are interacting with The north Face® brand in more ways than ever before. To integrate all these touch points and give consum- ers more relevant content, The north Face created a new technology platform that delivers synchronized messages, experiences and conversations across the brand’s entire ecosystem of digital properties. With the push of a button in the brand’s san Leandro head- quarters, rich stories, videos, and experiences can be instantly distributed online, in-store, and to a com- munity of The north Face® followers on various social media outlets such as Facebook® and Twitter®. 63 years young new wayS TO COnneCT wiTh COnSUMeRS 2010 was a year of two important firsts for the Wrangler® brand. The brand opened its first Wrangler® retail store, a 5,000-square-foot space in Denver, colorado. It’s an investment in a deeply immersive brand experi- ence that lets consumers see, touch, and feel the values of the Wrangler® brand. Wrangler identified the goal of developing a lifestyle destination for its core Western consumer. With raw timber poles, natural wood floor- ing, custom fixtures and tooled leather wallpaper, the store uses natural materials to create a truly Western feel. 2010 was also the first full year of e-commerce at wrangler.com, a new direct-to-consumer channel for this 63-year-old brand. DIREcT-TO-cOnsuMER TOucH pOInTs 35 When cowboys speak, we listen InnOVATIVE pRODucTs UpDaTinG a 63-yeaR-OlD ClaSSiC To the cowboys who have relied on it every day for decades, the Wrangler® 13MWZ jean is a product leg- end, so a reengineered version was a potentially risky undertaking. product designers at Wrangler conduct- ed ethnographic research with 50 working cowboys. They visited their homes to learn about how they live and what they wear. They sat at their kitchen tables and shared barbeque and beers and just listened. Afterwards, they designed a few prototypes, returned and listened some more. The result is the 47MWZ: 20% longer-lasting denim, a more comfortable waist and deeper, more functional, pockets. since its launch in the summer of 2010, sales of the 47MWZ have exceed- ed expectations, gained floor space from competitors and added a new source of growth to an iconic brand. 37 Going outside for new ideas InnOVATIVE pRODucTs peTeR pilOTTO FOR kiplinG For the last three years, the Kipling® brand in Europe has collaborated with young designers to create new product collections that keep the brand fashion-forward and generate buzz in the ever-changing bag and accessories markets. In 2010, the brand collaborated with peter pilotto, world-renowned digital print artists and designers. The peter pilotto for Kipling collection featured the artists’ signature abstract imagery of outer space and the inner workings of machinery on a wide variety of the brand’s backpacks, shoulder bags, and carryalls. After a successful launch during London’s Fashion Week, the collection generated worldwide press mentions, nearly selling out in Kipling’s retail stores in china within three weeks. The collaboration will continue with a new spring/ summer collection in 2011. 39 VF brands at-a-glance Our portfolio includes more than 30 brands that fit the lives of a broad variety of the world’s consumers. S T R O p S n O i T C a & R O O D T U O FOUnDeD: 1968 COUnTRieS: 61 TaRGeT: Outdoor athletes and enthusiasts innOvaTive pRODUCTS The North Face® Single-Track running shoe was awarded Best Debut by Runner’s World magazine and Gear of the Year by Outside magazine. The Single-Track, new for 2010, is a lightweight, everyday training and racing shoe designed specifically for runners. Never Stop Exploring® thenorthface.com FOUnDeD: 1966 COUnTRieS: 93 TaRGeT: Youth culture: art, music, action sports and street/ fashion devotees Off the Wall ® Since ‘66 vans.com innOvaTive pRODUCTS The Vans® brand reaches new audiences by allowing external collaborators to use Vans shoes as a blank canvas for their creativity. 2010 collaborations included kids’ TV series and pop culture phenomenon “Yo Gabba Gabba!,” downtown New York City fashion brand MadeMe® and Seattle-based American heritage label Filson®. FOUnDeD: 1967 COUnTRieS: 65 TaRGeT: 14-28 year-old male and female consumers Discover Freedom™ jansport.com innOvaTive pRODUCTS JanSport introduced a collection of reversible backpacks that can be worn two ways: inside or out. Each bag featured two designs, “Mild” on one side, and “Wild” on the other. The limited-edition, reversible packs quickly caught the attention of youth consumers around the world, selling out within days. FOUnDeD: 1987 COUnTRieS: 63 TaRGeT: Active, fashionable women DiReCT-TO-COnSUMeR TOUCh pOinTS In 2010, the Kipling® brand launched a single, global web- site to create a consistent brand story and e-commerce storefront. This change will enable the brand to roll out more global marketing initiatives and products. Attitude included. kipling.com FOUnDeD: 1987 COUnTRieS: 23 TaRGeT: Premium lifestyle/ casual wear oriented travelers ages 25-45 napapijri.com A premium lifestyle brand with travel and outdoor heritage. inTeRnaTiOnal OppORTUniTieS Napapijri grew at double-digit rates across major European markets, including France, Germany and Scandinavia. FOUnDeD: 1976 COUnTRieS: 70 TaRGeT: Passionate urbanites ages 18-24 BeST-OF-BReeD SOCial MeDia The Eastpak® Buddy Pak Facebook® app allowed the brand’s fans to create a virtual pack with photos of their friends printed on it. Every day, a new winner was chosen to have their pack made. Built to Resist™ eastpak.com 41 Ridiculously comfortable™ FOUnDeD: 1984 COUnTRieS: 58 TaRGeT: Beach enthusiasts ages 16-24 reef.com FOUnDeD: 1975 COUnTRieS: 30 TaRGeT: World travelers innOvaTive pRODUCTS The Reef® brand’s Supreme Collection sandals and Coastal Cruiser “hanging” footwear grew strongly in 2010, continu- ing the brand’s growth in the men’s footwear category. Both products feature a molded wax “pebble comfort” footbed, a textured cushion insole that makes them ridiculously com- fortable to wear. FOUnDeD: 1947 COUnTRieS: 76 TaRGeT: Authentic cowboys ages 40-60 BeST-OF-BReeD SOCial MeDia The Wrangler® Western brand’s Facebook® page added tens of thousands of new fans from its “Wrangler Race to the Rodeo” and the “Wrangler Rocks Country Music” promotions. wrangler western Long Live Cowboys™ wranglerwestern.com Inspired by Travel® eaglecreek.com wrangler europe We are Animals® eu.wrangler.com inTeRnaTiOnal OppORTUniTieS In 2010, Eagle Creek entered China, with products now available there in 80 doors. ® TaRGeT: Sociable style-seekers ages 21-35 innOvaTive pRODUCTS The Wrangler® brand in Europe reinvented its best-selling Texas Fit jean. After gathering direct feedback from con- sumers, the brand redesigned the jean with less fabric in the thigh. This new slimmer silhouette has made it the number one selling item for the Wrangler® brand in Europe. FOUnDeD: 1999 COUnTRieS: 1 TaRGeT: Active women lucy inspires performance™ lucy.com innOvaTive pRODUCTS The lucy® brand introduced the Perfect Core pant, its most successful pant launch to date. It’s designed with a special mesh “XBAR” panel that delivers “core awareness,” remind- ing women to keep their core muscles tight, and side panels that help make them look slimmer. R a e w S n a e J FOUnDeD: 1947 COUnTRieS: 76 TaRGeT: Men ages 25-54 BeST-OF-BReeD SOCial MeDia The brand’s “My Wrangler Story” promotion asked consum- ers to submit personal stories of why they’re comfortable in Wrangler® jeans. The winner got a chance to play football with legendary quarterback Brett Favre and an amazing story to tell friends. Real. Comfortable. Jeans.® wrangler.com FOUnDeD: 1965 COUnTRieS: 3 TaRGeT: Men ages 25-54 innOvaTive pRODUCTS The brand introduced a new rubberball finish, a process that washes jeans using rubber balls instead of stones. The end result is a finish between a rinsed and a stone- washed look. Hard Working Jeans… Guaranteed.® rustler.wrangler.com FOUnDeD: 1889 COUnTRieS: 76 TaRGeT: Women and men ages 25-50 lee north america Get What Fits lee.com DiReCT-TO-COnSUMeR TOUChpOinTS To promote its fit solutions that make finding the right pair of jeans easier than ever, the Lee® brand created a fictional medical condition called “shopphobia.” This online experi- ence, hosted by the brand’s new spokesman Mike Rowe, used humor to engage the men who hate to shop and the women who love them. 43 ™TaRGeT: Self-assured men and women ages 25-35 DeepeR BRanD expeRienCeS The brand introduced the WHY NOT? campaign, new com- munications designed to build the Lee® brand and to launch its 101 iconic jean style. ® FOUnDeD: 2001 COUnTRieS: 18 TaRGeT: Women ages 18-39 DeepeR BRanD expeRienCeS In 2010, the Ella Moss® brand introduced Butterfly Girls, a new communications platform that fully aligns its brand image, marketing, product labeling and product. lee South america Night and Day eu.lee.com Fresh, flirty and fashion-forward ellamoss.com TaRGeT: Contemporary urbanites from all walks of life innOvaTive pRODUCTS In 2010, the Lee® 101 line for men gained momentum across Europe. This premium denim line made from the finest Japanese and Italian fabrics is a contemporary col- lection rooted in the Lee® brand’s heritage. lee europe A Lee Don’t Lie eu.lee.com FOUnDeD: 1949 COUnTRieS: 5 TaRGeT: Female traditionalists ages 25-55 Instantly Slims You® ridersjeans.com DeepeR BRanD expeRienCeS The Riders by Lee® brand worked with celebrity spokesper- son, style expert Stacy London, the co-host of the TV show What Not to Wear. Ms. London is known for finding looks that fit and flatter any figure, making her the perfect fit for the brand’s message. She is featured in advertising as well as in-store displays and product labeling. y R a R O p M e T n O C The world’s premier brand of premium den- im lifestyle products. FOUnDeD: 2000 COUnTRieS: 80 TaRGeT: Premium fashion forward consumers 7forallmankind.com DeepeR BRanD expeRienCeS The 7 For All Mankind® brand has always been associated with Southern California’s effortless glamour. In 2010, the brand hosted a star-studded happy hour to introduce its wide-leg and trouser-style denim. Within a week, pho- tographs of celebrities wearing the new styles were on newsstands across the country. ® Colorful, soft and luxurious fabrics with a splendid fit. For those about to rock. R a e w S T R O p S Inspired by the water, crafted with intention, and designed to outfit the life well-lived. FOUnDeD: 2002 COUnTRieS: 18 TaRGeT: Men and women ages 20-50 splendid.com FOUnDeD: 2000 COUnTRieS: 15 TaRGeT: Creative men ages 18-55 johnvarvatos.com FOUnDeD: 1983 COUnTRieS: 60 TaRGeT: Men and women ages 25-44 nautica.com DiReCT-TO-COnSUMeR TOUCh pOinTS The Splendid® brand opened two new full-priced stores in Newport Beach, California, and Aventura, Florida. inTeRnaTiOnal OppORTUniTieS John Varvatos opened shop-in-shops at the legendary Paris flagship store of Galeries Lafayette for John Varvatos Collection and John Varvatos USA products. inTeRnaTiOnal OppORTUniTieS Nautica’s licensed business in China grew more than 20% in 2010, fueled by expanded distribution for men’s sportswear and the introduction of women’s sportswear. 45 R a e w e G a M i FOUnDeD: 1991 COUnTRieS: 28 TaRGeT: Industrial workers Life goes on. bulwark.com innOvaTive pRODUCTS The Bulwark® brand’s Cool Touch 2® fabric provides flame-resistant protection while remaining lightweight and breathable. This combination of protection and comfort helped make Bulwark VF’s fastest-growing brand in 2010, and the world’s largest provider of secondary flame resis- tant industrial clothing. If it happens in baseball, it happens in Majestic.® FOUnDeD: 1976 COUnTRieS: 27 TaRGeT: Baseball enthusiasts innOvaTive pRODUCTS Unveiled during the 2010 Major League Baseball Postseason, the Majestic® brand’s Authentic Collection Premier Jacket uses the brand’s Therma Base™ technology to provide light- weight insulation and water resistance. majesticathletic.com FOUnDeD: 1923 COUnTRieS: 37 TaRGeT: Industrial and service workers innOvaTive pRODUCTS The commercial laundry process is much more rigorous than home washing. Clothes must be designed to survive repeated high temperature washings and still look great. Red Kap introduced the first soft-shell jacket capable of enduring the rigors of industrial laundering while delivering superior water repellency and comfort. Done right.™ redkap.com FOUnDeD: 1937 COUnTRieS: 12 TaRGeT: Public safety officers DeepeR BRanD expeRienCeS In 2010, VF Imagewear rebranded its public safety uniform business under the Horace Small® brand. An American legacy brand that began making military uniforms, it later retooled to become one of the country’s leading suppliers of uniforms for police and emergency workers. Made for Heroes® horacesmall.com VF in 2010: naMeD “One OF The wORlD’S MOST aDMiReD COMpanieS” By FortunE MaGazine. VF ranked second overall among apparel companies, the highest level that VF has achieved on the annual corporate reputation list. hOnOReD aS a “TOp COMpany FOR leaDeRS in nORTh aMeRiCa” By FortunE MaGazine. RankeD #12 On a liST OF The “50 COMpanieS MOST aDMiReD FOR hR” By Human rEsourCE ExECutivE MaGazine. RankeD #89Th On The inFORMaTiOnweek 500, a liST OF TOp TeChnOlOGy innOvaTORS in The U.S. This is VF’s highest-ever ranking. COMMenDeD By The CDp (CaRBOn DiSClOSURe pROJeCT) FOR iTS CliMaTe ChanGe DiSClOSURe. 47 Operating Committee eRiC C. wiSeMan Chairman, President & Chief Executive Officer ROBeRT k. SheaReR Senior Vice President & Chief Financial Officer CanDaCe S. CUMMinGS Vice President — Administration, General Counsel & Secretary BOyD a. ROGeRS Vice President & President — Supply Chain FRanklin l. TeRkelSen Vice President — Mergers & Acquisitions STephen F. DUll Vice President — Strategy & Innovation kaRl heinz SalzBURGeR Vice President & Group President — International BRaDley w. BaTTen Vice President — Controller & Chief Accounting Officer MiChael T. Gannaway Vice President — VF Direct / Customer Teams MaRTin S. SChneiDeR Vice President & Chief Information Officer FRank C. piCkaRD iii Vice President — Treasurer (Retired) Board of Directors SUSan laRSOn williaMS Vice President — Human Resources SCOTT h. BaxTeR Vice President & Group President — Jeanswear Americas & Imagewear STeven e. RenDle Vice President & Group President — Outdoor & Action Sports Americas Top, left to right: Eric C. Wiseman, Robert K. Shearer, Bradley W. Batten, Candace S. Cummings, Stephen F. Dull, Michael T. Gannaway. Bottom, left to right: Frank C. Pickard III, Boyd A. Rogers, Karl Heinz Salzburger, Martin S. Schneider, Franklin L. Terkelsen, Susan Larson Williams eRiC C. wiSeMan 2,3* Chairman, President & Chief Executive Officer Director since 2006, age 55 ChaRleS v. BeRGh 3,5 Group President Global Grooming Procter & Gamble Company Boston, Massachusetts (Consumer products) Director since 2008, age 53 RiChaRD T. CaRUCCi 1,3 Chief Financial Officer Yum! Brands, Inc. Louisville, Kentucky (Casual dining restaurants) Director since 2009, age 53 JUliana l. ChUGG 1,4 Senior Vice President General Mills, Inc. Minneapolis, Minnesota (Consumer food products) Director since 2009, age 43 JUan eRneSTO De BeDOUT 1,3 Group President Latin American Operations Kimberly-Clark Corporation Roswell, Georgia (Consumer products) Director since 2000, age 66 ROBeRT J. hURST 2,3,4 Managing Director Crestview Partners LLC New York, New York (Private equity firm) Director since 1994, age 65 M. RUST ShaRp 2,5 Of Counsel Heckscher, Teillon, Terrill & Sager West Conshohocken, Pennsylvania (Attorneys) Director since 1984, age 70 URSUla O. FaiRBaiRn 2,4,5 President & Chief Executive Officer Fairbairn Group LLC New York, New York (Human resources consultant) Director since 1994, age 68 GeORGe FellOwS 1,4 President & Chief Executive Officer Callaway Golf Company Carlsbad, California (Sporting goods) Director since 1997, age 68 w. alan MCCOllOUGh 4,5 Former Chairman of the Board Circuit City Stores, Inc. Richmond, Virginia (National retailer) Director since 2000, age 61 RayMOnD G. viaUlT 3,5 Former Vice Chairman General Mills, Inc. Minneapolis, Minnesota (Consumer food products) Director since 2002, age 66 ClaRenCe OTiS JR. 1,4 Chairman & Chief Executive Officer Darden Restaurants, Inc. Orlando, Florida (Casual dining restaurants) Director since 2004, age 54 Committees of the Board 1 Audit Committee 2 Executive Committee 3 Finance Committee 4 Nominating and Governance Committee 5 Compensation Committee * Ex officio member From left to right: Raymond G. Viault, M. Rust Sharp, Juliana L. Chugg, Robert J. Hurst, Eric C. Wiseman, Clarence Otis Jr., Juan Ernesto de Bedout, George Fellows, Charles V. Bergh, Ursula O. Fairbairn, W. Alan McCollough, Richard T. Carucci 49 Financial Summary Consolidated Balance Sheets Dollars and shares in thousands, except per share amounts Summary of Operations(1) Total revenues Operating income Income from continuing operations attributable to VF Corporation Discontinued operations attributable to VF Corporation Net income attributable to VF Corporation Earnings (loss) per common share attributable to VF Corporation common stockholders - basic Income from continuing operations Discontinued operations Net income Earnings (loss) per common share attributable to VF Corporation common stockholders - diluted Income from continuing operations Discontinued operations Net income Dividends per share Dividend payout ratio (2) (7) Financial Position Working capital Current ratio Total assets Long-term debt Stockholders’ equity Debt to total capital ratio (3) Average number of common shares outstanding Book value per common share Other Statistics (4) Operating margin (7) Return on invested capital (5) (6) (7) Return on average stockholders’ equity (6) (7) Return on average total assets (6) (7) Cash provided by operations Cash dividends paid 2010 2009 2008 2007 2006 $ 7,702,589 820,860 $ 7,220,286 736,817 $ 7,642,600 938,995 $ 7,219,359 965,441 $ 6,215,794 826,144 571,362 461,271 602,748 613,246 535,051 - 571,362 - 461,271 - 602,748 (21,625) 591,621 (1,535) 533,516 $ $ 5.25 - 5.25 5.18 - 5.18 2.43 37.6% $ $ 4.18 - 4.18 4.13 - 4.13 2.37 46.0% $ $ 5.52 - 5.52 5.42 - 5.42 2.33 43.0% $ $ 5.55 (0.20) 5.36 5.41 (0.19) 5.22 2.23 42.7% $ $ 4.83 (0.01) 4.82 4.73 (0.01) 4.72 1.94 41.1% $ 1,716,585 2.5 $ 6,457,556 935,882 3,861,319 20.2% 108,764 35.77 $ $ 1,536,773 2.4 $ 6,473,863 938,494 3,813,285 23.7% 110,389 34.58 $ $ 1,640,828 2.6 $ 6,433,868 1,141,546 3,557,245 25.2% 109,234 32.37 $ $ 1,510,742 2.3 $ 6,446,685 1,144,810 3,578,555 26.4% 110,443 32.58 $ $ 1,563,162 2.5 $ 5,465,693 635,359 3,271,849 19.5% 110,560 29.11 $ 13.3% 15.6% 20.1% 11.8% $ 1,001,282 264,281 11.9% 12.6% 17.2% 9.6% $ 973,485 261,682 12.3% 13.5% 18.2% 10.0% $ 679,472 255,235 13.4% 14.8% 19.7% 11.1% $ 833,629 246,634 13.3% 14.7% 19.2% 10.6% $ 454,128 216,529 In thousands ASSetS Current Assets Cash and equivalents Accounts receivable, net Inventories Deferred income taxes Other current assets Total current assets Property, Plant and equipment Less accumulated depreciation Intangible Assets Goodwill Other Assets LIAbILItIeS And StOCkhOLderS’ equIty Current Liabilities Short-term borrowings Current portion of long-term debt Accounts payable Accrued liabilities Total current liabilities Long-term debt Other Liabilities Commitments and Contingencies Stockholders’ equity Common Stock Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Noncontrolling interests in subsidiaries Total stockholders’ equity (1) Operating results for 2010 include a noncash charge for impairment of goodwill and intangible assets – $201.7 million (pretax) in operating income and $141.8 million (aftertax) in income from continuing operations and net income attributable to VF Corporation, $1.30 basic earnings per share and $1.29 diluted earnings per share. Operating results for 2009 include a noncash charge for impairment of goodwill and intangible assets – $122.0 million (pretax) in operating income and $114.4 million (aftertax) in income from continuing operations and net income attributable to VF Corporation, $1.04 basic earnings per share and $1.03 diluted earnings per share. (2) Dividends per share divided by the total of income from continuing and discontinued operations per diluted share (excluding the effect of the charges for impairment of goodwill and intangible assets in 2010 and 2009). (3) Total capital is defined as stockholders’ equity plus short-term and long-term debt. (4) Operating statistics are based on continuing operations (excluding the effect of the charge for impairment of goodwill and intangible assets in 2010 and 2009). (5) Invested capital is defined as average stockholders’ equity plus average short-term and (6) Return is defined as income from continuing operations before net interest expense, after (7) Information presented for 2010 and 2009 excludes the impairment charges for goodwill and long-term debt. income taxes. intangible assets. 2010 2009 $ 792,239 773,083 1,070,694 68,220 121,824 2,826,060 1,663,299 1,060,391 602,908 1,490,925 1,166,638 371,025 $ 6,457,556 $ 36,576 2,737 510,998 559,164 1,109,475 935,882 550,880 $ 731,549 776,140 958,639 64,959 101,275 2,632,562 1,601,608 987,430 614,178 1,535,121 1,367,680 324,322 $ 6,473,863 $ 45,453 203,179 373,186 473,971 1,095,789 938,494 626,295 107,938 2,081,367 (268,594) 1,940,508 100 110,285 1,864,499 (209,742) 2,050,109 (1,866) 3,861,319 $ 6,457,556 3,813,285 $ 6,473,863 51 Consolidated Statements of Income Consolidated Statements of Cash Flows In thousands except per share amounts net Sales royalty Income total revenues Costs and Operating expenses Cost of goods sold Marketing, administrative and general expenses Impairment of goodwill and intangible assets Operating Income Other Income (expense) Interest income Interest expense Miscellaneous, net Income before Income taxes Income taxes net Income net (Income) Loss Attributable to noncontrolling Interests in Subsidiaries Year Ended December 2010 $ 7,624,599 77,990 7,702,589 2009 $ 7,143,074 77,212 7,220,286 2008 $ 7,561,621 80,979 7,642,600 4,105,201 2,574,790 201,738 6,881,729 4,025,122 2,336,394 121,953 6,483,469 4,283,680 2,419,925 - 6,703,605 820,860 736,817 938,995 2,336 (77,738) 4,754 (70,648) 750,212 176,700 2,230 (85,902) 1,528 (82,144) 6,115 (94,050) (2,969) (90,904) 654,673 848,091 196,215 245,244 573,512 458,458 602,847 (2,150) 2,813 (99) net Income Attributable to VF Corporation $ 571,362 $ 461,271 $ 602,748 earnings Per Common Share Attributable to VF Corporation Common Stockholders - basic earnings Per Common Share Attributable to VF Corporation Common Stockholders - diluted Cash dividends Per Common Share $ $ $ 5.25 5.18 2.43 $ $ $ 4.18 4.13 2.37 $ $ $ 5.52 5.42 2.33 In thousands Operating Activities Net income Adjustments to reconcile net income to cash provided by operating activities: Impairment of goodwill and intangible assets Depreciation Amortization of intangible assets Other amortization Stock-based compensation Provision for doubtful accounts Pension funding over expense Deferred income taxes Other, net Changes in operating assets and liabilities, net of acquisitions: Accounts receivable Inventories Other current assets Accounts payable Accrued compensation Accrued income taxes Accrued liabilities Other assets and liabilities Cash provided by operating activities Investing Activities Capital expenditures Business acquisitions, net of cash acquired Software purchases Other, net Cash used by investing activities Financing Activities Net decrease in short-term borrowings Payments on long-term debt Purchase of Common Stock Cash dividends paid Proceeds from issuance of Common Stock Tax benefits of stock option exercises Other, net Cash used by financing activities Year Ended December 2010 2009 2008 $ 573,512 $ 458,458 $ 602,847 201,738 116,837 39,373 17,186 63,538 7,441 (45,850) (92,068) 29,179 (12,954) (114,334) (7,689) 140,470 27,817 (14,649) 50,889 20,846 1,001,282 (111,640) (38,290) (13,610) (16,940) (180,480) (9,741) (203,063) (411,838) (264,281) 137,732 8,599 (240) (742,832) 121,953 113,207 40,500 16,745 36,038 24,836 (114,149) 54,674 (6,923) 75,449 209,439 77,173 (69,560) (11,714) 14,763 (25,182) (42,222) 973,485 (85,859) (212,339) (9,735) (8,943) (316,876) (11,019) (3,242) (111,974) (261,682) 62,590 6,464 (480) (319,343) - 105,059 39,427 21,685 31,592 22,062 (4,787) 23,654 (11,477) 52,679 (38,275) (66,866) (67,214) 471 24,118 (22,438) (34,136) 678,401 (124,207) (93,377) (10,601) 12,399 (215,786) (67,736) (3,632) (149,729) (255,235) 64,972 22,504 (905) (389,761) effect of Foreign Currency rate Changes on Cash and equivalents net Change in Cash and equivalents Cash and equivalents – beginning of year Cash and equivalents – end of year (17,280) 60,690 731,549 $ 792,239 12,439 349,705 381,844 $ 731,549 (12,873) 59,981 321,863 $ 381,844 53 VF Corporation High/Low Stock Prices Corporate Information COMMOn STOCk Listed on the New York Stock Exchange —trading symbol VFC. ShaRehOlDeRS OF ReCORD As of January 30, 2011, there were 4,319 shareholders of record. DiviDenD pOliCy Quarterly dividends on VF Corporation Common Stock, when declared, are paid on or about the 20th day of March, June, September and December. DiviDenD DiReCT DepOSiT Shareholders may have their dividends deposited into their savings or checking account at any bank that is a member of the Automated Clearing House (ACH) system. Questions concern- ing this service should be directed to Computershare Trust Company, N.A. at www.computershare.com/investor. QUaRTeRly COMMOn STOCk pRiCe inFORMaTiOn The high and low sales prices on a calendar quarter basis for the periods indicated were as follows: QUaRTeRly COMMOn STOCk pRiCe First QuartEr sECond QuartEr tHird QuartEr FourtH QuartEr DiviDenD ReinveSTMenT plan The Plan is offered to shareholders by Computershare Trust Company, N.A. The Plan provides for automatic dividend rein- vestment and voluntary cash contributions for the purchase of additional shares of VF Corporation Common Stock. Questions concerning general Plan information should be directed to the Office of the Vice President — Administration, General Counsel and Secretary of VF Corporation. 2010 low high 2009 Low 2008 Low High High $ 80.99 $ 70.25 71.04 69.24 78.21 89.23 82.11 89.74 $ 59.98 $ 46.06 53.27 53.53 68.60 69.72 73.81 79.79 $ 83.29 $ 63.68 69.44 65.50 38.22 79.87 84.60 77.69 CORpORaTe OFFiCe VF World Headquarters 105 Corporate Center Blvd. Greensboro, NC 27408 Telephone: 336.424.6000 Facsimile: 336.424.7696 Mailing Address: P.O. Box 21488 Greensboro, NC 27420 annUal MeeTinG The Annual Meeting of Shareholders will be held on Tuesday, April 26, 2011 at 10:30 a.m. at the O.Henry Hotel, Caldwell Room, 624 Green Valley Road, Greensboro, NC 27408 inveSTOR RelaTiOnS Cindy Knoebel, CFA Vice President, Corporate Relations VF Services, Inc. 105 Corporate Center Blvd. Greensboro, NC 27408 TRanSFeR aGenT anD ReGiSTRaR Computershare Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 Shareholder Relations Department 800.446.2617 inDepenDenT aCCOUnTanTS PricewaterhouseCoopers LLP 800 Green Valley Road, Suite 500 Greensboro, NC 27408 CeRTiFiCaTiOnS VF has filed the certifications required under Section 302 of the Sarbanes-Oxley Act of 2002 regarding the quality of the Company’s public disclosure as exhibits to the Company’s annual report on Form 10-K for the fiscal year ended January 1, 2011. After VF’s 2011 Annual Meeting of Shareholders, VF intends to file with the New York Stock Exchange (NYSE) the certification regarding VF’s compliance with the NYSE’s corporate gover- nance listing standards as required by NYSE Rule 303A.12. Last year, VF filed this certification with the NYSE on April 30, 2010. OTheR inFORMaTiOn VF’s filings with the SEC, including its annual report on Form 10-K, quarterly reports on Form 10-Q, press releases and reports on Form 8-K and other information, are available and can be accessed free of charge through the Company’s web- site at vfc.com. VF’s Corporate Governance Principles, Code of Business Conduct and charters for the Audit Committee, Compensation Committee, Nominating and Governance Committee and Finance Committee are also available on our website. These documents will also be provided to any shareholder free of charge upon request to the Secretary of VF at P.O. Box 21488, Greensboro, NC 27420 55 The following trademarks owned by VF Corporation affiliates appear in this report: REGiSTERED TRaDEMaRkS Lee, The North Face, Vans, Kipling, Reef, Wrangler, Nautica, 7 For All Mankind, Off the Wall, JanSport, Inspired by Travel, Eagle Creek, Eastpak, Napapijri, lucy, Real.Comfortable.Jeans., Rustler, Hard Working Jeans…Guaranteed., Ella Moss, Splendid, John Varvatos, Bulwark, Majestic, Red Kap, Horace Small, Cool Touch 2, If it happens in baseball, it happens in Majestic, Made for Heroes, We are Animals, Instantly Slims You, Riders by Lee, Never Stop Exploring TRaDEMaRkS Discover Freedom, Built to Resist, Ridiculously Comfortable, lucy inspires performance, Long Live Cowboys, Done Right, Therma Base, House of Vans The following trademarks owned by other companies also appear in this report: NASCAR, Facebook, Twitter, YouTube, Yo Gabba Gabba!, MadeMe, Filson, Fortune, Human Resource Executive, Informationweek, Outside, Runner’s World COnCEPT/DESiGn And Partners, NY andpartnersny.com 56 VF CORPORATION 105 Corporate Center Blvd. Greensboro, NC 27408 336.424.6000 vfc.com ® For additional content visit: RePORTINg.VFC.COm I n t e r n a t i o n a l o p p o r t u n i t i e s Best-of-breed social media Direct-to-consumer touch points i e n c e s D e e p e r b r a n d e x p e r Beyond the numbers I n n o v a t i v e p r o d u c t s VF CORPORATION ANNuAl RePORT 2010 ® 

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