V.F. Corp Boosts Workwear Range with Williamson-Dickie Buy

V.F. Corp. VFC has successfully acquired the family-owned, private global workwear company, Williamson-Dickie Mfg. Co. for $820 million cash. Following the conclusion of the acquisition, which was announced in August, Williamson-Dickie has become a wholly owned subsidiary of V.F. Corp. The buyout forms a part of its 2021 target of accelerating growth by reshaping portfolio.

Williamson-Dickie now forms part of V.F. Corp’s Imagewear coalition and adds the popular Dickies, Workrite, Kodiak, Terra, and Walls brands to the latter’s portfolio. These brands will enhance V.F. Corp’s present workwear offerings, which include Wrangler RIGGS Workwear, Timberland PRO, Red Kap, Bulwark, and Horace Small.

The combined business has given rise to a global leader in workwear, which is capable generating $1.7 billion revenue annually. Additionally, it will help serve more consumers and industries worldwide.

Further, this acquisition is expected to contribute nearly $200 million to V.F. Corp’s revenues and about 2 cents per share to earnings in 2017. Moreover, the acquisition will add more than $1 billion to its revenue target for 2021. This will accelerate the company’s revenues to more than $15 billion and earnings per share in excess of $5 by 2021.

Apart from enhancing portfolio, the acquisition also demonstrates V.F. Corp.’s focus on being an active portfolio manager to drive transformative growth along with enhancing shareholder value.

Following the announcement to acquire Williamson-Dickie, V.F. Corp. had raised guidance for 2017 and 2021. For 2017, the company now expects revenues to grow 3.5% to $11.85 billion, while currency neutral revenues are expected to be up 4.5%.

The company now anticipates gross margin to be 49.5%. Currency is still anticipated to impact gross margin by roughly 70 bps. Moreover, the company now envisions earnings per share to be $2.96, meaning a decline of nearly 1% year over year and mid-single-digit percentage growth on currency-neutral basis.  Further, the company anticipates the transaction and deal-related expenses to be nearly 4 cents per share.

Additionally, the company revised 2021 targets to include the impact of the Williamson-Dickie acquisition. The company now anticipates five-year compounded annual revenue growth rate (CAGR) of 5-7% to more than $15 billion, through 2021. Further, the company now estimates earnings per share growth of 11-13% at a five-year CAGR, meaning earnings per share of more than $5. The company had previously expected earnings per share growth of 10-12% at a five-year CAGR. The aforementioned acquisition is predicted to contribute more than 25 cents per share to earnings by 2021.

The news did not bear much impact on the company’s stock price. However, this Zacks Rank #3 (Hold) stock has improved 19.4% year to date, outperforming the industry’s increase of 0.9%.

Looking for Some More Promising Stocks? Check these

Some better-ranked stocks in the Consumer Discretionary space include Crocs, Inc. CROX, G-III Apparel Group, Ltd. GIII and PVH Corp. PVH. While Crocs and G-III Apparel sport a Zacks Rank #1 (Strong Buy), PVH Corp. carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Crocs has improved 41.4% year to date. Moreover, the stock has a long-term growth rate of 15%.

G-III Apparel has witnessed positive estimate revisions in the last 30 days. The stock has a long-term growth rate of 15% and has advanced 15.5% in the last three months.

PVH Corp., with long-term earnings per share growth rate of 13.1%, has surged 10.6% in the last three months.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
V.F. Corporation (VFC) : Free Stock Analysis Report
 
PVH Corp. (PVH) : Free Stock Analysis Report
 
Crocs, Inc. (CROX) : Free Stock Analysis Report
 
G-III Apparel Group, LTD. (GIII) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research