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Reuters Summit-UPDATE 1-VF Corp sees markets 'stabilise'

Published 06/12/2009, 09:30 AM
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(For other news from the Reuters Global Retail Summit, click on http://www.reuters.com/summit/GlobalRetail09?PID=500)

* Does not expect a return to growth in 2009

* Hopeful of recovery in 2010; not banking on it

* Keen on more acquisitions, will have $2 bln war chest

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By James Davey

LONDON, June 12 (Reuters) - VF Corp, owner of brands such as Wrangler, Lee, Vans and The North Face, has seen its markets in the United States "stabilise" but does not expect a return to growth in 2009, its chief executive said on Friday.

"The apparel (wholesale) business and the stores that we sell (in), things seem to be stabilising," Eric Wiseman told the Reuters Global Retail Summit in London.

"They're not stabilising at a great place but compared to December, January and February, when week after week it looked a little bleaker, it's stable," he said.

Wiseman said VF had also seen some of its markets in Europe bottom out.

"I don't think most of western Europe is any better or worse than the U.S., it feels like it's stabilising here some too," he said.

But he said VF's jeans business in eastern Europe remained difficult.

In April the group posted a steeper-than-expected drop in first-quarter profit and lowered its full-year outlook.

Wiseman does not expect any of VF's markets to return to growth in 2009.

"We are assuming that there is no recovery this year for sure," he said.

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"We think the right assumptions are to assume that it's going to be very difficult and if it's better than that we'll chase business, chase inventory."

The CEO is hopeful of a recovery in 2010 but is not banking on it.

"We will not be assuming that there's an enormous recovery that lifts our performance. That assumption is off the table," he said.

"Whether there's any improvement in 2010, and when you assume it, are the discussions we're having now."

WAR CHEST FOR ACQUISITIONS

Wiseman said VF Corp was keen to do more acquisitions, with the recession having spawned "lots of opportunities", and was having "a lot of discussions".

He said the group had the financial firepower to do "a reasonably large" deal.

"By the end of the year ... we'll have $600 million in cash and $1.3 billion in accessed funds, so we'll be sitting on a $2 billion cheque book that's accessible for investment and acquisitions."

Wiseman said VF was particularly keen to expand its portfolio of brands in "outdoor, action sports and contemporary".

"We have a (potential acquisitions) list that we go through every four months," he added.

Shares in VF, which have lost 18 percent of their value over the last year, closed Thursday at $59.29, valuing the business at $6.56 billion. (For summit blog: http://blogs.reuters.com/summits/) (Editing by Jon Loades-Carter and Rupert Winchester)

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