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[Beginning of
Cramer's
verbatim
comments for
this segment...]
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Jim's
rating on
this stock |
STOCK
SYMBOL |
Closing
price that
day |
Full Company Name |
|
 |
VFC* |
70.73 |
VF Corp. (VFC*)
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Jim:
When I
interview a CEO,
you'd better
listen up...
This morning,
XLNX, the
semiconductor
company... the
mobile internet
play...
came out and
boosted guidance
big-time...
Maybe you didn't
have it... I
don't have it? I
don't know...
The last time I
spoke to Xilinx
CEO, on July
16th, he said
the company's
troubles were
behind it... He
was bullish
about the
future. So I got
behind him and
Xilinx... Boom!
An 18% gain...
I'll take it...
better than a
sharp stick in
the eye...
I want to
emphasize this,
because we're
about to talk to
one of the best
CEOs in the
apparel
industry... Wes
Card, from JNY?
Hey, just a
second... No...
Eric Wiseman of
VF Corp. (VFC*).
It's a stock
that I like so
much that I own
it for
my charitable trust,
ActionAlertsPlus.com.
The last time we
had Wiseman on
was
February 11th.
VF Corp. was
trading at
$53.87. Now it's
at $70.73. Hey,
a 31% gain...
Eric was very
positive about
VFC's ability to
hold out,
despite being in
the midst of
what looked like
the worst
environment for
retail in
ages... He was
right. We went
with him. I
loaded up on
the trust
as soon as I
was allowed to,
because he was
so confident...
You probably
know VF Corp. by
its brands...
Lee's... North
Face...
sneakers... golf
shoes... The
company is the
premier brand
builder. It
acquires them.
It invests in
them heavily, it
expands their
distribution,
and that's been
a fabulous
business
model...
VFC also has a
fabulous... yes
indeed... a
marathon-man
safe dividend...
raised 36
consecutive
years... It's an
accidental
mid-yielder at
3.3%.
Now, VFC's
revenues were
down 11% in the
most recent
quarter but,
despite the
decline, sales
in Asia were up
big... 32%...
That's an area
that Wiseman
highlighted the
last time he was
here... and the
direct-to-consumer
business grew
19%. This is a
company that
really has its
finger on the
pulse of the
consumer. They
know what people
want to buy, and
they know which
was things are
trending.
On the
conference call,
Wiseman didn't
make a call on
the economy,
although he did
say that VFC was
well prepared to
make it through
the 2nd half of
the year, with
its most
difficult
comparisons
behind it. That
was all the way
back on July
21st. The
economy seemed
to have improved
a lot since
then... the
consumer really
coming alive...
retail stocks on
fire....
I want to know
what he thinks
now... I want to
ask him about
the state of
retail... the
state of his
great company...
So let's hear
from Eric
Wiseman, VF
Corp.'s terrific
CEO...
▼ ▼
▼ ▼
▼
Jim: Mr. Wiseman, welcome back to Mad Money...
Eric: Hi Jim. Thank you very much. It's always a pleasure to be on your show.
Jim: Great to have you. Now, I get the New York Times, I get the Wall Street Journal... Uh, they said, in unison, that there was no back-to-school season... that there hasn't been a turn... that things are more gloomy than ever... They're already starting to talk about how the Christmas season's going to be bad. Isn't it true that things were actually better than we expected?
Eric: Well, I think it's true to say, Jim, that the trend did improve a little bit during back to school, helped in part by the September shift to Labor Day this year... is really going to help the September numbers... but to calibrate your numbers, while the trend is improved... and this month is not over yet... we're still expecting most retailers to report comp. store declines for September, but lower comp. store declines than we've seen over the last 3-12 months.
Jim: Well, that's what has to happen. You can't get them... life is not such that you go down 8%, and then you're up 8%. You have to level it off.
Eric: And we expected the trend to increase. Of course, we're coming up against last year's 2nd half, which was so challenging and so difficult, so we planned accordingly.
Jim: Alright, one of the things that I think... and I spoke to Wes Card (CEO) from Jones and I spoke with a lot of department store guys behind the scenes... There's a lot of talk that maybe the ways of Wall Street aren't the way to go. We focus on same-store sales... we focus on top line. What I am hearing from executives in the apparel business is, you know what, let's focus on profitability... let's get our inventories down so we don't have to discount so much, and gross margins go higher. Where does VF figure in the theory that maybe profitless sales are a thing of the past?
Eric: Well, we're real focused on inventory. I will say that. And you know, at the beginning of the year, we came out and talked about, uh, getting a $100 million inventory reduction at VF, and generating over $750 million in cash flow from operations this year, and we are on track to do both of those things. Of course, when the inventory is cleaner... both with us and with retailers... there is a need for less discounting, and that ought to show up in the margins eventually.
Jim: Yeah, that's what I think... I'm trying to impress upon people that, just when you see... Correct me on my arithmetic, but if you see sales down 5%, but inventories down 8%, that kind of company is going to do pretty well.
Eric: That's correct, and that's where VF is.
Jim: Alright, talk to me about new things... You've always got new things going... we've got some of these great new Vans products... One of the things that I always look at at VF Corp... it never stands still. Tell me about the most exciting stuff, and what's going to be actually added to earnings.
Eric: Well, there are a couple of things... There are three things that are going to make VF go for the next few years... One is our investment in the international business, with the focus on China... Another is, we continue to invest in owned retail presence for all of our core brands around the world, and I'll add that we're not intending to become a retailer. It's still going to be, you know, only 20% or so of our business... But innovation is key to us, and we drive through each of our brands and each of our businesses a need to take innovation to consumers... because what we've found in the recession is that consumers are responding either to value... and value does not necessarily have to be price... it can also be about paying a fair price for a product that they find compelling. So some of the products that you may have on the show... and I can't obviously see what you're showing... but the North Face has some new products out that are just terrifically innovative and accommodate different North Face consumers. They have a jacket out called the Kremtastic (sp?) that is really meant for the climber or the mountaineer...
Jim: Right. That's exactly what I'm showing, because it looked great... and I know we have rules, and I can't send it to my daughter, unfortunately, because that would mean that I'm on the take of VF, but it's certainly nice...
Eric: Yeah, you know, it has 800 fill down for warmth, and Polartec powerstretch for movement and a waterproof shell... and that's for our mountaineer customers. We also make innovative products for the people who are more active outdoors... runners or cross-country skiers... We have a product called the Antimadgie (sp?) that's just a terrific product that incorporates primaloft, which is 30% recycled insulation, with all kinds of lightweight things so that you don't get too hot while you're active... and it has stetch panels, and all kinds of other things, for the person who is active outdoors.
Jim: Okay, well I've got to tell you something... even more than the innovative products... even more than the numbers... I think your enthusiasm, to me, says we're on the on the right track, sticking with VF. Eric Wiseman, chairman and CEO of VF Corp., thank you so much for coming on Mad Money.
Eric: Thanks for having us, Jim.
▼ ▼
▼ ▼
▼
 Jim's
comments AFTER the
interview:
Guys, I'm sticking
with this one. I
have said it
before... you need a
retail play. It's
only 20% retail. You
need an apparel
play... this one has
it. Good dividend,
good strength, low
expectations,
inventory control...
new products.
VF Corp. (VFC*)...
it's pretty easy,
isn't it?
[verbatim recap]
[end of segment]
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