Apparel producer VF Corp., which makes Lee and Wrangler jeans, is cutting about 13,000 jobs, or 18 percent of its work force, as part of a restructuring aimed at boosting profits by focusing on fewer businesses.
The Greensboro clothesmaker said Wednesday it plans to exit its swimwear, private label knitwear and specialty workwear businesses. VF said the actions would reduce its costs by $115-million annually.
VF's Florida operations were spared. Its properties in the state include a 700-employee division in Tampa that emblazons professional sports logos on T-shirts and other casual clothing and a factory outlet store in Ellenton. The company shut down a 541-worker bra factory in the Panhandle town of Milton in 1999.
Ed Moran, president of the company's Activewear division, said he was "pleased" the two Tampa plants survived. He said they are profitable and fit VF's new, narrowed focus on branded clothing. Recent successes include a five-year deal with the National Football League that will make VF Activewear the exclusive supplier for some team-related apparel, and the making of thousands of "locker room" T-shirts for the World Series champion Arizona Diamondbacks.
Employees at Moran's other unit, a Martinsville, Va., manufacturer of apparel sold under the labels of retailers such as Sears, Target and JCPenney, may not be so fortunate. That unit will either be sold or closed, Moran said.
Southeastern states will be particularly hard-hit by VF's job cuts. Though the company did not describe the geographic distribution of all 13,000 job cuts Wednesday, it spelled out 23 plant closures that will eliminate about 6,500 workers. Of these job cuts, Alabama factories will account for 42 percent and Virginia plants 34 percent. Eleven percent of the cuts will occur in North Carolina, with Tennessee and Oklahoma comprising 6 and 3 percent, respectively.
George Derhofer, who oversees the company's textile operations in Virginia, blamed the layoffs on competition from foreign plants that pay much lower wages than factories in the United States.
Wall Street reacted favorably to the announcement. VF's shares were up $1.49 a share, or nearly 4 percent, to $38.95 in trading on the New York Stock Exchange.
Analyst Thomas J. Lewis, who follows the company's stock with C.L. King & Associates, said the restructuring gets VF out of some unprofitable businesses and allows them to build up their successful lines.
"It's a reassessment of what they are really good at," he said. "They are taking their chips off the table in places where they are marginal and putting more into businesses where they really want to be."
Mackey McDonald, VF chairman and chief executive, said current economic conditions gave the company no choice.
"Our profitability remains at healthy levels, our cash flow is strong and our balance sheet is powerful, yet our return on capital has declined in recent years," McDonald said.
"Our jeanswear, intimate apparel and outdoor businesses enjoy healthy returns on capital, and our acquisition and brand investment activities will be focused in these areas," he said.
VF also reiterated its fourth-quarter earnings and sales guidance, issued Oct. 17. The company expects to reduce inventories $100-million below 2000 levels and achieve cash flow from operations of about $450-million to $500-million. VF said it will take a charge of $280-million to $320-million, or $1.74 to $1.98 a share, in the fourth quarter. VF employs 71,500 people worldwide.
_ Times staff writer Scott Barancik contributed to this report.