VF Corporation SWOT and PESTLE Analysis

Strength

1. Diverse products sold across the world through multiple channels: The diverse portfolio of VF meets the needs of different kinds of consumers across lifestyles and activities. This ability to connect with diverse consumers provides a platform for sustainable long-term growth of the company. The diversification of VF is across brands, distribution channels, product categories, consumer demographics and geographies. The company owns brands across categories of footwear, backpack, outerwear, luggage apparel and accessories. The products are marketed to consumers through various wholesale means like specialty stores, national chains, department stores, independently-operated partnership stores, mass merchants and strategic digital partners. The products are also marketed through various direct-to-consumer channels like concession retail stores, VF-operated stores and brand e-commerce sites.

2. Strong centralized global supply chain: The company has a strong centralized global supply chain system for production, procurement and delivery of products. VF has developed an excellent capability of managing the different complexities associated with a global supply chain, which is made possible by a network of information systems for forecasting, order management, product development and warehouse management. The products are obtained from various facilities, including 19 VF-operated manufacturing facilities and 700 independent contractor manufacturing facilities in 60 countries. There are 1,551 retail stores and 40 distribution centers across the world.

3. Industry leadership in the use of natural and sustainable performance materials: VF corporation has quickly grown to be the industry leader in advancing the use of natural and sustainable performance materials. The acquisition of the Icebreaker brand was a significant step in that direction. This was VF’s first purpose-led acquisition. The company is aligning its purpose commitment with Global Business Strategy and innovation agenda for prioritizing and accelerating more such acquisitions. The Icebreaker acquisition complemented VF’s Smartwool brand. Both these brands have made VF a global leader in natural fiber and Merino wool categories.

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Weakness

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Opportunity

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Threat

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Political

1. Changes in trade policies of US and other countries: VF’s ability to maintain the current level of operations in existing markets and capitalising on growth in existing and new markets is subject to the burdens of complying with U.S. and international laws and regulations, unexpected changes in regulatory requirements, tariffs or other trade barriers. A significant portion of VF's Fiscal 2019 net income came from jurisdictions outside the US and most of its goods are manufactured outside the US. The company is exposed to risks of unpredictable changes in US policy or those of China, the European Union or other countries on the import or export of products. These changes may adversely affect VF’s business or may require a modification of current business practices.

2. Vietnam and Bangladesh to play a bigger role as apparel suppliers: So far, fashion companies in USA have sourced raw material mainly from China. But China’s status as the largest supplier for American fashion brands is under threat due to the tensions between US and China. In this scenario, American fashion companies are expected to increase sourcing from other Asian countries like Vietnam and Bangladesh. In 2019, Vietnam was number 2 sourcing destination behind China, as per survey respondents, with 86% usage rate. 7% of respondents have said they were planning to increase sourcing from Vietnam over the next 2 years. The figure could have been higher had it not been for concerns about Vietnam’s rising cost of sourcing and limited production capacity. Bangladesh is the number 6 sourcing destination with 60% usage rate. However, 80% of respondents were keen to increase sourcing from Bangladesh in next 2 years due to price advantages. Yet, concerns remain about Bangladesh with respect to flexibility and agility, speed to market, and compliance risk. The sourcing strategy at VF is balanced; the company does not overly depend on a single country, which helps in competitive cost management and sourcing closer to end markets. Vietnam consists of 25% of VF’s sourcing, whereas Bangladesh consists of 5%.

Economic

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Social

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Technological

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Legal

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Environmental

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