http://dailynews.yahoo.com/h/nm/20011114/bs/textiles_vf_dc_3.html

VF to Cut 13,000 Jobs, Some Businesses By Jean Scheidnes

NEW YORK (Reuters) - Apparel maker VF Corp.(NYSE:VFC - news) on Wednesday announced it was slashing 13,000 jobs, or 18 percent of its work force, as it gets rid of its lower margined lines to focus on core businesses like jeans, intimate apparel and outdoor clothing.

The overhaul is a major milestone in VF's evolution from a textile manufacturer into a branded apparel marketer. In recent years, the profitability of making textiles in the U.S. has been nearly extinguished by pricing pressure from a flood of goods imported from countries with cheaper labor.

The world's largest jeans maker, which manufactures Lee and Wrangler jeans as well as Vanity Fair lingerie and North Face outerwear, said it will take a $280 million to $320 million charge in the fourth quarter, or $1.74 to $1.98 a share, as it exits the Jantzen swimwear business, the private label knitwear business and the small specialty workwear business.

``Cotton-oriented knitwear -- not only at VF -- has suffered from price and margin erosion during the past few years. VF has found a solution in the high-tech fabric, high-margin specialty outdoor gear markets, especially through its premium North Face business unit,'' said retail analyst Richard Hastings of Cyber Business Credit.

The Greensboro, N.C.-based company also said it will move remaining production to lower-cost manufacturing facilities outside the United States and will consolidate its intimate apparel business near Atlanta, Georgia.

The capacity realignments and-cost cutting moves will save VF about $115 million annually, the company said.

The company's knitwear business had sales of about $200 million in 2001, the swimwear business had about $100 million and the small specialty workwear business had $10 million in sales.

NO REAL SACRIFICE

``Those businesses were less than 10 percent of sales, and haven't been generating operating profit. So there is obviously an opportunity to improve the overall margins of the company without really sacrificing a significant amount of sales,'' said analyst Carol Pope Murray of Salomon Smith Barney.

VF set new long-term goals of 17 percent return on capital, 6 percent annual sales growth, 14 percent operating margin and a $200 million reduction in invested capital.

The company also said it would intensify its acquisition efforts and investment activities for jeans, intimates and outdoor brands, spending 10 percent more on new products and marketing opportunities in those areas.

``The financial management strategy is correct: increase margins and return on invested capital during recessionary periods when demand is sluggish and lower margin items -- especially its knitwear -- absorbs too much production cost. VF, by doing this action, will maintain its already strong financial condition,'' said Hastings.

The company reiterated that it expects a fourth-quarter earnings decline by more than 35 percent, on a sales decline of more than 10 percent. It also anticipates reducing inventories to $100 million below 2000 levels, and continues to expect cash flow from operations of about $450 million to $500 million.

Shares of VF were up $1.09 at $38.55 in midday New York Stock Exchange (news - web sites) trading. The stock has risen about 25 percent since the Sept. 11 attacks.

Standard & Poor's on Wednesday affirmed its single-'A'-minus long-term corporate credit and senior unsecured debt ratings for VF, as well as its 'A-2' short-term corporate credit and commercial paper ratings for the company.

The company's strengths are offset by its participation in the highly competitive and volatile apparel industry, and by integration risks from its acquisition strategy, S&P said. Apparel marketers are up against a tough retail environment, which has worsened since the Sept. 11 attacks.

-- Anonymous, November 14, 2001

Answers

This royally pisses me off that they are slashing the jobs in the US and sending them overseas. Wranglers were supposed to be the choice of the rodeo people who are as red/white/blue as you can get.

-- Anonymous, November 14, 2001

At this point, I think people might be willing to pay more for stuff made in the US--if they can find anything made in the US, that is. Time for a campaign, I think. Damn, I forgot, George is kinda busy.

-- Anonymous, November 14, 2001