VF buys Seven for all Mankind and Lucy

VF Corporation (NYSE: VFC) has made 2 big acquisitions. It spend $775 million to acquire 7 For All Mankind, a privately-held leader in the booming premium denim market, and another $110 million to acquire Lucy, a make of women's activewear.

The moves are consistent with the company's strategy of acquiring strong brands with high margins while divesting some of its lower margin labels. The company holds numerous household names in apparel, including Wrangler, Lee, North Face, and Nautica.

For investors, the 7 acquisition is a sign of industry faith in continued strength in the premium denim category, where $300 jeans are nothing out of the ordinary.

VF is paying about 2.5 times sales for 7, while fellow denim-leader True Religion (NASDAQ: TRLG) trades at about 3.35 times sales with a market cap of around $450 million. That company recently announced that it was concluding a review of strategic alternatives and would continue as a stand-alone company. I suspect that there was little interest on the part of prospective buyers.

The other premium denim play, which owns much, much less valuable brands, is Blue Holdings (NASDAQ: BLUE), the parent company of Antik Denim, Taverniti So Jeans, Yanuk and Faith Connexion. The stock trades at less than 1 times sales, but has a substantial debt load and it isn't profitable.

Investors should probably watch the premium denim industry from the sidelines for now.