Timberland aquisition is a real opportunity for VF Corporation

Mark Gunther has interviewed Timberland boss Jeff Swartz on the announcement of the sale of the business to VF Corporation, which owns The North Face, Vans, Wrangler and JanSport.

Naturally, Jeff has to be a little circumspect given the recent announcement.

The news of the sale is not entirely unexpected. As chief brand officer Mike Harrison told our conference in New York on June, the company has done very well from its Earthkeepers product line, launched in the last few years, after a bad financial patch.

Suitors for Timberland have been sniffing around for years. A sale was perhaps inevitable at some point, given the consolidation in the outdoor goods marketplace.

The Earthkeepers line now accounts for more than 10% of overall sales and all of the firm’s growth. Not bad. In fact, very impressive.

I interviewed Mike just before the second day of our conference on June 2.

The podcast is not yet on the Ethical Corp website since we are about to launch our new site, but you can download it here, if you wait a minute and click bottom right.

As usual, when an ethically-minded brand is sold, there are two camps of opinion.

One expresses dismay that a larger company has bought a smaller, focused brand and is concerned about dilution of the core brand proposition: sustainability.

Those in that camp might point to Marc’s quote that: “VF says it intends to both grow Timberland’s sales and make the company more efficient — Timberland’s operating margin was 9% last year, well below VF’s 20%.”

Making Timberland more efficient, they might say, could result in the firm’s famed employee benefits being whittled away, or supply chain capacity building exercises and ethical sourcing improvements cut.

Another school of thought suggests the sale is a step towards the ‘mainstreaming’ of corporate responsibility into larger companies.

The argument in this case might be that Timberland’s outspoken position on social and environmental issues, and particularly the greener product line it has developed, can help the other brands owned by the larger firm to become more responsible, faster.

(You can see all the brands VF owns at this link)

As Marc points out in his post, insiders say that North Face, owned by VF, “is getting serious about sustainability, lobbying for action on climate change and looking at the environmental footprint of its products.”

One can imagine the other brands VF owns, such as Lee and Wrangler, are doing the same.

Levi Strauss has certainly raised the game for jeans and outdoor gear firms in recent times, along of course with Patagonia.

So, as often in the world of corporate responsibility, what you think about Timberland’s prospects for continuing its accelerating path towards overall sustainability depends on how you look at these kinds of deals.

A loss for ‘ethical brands’ or a ‘gain’ for mainstreaming sustainability?

Most folks, I’d guess, would prompt for the latter if pushed for an opinion.

Realpolitik means we have to hope that it is true.

We’re written a lot about buyouts of ethical brands over the years at Ethical Corporation.

In many ways it doesn’t really matter whether ethical brands (Timberland was in an unusual space I should add, given its large size compared with many others) would have been better on their own. Reality bites eventually.

I can’t think of anyone I know that would have turned down VF’s offer if they were in Jeff’s shoes.

How could you?

The two key questions are: What will Jeff Swartz do next? (That WILL be interesting to watch, I can’t see him on a beach forever)

Perhaps more importantly: How fast can VF’s other brands learn from Timberland’s experience with employee motivation and product design and sourcing?

The sale seems like a decent fit to me, as much as these things can be.

VF has an opportunity to really capitalise on the outdoor goods consumer sentiment for products which have a lower footprint, socially and environmentally.

Let’s hope they grasp it with both hands.

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