VF is forecasting higher sales growth in the GAS (Germany, Austria, Switzerland) area over the next five years than in the other major markets in the Europe, Middle East and Africa (EMEA) region. At the global Investor Day held on Sept. 25 in Beaver Creek, Colorado, VF projected a compound average annual growth rate (CAGR) of 6 to 7 percent across all its brands in the EMEA between 2019 and 2024.
Providing detail that should interest our readers, the company projected CAGR of 10 to 11 percent in the GAS area, 7 to 8 percent in France, 5 to 6 percent in the U.K. as well as Spain, and 2 to 3 percent in Italy. In other countries of the region, the growth rate should range between 6 and 7 percent.
The U.K. is the biggest market for VF in Europe. It represents about 25 percent of its sales in the EMEA, followed by GAS with a share of 17 percent, Italy with a share of 14 percent, France with a share of 9 percent and Spain with a share of 7 percent. By 2024, the breakdown by country should show France and Spain maintaining their position and the U.K. and Italy shrinking to 24 and 11 percent of sales, respectively. The GAS area should see its share jump to 21 percent, which seems logical as it represents the biggest portion of the European outdoor market.
Martino Scabbia Guerrini, who has been running the European operations of the group since the spring of 2017, reportedly told a small group of fashion journalists at VF's European headquarters in Switzerland a few days ago that the group plans to invest strongly in the cities of London and Milan. According to a spokesperson, he also said that Paris remains “a key city” for VF, although the recent “yellow vest” movement in France has created some instability in the business, as the group had to close some of its mono-brand stores and concessions within department stores for several weekends in a row.
VF currently operates 350 stores directly under its various brands in the EMEA. It also has about 1,000 mono-brand partner stores. It employs some 7,800 people in the region and services it from eight fulfillment centers.
At a previous Investor Day in New York in 2017, Scabbia Guerrini had noted that VF's sales in the EMEA had been growing steadily since 2014. In spite of some turmoil in the region that has persisted with Brexit and other issues, sales have continued to grow rapidly, excluding the divested jeans business. From $2.1 billion in 2016, they went up by 6 percent in 2017, by 12 percent in 2018 and by 6 percent in the financial year ended last March 31, reaching a level of $2.7 billion.
Through 2024, the group is now projecting CAGR of between 6 and 7 percent in EMEA, meaning that its turnover should rise to around $3.7 billion. By then, VF says, Vans should represent 29 percent of VF's sales in the region, The North Face 26 percent and Timberland 21 percent. This would mean that the group would reach sales of over $1 billion for Vans in EMEA by 2024, about $950 million for TNF and about $750 million for Timberland.
As in the rest of the world, The North Face and VF's other brands expect to further boost their direct-to-consumer sales activities, especially on the digital front, where sales are expected to go up by 22 to 23 percent in EMEA for the company's own online sales operations and by 16 to 17 percent for the digital wholesale channel.
Other wholesale revenues are still expected to go up by 2 to 3 percent a year. Scabbia Guerrini noted that the group's brands have been creating partnerships and working more closely with leading retailers like JD Sports Fashion, Foot Locker and Intersport, as well as department store chains like El Corte Inglés in Spain and Coin in Italy.