Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 7, 1993 TAG: 9304070023
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: ERICH SMITH ASSOCIATED PRESS
DATELINE: WYOMISSING, PA. LENGTH: Long
VF BUCKS THE DOWNTURN AND KEEPS ON GROWING
While other American companies have been laying off workers and cutting back, VF Corp. has been hiring.The parent of Bassett-Walker Inc. of Martinsville and maker of Lee and Wrangler jeans is enjoying record sales and earnings. Its stock price has quadrupled in the past few years.
VF's chairman, Lawrence Pugh, has moved aggressively to diversify the once-languishing denim maker into other types of clothes that share a common theme - the basics. That means such diverse things as Jantzen sportswear and Vanity Fair lingerie.
Pugh prides himself on reinventing an American company that makes 90 percent of what it sells in this country, using 58,000 workers at 135 U.S. plants. About 3,500 of those workers have been hired in the past year.
VF's Bassett-Walker unit has 8,000 employees at 18 plants making T-shirts and sweat clothes. More than half of its workers are in Virginia.
Competitors may find cheaper labor costs overseas, Pugh said, but "that doesn't mean that I can't tell the American public that in my judgment our product is made in America and an American product is just as good or better than anybody else's."
Pugh spoke in an interview at VF's headquarters in Wyomissing, a small town about an hour's drive northwest of Philadelphia. The 60-year-old executive, who has spent his career in marketing and retailing for such products as luggage and electronics, has been at VF for 12 years, the longest he has stayed with one company.
It's not just making the fundamentals of what people wear that has enabled VF to grow in a tough economy. Getting hot-selling items onto store shelves quickly has helped, too.
"Our production in the United States will continue to increase," Pugh said. "That production will come from adding some people, but also from different methods of procedures as we continue to make ourselves more competitive."
The apparel company has gained an increasing prominence among Wall Street investors. VF's stock, selling for around $13 a share in 1991, has been trading on the New York Stock Exchange at around $50 per share recently.
"Basically, they've gotten their act together," said Josie Esquevel, an industry analyst for Shearson Lehman Brothers.
Brenda J. Gall, an analyst at Merrill Lynch, credited VF's strategy of developing different brands for different markets and making private-label clothes for retailers such as Victoria's Secret, the catalog retailer that showcases models in intimate clothes.
VF offers high-priced Girbaud jeans in department stores; Wrangler jeans go to mass merchants, discount stores and Western specialty shops; and Rustler jeans are for big discounters.
People need to buy more clothes no matter how bad the economy is, but Pugh said the company can't depend on that and must stay attuned to what people want.
"We are great believers in right product design with appropriate value attached to a very strong, reputable brand name," Pugh said.
"People's lives are more casual, their dress is more casual, and that is not just the United States, that is worldwide, and that is not going to change in the '90s," he said.
Like many other executives in the clothing and retail trades, Pugh said shoppers demand more value and that spendthrift days are gone.
"To think that people are going to go back and shop like they did in the '80s is just insane, because they just don't have the money to do so," he said.
When they do shop, they have less time and want to find what they're looking for in the right size and color, he said.
VF has established an electronic link between retail cash registers and its shipping department, which Pugh credits as the main reason for the company's surging financial results and increased employment.
For example, Pugh said, a Wal-Mart cashier will ring up a VF product and read the scanner bar code on the price tag.
"When he or she rings that cash register, that automatically goes up through our satellite system to our warehouse, and we will have that product back on the shelf in six to seven days.
"So what we are doing is replenishing the product that's selling, not the product that's not selling - which satisfies the consumer, dramatically increases the store's sales, decreases the store's inventory and it's a profitable venture for everybody."
Pugh said about 10 percent of the company's products are made abroad. Its jeans are well-known in Germany and England. It has five plants in Europe, and is looking into opening a plant in Poland with a partner.
He said he sees other opportunities overseas, in the Pacific rim and in Mexico, once the North American Free Trade Agreement is final. That pact, which Congress is reviewing, gradually would eliminate tariffs among Mexico, the United States and Canada.
"From VF's standpoint, the big advantage will be that it is going to improve the Mexican economic environment, which will give us more opportunity to market our brands and our products in the country of Mexico," Pugh said.
Pugh said he expects more change in the apparel business, but doesn't mind.
"One of the real keys, I think, is to manage the business and control it from a financial standpoint.
"But at the same time, you have to have an entrepreneurial spirit in the divisions, because it's so fast-paced, and you do need the creativity. So it's a very fine line that we as managers have to run here," he said.
What Pugh doesn't anticipate is VF's departing from a decision made in the early '80s to sell basic clothing, nothing fancy.
"We will stick with what we know how to do," he said.
writer George Kegley contributed to this story.