VF Corporation to Spin Off $2.5B Denim Division

VF Corporation announced on Monday that it planned to spin out its denim brands — Lee, Wrangler — into a separate publicly traded business, enabling it to better focus on its faster-growing activewear and lifestyle clothing lines like The North Face and Vans. VF has spent much of the past two decades diversifying away from denim through acquisitions, including its $2 billion takeover of Timberland in 2011, and shedding slower-growing businesses.The company bought Lee in 1969 and Wrangler in 1986, and the division was responsible for $2.7 billion of VF’s $11.8 billion in sales last year.

Total Retail's Take: As consumers increasingly opt for athleisure and activewear, particularly women shoppers, denim retailers and brands have seen their businesses take a hit. VF Corporation is trying to cut its losses, unloading the Lee and Wrangler brands, whose sales have fallen in recent years. However, the move isn't without its risks. VF is moving on from two brands that generated nearly a quarter of its revenue last year. The retail organization will be counting on Timberland, North Face and its other activewear brands to recoup the revenue generated by the denim business, while also becoming more profitable from the slimmed-down brand portfolio.