Jeans Are Still A Potential Market, And This Area Will Meet The New Competitors.

There will be a strong competitor in the field of jeans clothing.

According to the latest Reuters news, the Vans parent VF VF group has officially split up Wrangler and Lee denim business to set up Kontoor Brands Inc. and submitted IPO application on the New York stock exchange with the ticker symbol "KTB". The plan will be completed in the coming year, and the future group will focus more on the fast-growing areas such as sports and leisure and outdoor clothing.

Steve Rendle, chairman and chief executive officer of VF group, points out that both the VF and the Kontoor Brands will achieve higher market value in the future.

After the release of the news, VF group's share price rose to $87.3 after the day, and its market value is currently about $34 billion 600 million.

After splitting, Kontoor Brands will cover brands such as Lee, Wrangler and Rock&Republic. Its annual sales volume will exceed US $2 billion 700 million. Its headquarters will be located at Wrangler headquarters of North Elm, while some functional departments will move to Revolution Mill, and about 845 union members of the VF group will join the Revolution.

Scott Baxter, chief executive of Kontoor Brands, said that the move was an important milestone on the occasion of the 130th anniversary creation of Lee, which will help the management including him to better manage Lee, Wrangler and other brand businesses while speeding up the expansion of the brand in the world, especially in the Asia Pacific region.

In a report to investors and shareholders, VF group also wrote that the separation of cowboy businesses will help brands such as Lee and Wrangler to better develop their potential, while looking for new acquisition targets to further enrich the brand matrix.

Founded in 1899, VF group is one of the largest outdoor apparel, footwear and accessories groups in the world.

Lee brand was founded in 1889 by Paul David in the United States. Apart from the classic harness jeans jeans, it also created the world's first zipper jeans, known as one of the top three Jeans Brands.

In 1969, VF group announced the acquisition of Lee brand, and in 1975 launched the first women's jeans series, called "FIT FOR GIRLS".

Subsequently, Lee has released a series of brand names suitable for all ages to further stabilize the throne of its cowboy fashion brand.

According to market research firm Ou Rui International, the world's five largest brands of jeans are ranked first in the list. Levi's, Zara, H&M and other parent companies are listed companies, while Wrangler and Lee are all owned by VF group, a listed company.

In addition to Wrangler and Lee, VF group has grown rapidly to become one of the leading cowboy clothing manufacturers in the United States through the acquisition of cowboy brands such as Ruslter and Riders. It occupies about 25% of the global jeans market.

Although the demand for jeans market has been decreasing since 1980s, VF group, which has a diversified brand matrix, is not worried. Its profitability is much higher than that of its rival Levi's and Blue Bell.

In 1986, the VF group bought a Blue Bell holding company for $762 million and became the largest cowboy costume manufacturer in the United States.

Euro forecast that the American jeans market will be warmer in the past 5 years, and that the composite annual growth rate of American jeans sales from 2018 to 2023 is only 1%, but higher than that of 2013 to 2018.

Bloomberg quoted analyst Chen Grazutis as saying that although consumers tend to buy sportswear at present, the jeans market has improved somewhat compared with one or two years ago, showing "stable, low single digit growth."

What it means is that another American clothing brand Guess has begun to target the cowboy business. The new CEO Carlos Alberni said at the earnings analysis conference that the future brand will focus on cowboy business as soon as possible to return to the leading position in the market as soon as possible. The first task after he takes office is to optimize the product development and sales channels.

Guess was founded in 1981 by Georges, Armand, Paul and Maurice Marciano four brothers. It was founded on tight Monroe jeans. It was regarded as a synonym for sexy, enthusiastic and free. In the 2018 fiscal year ended February 2nd, Guess revenue rose 10.4% to 2 billion 600 million yuan, and the net profit was 14 million 100 thousand dollars. The net loss in last fiscal year was 7 million 900 thousand dollars.

It is noteworthy that Heji international, the ochirly parent company, acquired the palace denim brand Denham at the beginning of this year to further penetrate the jeans market.

JACK&JONES Jack & Jones announced last year that after brand research director Anders Gam and Peter Kristiansen investigated consumer preferences and needs, the brand decided to return to the cowboy market and focus on full channel operation.

To this end, the brand has introduced a new and more modern Logo, consisting of two letters J, denim blue.

Levi's, the originator of jeans, was listed again in March 22nd after 48 years. The stock price jumped 32.76% to 22.58 dollars from the initial $17, and the market value increased to 8 billion 700 million dollars.

In the prospectus, Levi's expects its growth rate to be faster than that of the overall apparel industry, and believes that the future jeans market will be attractive.

The industry believes that the re listing of Levi's has revealed a positive signal, but the competition for cowboy clothing industry will also intensify. On the day of Levi's listing, Guess shares fell by nearly 13%.

After 166 years of development, Levi's group owns its main brand Levi's, leisure brand Dockers, and low-end brand Signature by Levi Strauss Co. and Denizen based on wholesale channels. Last year, its sales volume was $5 billion 600 million and returned to 5 billion clubs.

In fact, Levi's has gone through a long period of low tide, and its development trajectory is not smooth. Although it was listed as early as 1971, it has launched a non cowboy business because of its brand trying to satisfy all people's needs, resulting in the declining profitability of the group. Finally, it was privatized by the Haas family of the Strauss family in 1984 with a leverage acquisition of 1 billion 700 million US dollars. Until last year, the annual sales of Levi's returned to the level of 20 years ago.

Levi's chief executive Chip Bergh said in his earnings report that his mission is to make Levi's the best cowboy fashion group in the world. The growth of sales in 2018 will benefit from the development of new categories, the expansion of business scope of direct retail channels and the upgrading of interaction with global consumers.

Driven by the launch of a joint partnership with other brands or designers, the rising trend of fashion is also the key to Levi's's re acquisition of young consumers.

It is learnt that the Levi's x Air Jordan 4 series shoes have just been launched and become the finalists for the top ten sneakers in 2018.

In February 27th last year, the Levi's brand formally launched the F.L.X. project, which aims to shorten the production cycle of the jeans garment by upgrading the manual garment and automating the cowboy garment process, so as to maximize the supply chain's quick response and sustainable development.

Levi's ranked 111st in the list of the top 500 global brands in 2018.

According to the 2018 annual "American consumer favorite brand" list released by Morning Consult in May, Levi's is the only fashion brand selected, and consumers have a 71.9 degree of interest.

Chip Bergh believes that the scarcity sense created by cooperation with brands such as Supreme and Off-White is one of the main factors to get consumers to respond positively, and also creates a hot topic for brands.

However, Chip Bergh has been drawing the line between Levi's and fast fashion. He once said that a distinctive and quality brand can win the favor and recognition of the Millennials.

Although some investors and analysts are skeptical about the Levi's's future development prospects, the group is still lagging behind its competitors in the digital channel layout. Chip Bergh remains optimistic that the annual revenue of the post market group is expected to reach US $7 billion 100 million. The long-term goal is to bring Levi's into the $10 billion club. "Levi's will lead the trend rather than follow the trend."

In addition, some analysts believe that the trend of fashion is coming, and the development of women's jeans market is strong. Maybe women are tired of sports tights and jogging pants.

Chip Bergh emphasized that the Chinese market has always been the top priority of the group's development strategy. At present, only 5% of the sales volume of the brand comes from China, compared with the market share of 20% of its global apparel market.

Today, Levi's officially launched the official small program "my LEVIS official customization" in WeChat, China, which mainly sells customizable products such as sweaters, jackets and T-shirts.

Obviously, under the constant subdivision of the clothing industry, cowboy business is becoming a new potential market.

According to the latest just-style report, sales of the global jeans retail market last year was about $57 billion 300 million, and by 2023, it will achieve $60 billion 90 million, mainly due to the strong growth of consumer demand in developing countries.

The report also predicts that the United States will continue to be the world's largest market for jeans, while China will be the second largest.

Mordor Intelligence data from research institutions show that the jeans market is expected to grow at a rate of 6.7% from 2018 to 2023.

However, some analysts believe that even if the environment is good, the Kontoor Brands after spin off may be difficult to duplicate the success of Levi's. After all, the sales and profits of Levi's have resumed growth, but the performance of cowboy brands such as Lee and Wrangler is shrinking.

According to the latest three quarter earnings report released by VF group, sales in the cowboy sector fell 3.5% to 1 billion 900 million US dollars in the 9 months to December 29th, with a 13.5% decline in profits.

In addition, Lee is more monotonous than Levi's in terms of products. At present, only U jeans, female jeans, 101 of American products, and washed jeans are sold well, and brand stores are also lack of innovation, which has not aroused enough attention among young consumers.

Stifel analyst James Duffy wrote in a report last month that the Kontoor Brands business still faces challenges and expects that the value of the company's spin off will be about $4 billion, less than half of the market value of Levi's.

More investors are wary of the Gap group's cash cow Old Navy will also be listed independently, the valuation of up to 8 billion U.S. dollars, this low-priced jeans based brand will also become a major threat to Kontoor Brands.

The industry is concerned that VF group suddenly invited Silicon Valley venture capitalist and Hone Capital founder Veronica Wu to join the board of directors last month and was in the finance and nomination and Governance Committee of the board of directors.

VF group said in its statement that the experience of Veronica Wu will play an important role in the development of globalization and digital strategy of its business and expansion in the Chinese market.

Lee appointed male star Eddie Peng as spokesperson last year. The two sides also launched the EdW x Lee Urban Riders series, which is accelerating the expansion of the Chinese market.

Although domestic fashion retailers are in turmoil, foreign cowboy brands are still optimistic about China's market prospects. As early as 2 years ago, the Japanese high-end Cowboy brand EVISU parent EVISU Group Limited recovered the retail rights and franchise rights of the Chinese market with 40 million US dollars (about 277 million yuan).

With the improvement of consumers' fashion and preferences, the shuffle of fashion industry will continue. The battle for Chinese Cowboy brand is just beginning.