Casey From VFC's Meeting

Here are Casey Flavin’s thoughts after the kick-off dinner for VFC’s analyst meeting in So Cal. Some interesting tid-bits on acquisition strategy…
Sat with CEO at Dinner. He seemed confident in guidance they've given thus far and noted that he has "crystal clear" visibility on the cost side through the spring of 2009 due to locked-in prices. After that, they are assuming 3% cost inflation internally (which sounds low).

In discussing the timing of acquisitions and the fact that the company is going to be reliant solely on organic growth in Q4, Eric Weisman (rightfully) stressed that short-term deal timing is largely out of his control, and that he is focused on the multi-year plan.

Talked a lot about the process behind which VFC acquires brands. Sounds like this will be a part of the presentation at the meeting later today.

Last year, all of the acquisitions that were consummated were companies that came to VFC, not vice versa including Seven, which was totally unsolicited. Will VFC have to go after more candidates in ’09 instead of the other way around?

The company is typically in talks with 20-40 companies simultaneously at any given point in time. There is no significant uptick in discussions to note at this time; although VFC thinks/hopes that is very likely to tick up over the next few months.

Culture and financial position of the target is very important.

The company has looked at TBL, but to date there has been either a) cultural fit issues, b) management issues, or c) state of business issues that precluded a deal. [McGough: This sounds like a tonal change from my vantage point. Sounds like VFC won’t chase this one.]

Also discussed the rumor of an interest in UA. Bottom line -- not on the board for discussion.

Other nuggets:
a. Very positive on TNF opportunity in china
b. At the end of 2 yrs they will already surpass their 5 yr targets for that business
c. Essentially trying to create and outdoor brand presence over there like Nike has done with athletic footwear.
d. North Face is "well over a Billion" dollar brand
e. Wrangler is still substantially bigger
f. TNF and Vans is ~25% of total revs

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