VF Corp. is projecting a compound annual growth rate (CAGR) in its total sales of between 4 and 6 percent over the next five years, driven by continued growth at Vans and th e resumption of growth at The North Face and Timberland, which have under-performed lately, especially in the U.S.. Those three brands should be responsible for 90 percent of the group's overall growth, excluding possible acquisitions.

Running his first investors' day since he became the company's new chief executive in January, Steve Rendle indicated that most of the future growth will take place in China and other international markets and through e-commerce. VF blamed the recent disruption in the U.S. retail sector for missing the targets set in a previous five-year plan, adding that the disruption will likely continue, and that may even accelerate.

VF will slow down investments in new physical stores, especially in the U.S., and boost instead its e-commerce business, which is set to post 28 percent CAGR in the next five years. That would make it grow to more than $2.1 billion, up from $600 million in the past year. It has already tripled since 2012.

In fact, 85 percent of the future overall growth is due to come from direct-to-consumer (DTC) and digital sales. The Outdoor & Action Sports Coalition, which includes Vans, TNF, Timberland and other brands, will represent 71 percent of the group's total turnover excluding new divestitures or acquisitions, up from the present share of 66 percent.

The group will change its fiscal year-end from Dec. 31 to March 31 in 2016 to reflect the end of its important winter business. The management promises to improve the product development process, using more analytics, as it aims to deliver more innovative and relevant products and to better regulate the flow of seasonal goods.

The gross margin is projected to rise by 1.4 percentage points to 51.5 percent in five years' time, thanks to higher international and DTC components as well as stronger growth for higher-margin brands. The operating margin is seen growing more slowly to a level of 16 percent, up from 14 percent this year, and this should help VF to generate a 10-12 percent CAGR in earnings per share, with three percentage points coming from share repurchases.

With regard to the three major brands in VF's portfolio, the biggest one of them with sales of $2.3 billion, Vans is seen rising at a CAGR of 8 to 10 percent, reaching an implied level of $3.5 billion in five years. The fastest growth is expected to take place in China and the rest of the Asia-Pacific region, with a CAGR of 17-19 percent, followed by Europe, the Middle East and Africa (EMEA) with 6-8 percent and the U.S. with 5-7 percent growth. The U.S. would thus drop from 48 to 55 percent of Vans' total sales. DTC would rise from 38 to 48 percent of the turnover, with digital's share growing from 7 to 16 percent.

Apparel and accessories will drive Vans' growth going forward, rising from 21 percent to 27 percent of the product mix. In the footwear segment, which currently generates annual sales of $1.9 billion, the brand will try to expand beyond classic styles, which now represent half of the mix. Vans has already started to offer customized footwear in the U.S., and the project will be extended this year to Canada, Europe and Asia.

For The North Face, the group is projecting a re-acceleration in its CAGR to a rate of 6 to 8 percent, taking its turnover up to $3.0 billion by 2021 from the current level of $2.3 billion. DTC is set to expand at a 7 to 9 percent rate at TNF, making it represent 46 percent of the total turnover. Geographically, TNF is seen raising its sales at a CAGR of 4-7 percent in the U.S., 7-9 percent in Europe and 8-10 percent in Asia-Pacific.

The product offer will include more lifestyle offerings and more footwear, which now represents only 10 percent of TNF's sales (we were led some time ago to believe that it represented 15 percent of sales). VF also wants to rebuild TNF's place in the outdoor specialty market (more on this in The Outdoor Industry Compass).

Timberland, whose annual sales now stand at about $1.8 billion, is expected to go back to a previous CAGR of 4 to 6 percent, mostly through a diversification of its product line, led by a stronger development for women's footwear and men's apparel. The footwear business will have to be more diversified in the U.S., where classics represent 40 percent of the mix against 18 percent overseas.

Also at Timberland, digital sales will lead the growth with a CAGR of 23-25 percent budgeted for the next five years. Geographically, Timberland is aiming for CAGR of 3-5 percent in the U.S., 4-6 percent in Europe and 6-8 percent in Asia-Pacific.

VF intends to be active in the area of mergers and acquisitions. It is particularly interested in big brands or brands that have the potential to cross the $1 billion sales barrier, but any takeover will have to be accretive to the group's results.