Zacks Investment Research | Mar 14, 2018 09:49PM ET
V.F. Corporation (NYSE:VFC) has agreed to buy the Altra footwear brand from ICON Health & Fitness, Inc., a leading Utah-based health & fitness company. The deal is likely to close in April and will be accretive to V.F. Corp’s earnings thereafter. However, other terms of the deal remained under covers.
Notably, this latest acquisition is in sync with V.F. Corp’s five-year strategic growth plan, alias, 2021 growth strategy, which focuses on rapidly responding to the changing marketplace while targeting huge shareholder returns. Under the plan, the company’s four-point strategy is focused on redesigning portfolio and empowering its key brands; adopting a consumer and retail-centric model; enriching direct-to-consumer and digital businesses and directing investments in to Asia, particularly China.
The acquisition of Altra, an exclusive technical footwear brand, is likely to boost growth across V.F. Corp’s direct-to-consumer and international channels.
Launched in 2011, the Altra brand is marketed across 55 countries through more than 1,600 specialty retail outlets as well as through www.altrarunning.com. Notably, it is a well-known and high-growth athletic brand, with specialized and latest designs for road, trail and lifestyle footwear. This will fuel growth at V.F. Corp’s Outdoor & Action Sports coalition, which contributed nearly 68.5% to the company’s total revenues in fourth-quarter 2017. In fact, the segment is the company’s fastest-growing business unit and its revenues grew 16% in the quarter.
In a year’s time, the Altra brand produced roughly $50 million of revenues. Also, the buyout of Altra will boost growth for the ICON Health & Fitness’ NordicTrack, ProForm core brands, Freemotion commercial business and iFit.
V.F. Corp stock reacted positively to the purchase agreement, rising 1.7% on Mar 14. In the past six months, this Zacks Rank #3 (Hold) company’s shares have rallied 20.2% compared with the Zacks Investment Research
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