Innovations in recent years include Pure Motion, Sprint Frame, and Sprint Web. The new $150 Energy Boost shoe promises users more bounce while expending less energy. I think some of these lighter designs compromise the structural support and integrity of the shoes. Adidas looks to capitalize on newer trends like CrossFit with its Reebok brand having a large percentage of that particular market.
V.F. Corporation (NYSE:VFC).
I believe there’s no better example of the impact of a premier shoe brand purchase than V.F. Corporation (NYSE:VFC). The worldwide leader in branded lifestyle apparel, footwear, luggage, sportswear, and jeans-wear, with brands like The North Face, Vans, Eastpak, JanSport, Wrangler, Lee, MLB and NFL apparel, Nautica, and Ella Moss. Plus, V.F. Corporation (NYSE:VFC) only got better when it bought Timberland for $2.2 billion on June 13, 2011.
To put into perspective what Timberland did for the stock, let’s compare returns between the infamous March 9, 2009 market collapse and the Timberland acquisition, which have been more than 92%, to the share gains between that acquisition and today, profits that surpass 80%. In the same time frame when shares of VFC advanced 80%, Nike and Adidas only increased 46% and 39%, respectively.
Furthermore, both the Dow and S&P 500 index only increased about 20% each in that time period. Additionally, profit margins in the seven quarters since the purchase have averaged 9.4% versus 7.7% in the seven quarters prior. Clearly, Timberland proved to boost VFC both as a company and as a stock even after it already rebounded from the 2009 market collapse.
With so many top brands across different apparel sectors, performance in V.F. Corporation (NYSE:VFC) has crushed the S&P 500 Index. If you had invested $100 in each nearly five years ago, the index would have turned that $100 into a little more than $108 today, while VF Corp would have generated more than $254.
Earnings continue to set records, as well. For instance, 2012 revenue soared to a record $10.9 billion, an increase of more than 15% versus 2011. Like NIKE, Inc. (NYSE:NKE) and Adidas, the shoes matter most: 9% of that 15% increase was due to the Timberland brand. International revenue grew 23%, with the boot brand responsible for 18% of those sales. If income is what you’re looking for, V.F. Corporation (NYSE:VFC) just passed its 40th consecutive year of increasing dividends, with the current yield at just over 2%.
The Original status symbol
Shoes can make or break an outfit, whether you are going to work, going out to enjoy the nightlife, going shopping, or simply going. They can do the same for big companies, as shown in this article.
For NIKE, Inc. (NYSE:NKE), the multi-million dollar gamble on Michael Jordan has turned a $1 million company into a multi-billion dollar global empire. While Adidas is a respectable second in terms of market value, it could be worth much more if it can come up with the next best thing in footwear. The power of Timberland has been demonstrated clearly through V.F. Corporation (NYSE:VFC)’s success, as the acquisition has been a huge positive for the company’s bottom line.
In the end, shoes are not only the original status symbol among the typical consumer; they are also the status symbol for the world’s most successful shoe companies.
The article It’s Gotta Be the Shoes originally appeared on Fool.com and is written by Michael Carter.
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