The global athletic footwear and apparel market is fiercely competitive and has remained fairly stagnant amid the tough economy of the past several years.

Despite all that, Nike (NYSE: NKE) has remained a retail favorite for many investors. After all, Nike is an innovative company that has thrived for generations by creating high-demand apparel and shoes. Think about all Nike has going for it:

• It is one of the world’s best-known brands, with strong pricing power and higher gross margins than most footwear companies.

• It currently represents more than half of the purchases at both Foot Locker (NYSE: FL) and Finish Line (Nasdaq: FINL) and more than 13% of purchases at Dick’s Sporting Goods (NYSE: DKS).

• It is committed to returning cash to shareholders, including $5 billion in planned share repurchases during the next five years along with continued dividend growth.

• It has had an impressive 12.3% annualized return over the past 15 years and raised its dividend every year since 2002. The current yield is 1.4%.

Take a look at Nike’s climb from $20 a share in 2009 to over $60 today:

This all looks great from a historical perspective. However, Nike’s high-growth days are behind it. I see many challenges for the company going forward. For instance, Adidas (OTC: ADDYY) has been a relentless competitor since its 2006 acquisition of Reebok.#-ad_banner-#

Endorsement contracts also tend to get more and more expensive. Though athletes and teams provide instant credibility for Nike products, the rising cost and negative publicity from controversial endorsers (read: Tiger Woods) can make revenue growth tricky.

Additionally, almost all of Nike’s merchandise is sourced internationally. Disruptions in Nike’s supply chain could significantly impair its operating margins and profitability.

In the retail apparel space, I have found a much better alternative.

This well-established hybrid company acts as both retailer and wholesaler, and is working on its 40th consecutive year of dividend increases. It produces apparel and footwear products primarily in the U.S. and Europe, and it sells its products to specialty stores, department stores, national chains and mass merchants.

You may know this company from its well-known lines of outdoor equipment, skateboard apparel and surfing gear, with names like Nautica, The North Face, Lee, Wrangler, JanSport, Timberland and Vans. Though its brands have become household names, VF Corp. (NYSE: VFC) has not.

VF Corp. has shelf space in a wide range of retailers, from Wal-Mart (NYSE: WMT) to Nordstrom (NYSE: JWN), and it continues to open its own retail stores. As one of the largest apparel companies in the world, VF Corp. enjoys substantial economies of scale in manufacturing, sourcing and distribution, trumping Nike. It is also more diverse than Nike with more brands, product categories and distribution channels.

Additionally, VF Corp.’s lifestyle brands are attracting larger market share as it continues to add new product categories, which has been increasing its profitability.

VF Corp.’s earnings last year were impressive. Total revenue increased 15% to $10.9 billion, gross margins increased to 46.5%, and adjusted earnings per share (EPS) soared 17%, to $9.63. For 2013, revenue is expected to increase more than 6%, and adjusted EPS is expected to again grow by double digits: 11% growth is projected, which would bring its EPS to $10.70. Cash flows from operations are expected to approach $1.4 billion.

Shares of VF Corp. have had a nice ride recently as well:

Acquisitions have been key to VF Corp.’s success. For example, its purchase of Timberland in 2011 has opened new avenues for growth worldwide and provided a complement to its billion-dollar North Face brand.

Not only has VF Corp. grown through acquisitions, it has also created lifestyle brands that have drawn attention around the globe. By focusing on today’s youth culture, it is creating loyal fans from an early age.

For example, VF Corp. works with outside collaborators who use blank Vans shoes as a canvas for their creativity. Its North Face brand has invested in China to help build enthusiasm for outdoor activities. In the denim category, Wrangler is developing innovative designer jeans. All this innovation has been paying huge dividends for shareholders.

A tale of the tape shows VF Corp. trumps Nike by virtually every financial measure:

Risks to consider: VF Corp. has been aggressively pursuing acquisitions. This strategy has paid off nicely, but future acquisitions could result in overpaying, a failure to integrate brands into its portfolio, or other risks, which could distract the company from its core operations. Additionally, the trend toward private-label merchandise could squeeze VF Corp.’s floor space for its many brands of apparel and accessories.

Action to take –> The year’s warmer months have typically been VF Corp.’s peak earning season as it sells more outdoor products. Now is a great time to get in. VF Corp. stands as one of the most well-rounded and diverse retailers and manufacturers in the world. It is a good buy up to $185 a share and currently pays a 2.2% dividend.

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