With high-performance athleisure on the rise, spinning off a denim business seems obvious. But they may be missing an opportunity for innovation


Nobody at VF Corporation appears to be thinking about James Dean, the cultural icon who took Lee jeans from cowboys and made them an apparel fixture for young Americans in the mid-20th century.

It’s not that executives don’t appreciate the iconic nature of its Lee brand, which along with its Wrangler brand is being spun off  into a separate publicly traded denim company that executives expect will be worth more than $2.5 billion in annual revenue. VF CEO Steve Rendle even used that word, “iconic,” to describe the brands.

The move — which would leave a slimmed-down VF with Vans, The North Face, Smartwool, Timberland and JanSport, among others — is squarely in line with the company’s strategic priorities.

“It looks like VF is considering divesting itself of its core denim business much in the same way it sold off its intimate apparel business years ago,” Mark Cohen​, Columbia Business School retail studies professor, told Retail Dive in an email. “The market value they receive from the growth components of their portfolio is diminished by the drag that this mature segment creates.”

VF executives told analysts on a conference call this week that removing Lee and Wrangler from the company’s stable was “logical.” On its face, that’s difficult to argue with.

“The VF denim businesses have been a drag on overall growth and profits, so splitting them out will make the remaining VF business look much better,” Matt Powell, vice president and senior industry advisor at The NPD Group, told Retail Dive in an email.

Denim days are over

There’s little question that the denim business has taken a back seat to apparel like athlesiure, which people are no longer saving for the gym or yoga studio. It’s been a trend line for the past five years, according to Powell. The category has become a catch-all term for high-performance casual wear that Lululemon, arguably, popularized.

“It’s not a secret the denim market in the United States has shrunk. Thanks to athleisure and other market dynamics, jeans sales have dropped over 14% the past four years,” Ray Hartjen, director of marketing for retail analytics firm RetailNext, told Retail Dive in an email. “With that in mind, it’s damn difficult for VF Corp to sell itself as a growth company with so much invested in a mature and, perhaps, declining market.”

The denim market is no longer dominated by the labels that for a while sold the world over. First produced well over a century ago, American denim jeans from Lee, Wrangler and Levi’s staked their reputations both on practical considerations like durability — they sold to rugged workers like mariners, loggers and cowboys — and, eventually, a mythology, perpetuated in part by the movies.

“Denim is doing well in specialty and at the department stores. However, it is stylized and targeting Get Z/Gen Y. All of VF’s denim is not — it’s basic and targeting an older customer, and there lies the problem.”

James Dean’s and others’ embrace of jeans helped expand the myth beyond westerns to American culture more broadly. For a while, denim was the wardrobe staple for America’s youth. Each pair was uniquely the wearer’s own, faded and shrunk to perfection according to the activities and body of the person who wore them. Today, though, rips, tears and fading are all done at the factory, the fabric stretches thanks to cotton blends, and, in the post-fast fashion era, durability isn’t much of a concern.