VFCorp (VFC) – The Future is Light

This week, the Outdoor Retailer Show took place in Denver, Colorado where public brands had the opportunity to reach their retail audience. With the show wrapping up today, I thought I’d share some notable commentary I came across surrounding VFCorp (VFC):

The North Face

Piper Jaffray analyst Erinn Murphy was out with a note on Thursday discussing The North Face’s FutureLight technology, which is set to launch later this fall and could position the brand to drive outerwear refreshes in the upcoming year given it is proprietary in nature.

According to Piper, FutureLight uses a technique called nanospinning which allows not only a number of different fabrics to be woven together but allows the design team to make a product with a lot more absorbency than peers in the market. It took two years to develop and is the most eco-friendly material the brand has ever developed. “Instead of using a partner like Gore-Tex to tap into waterproofing capabilities, this product is waterproof, <50% of the weight of peer offerings, is much softer than your average ski shell (we felt it!), and more breathable. With time, this product should be margin accretive given price points & that it is proprietary.”

JPMorgan’s Matt Boss was also out discussing this new technology:

“Looking ahead, management noted TNF’s “best product as still to come” showing palpable enthusiasm for their new internally developed FutureLight technology set to initially launch in Fall ‘19 through 37 SKUs in TNF’s top tier Summit Series segments with all of TNF’s higher-end Mountain Sports waterproof/breathable apparel/footwear set to transition to FutureLight by Fall ’20 (vs. licensed Gore-Tex prior) w/ the shift also likely proving margin-accretive. Specifically, management views FutureLight as a disruptive “enterprise” technology that enables lighter, softer and increased breathability in products reducing the consumer’s need to layer w/ opportunity to scale the technology across brands over time.”

BAML analyst Robert Ohmes believes FUTURELIGHT is The North Face’s strongest innovation since Thermoball in 2013 and could potentially drive a multi-year product cycle. “We believe VFC’s multi-year journey to clean up the marketplace (which began in 2015) combined with innovative new product should continue to drive high-single digit growth for the brand. Additionally, we believe The North Face is increasingly less weather dependent as the brand is able to modulate between cold weather product & sportswear/lifestyle styles (TNF in Europe grew +8% last Q despite challenging weather).”