VF (NYSE:VFC), the consumer-goods company behind Lee and Wrangler brands, may not be known for its high-end denim. But it's trying to spruce up that image, starting with its acquisition of trendy jeans-maker Seven for All Mankind (or 7FAM, for brevity's sake).

In a not-terribly-surprising move, VF bought 7FAM, which has annual revenue of roughly $300 million, for $775 million. Guess? (NYSE:GES) may be an established player in the high-end denim trend, but brands like 7FAM and True Religion (NASDAQ:TRLG) took pricey jeans to a whole new level. (Of course, some of us can barely stomach paying $40 for a pair of jeans, much less $400.)

VF also shelled out another $110 million to add activewear company Lucy, which specializes in yoga gear, to its portfolio. VF clearly aspires to be hip, but could such a strategy end up being tragically hip?

In search of cool
Though it recently sold its more stodgy Vanity Fair brand to Berkshire Hathaway's Fruit of the Loom, VF's generally been trying to go more upscale. Its recent brand acquisitions include hip, youthful names such as North Face and Vans.

At present, 7FAM jeans populate the racks at high-end department stores such as Nordstrom (NYSE:JWN), Bloomingdale's, Barney's, Neiman Marcus, and Saks Fifth Avenue (NYSE:SKS), as well as high-end boutiques and online stores. I'm wondering whether VF will continue this strategy, or begin widening distribution of "7's," as they're affectionately known, to other department stores. That might increase distribution and reach, but it could also tarnish the brand.

VF said the 7FAM and Lucy purchases will anchor its new Contemporary Brands segment, which is expected to contribute $125 million in revenue this year. (It should have a neutral effect on earnings.) At the moment, analysts expect VF to report earnings growth of 13% in 2007. Seven may be a magic number, but so is 13 -- as in the 13% EPS growth analysts expect VF to report in 2008 and 2009, too. And of course, VF recently entered into a $400 million credit agreement, which it's using to help finance these acquisitions. That will vastly increase the company's long-term debt; last quarter's balance sheet reported $177.8 million in cash and $602.2 million in long-term debt.

Will these shrink in the dryer?
Are VF's moves really so savvy? The premium denim craze seems to be getting old, but the fashion-conscious Fools I've informally polled around Fool HQ seem to agree that 7's haven't lost their magic quite yet. Jeans like 7's might function as a "gateway" to pricier and more obscure jeans. But if everyone else is already wearing them, how much of a fashion statement are you making by sporting 7's?  

Luxury brands often find themselves in this delicate balancing act. By widening their demographic reach, they often lose what made them special -- and helped them command high prices -- to begin with. Coach (NYSE:COH) is a good example of this tenuous situation.      

Lucy's yoga apparel might be an interesting avenue to capitalize on current trends, but it's hardly alone in pedding New Age workout gear. You can already get all manner of cheap or ultra-pricey yoga outfits and gear here in the U.S. (And what was wrong with sweatpants, anyway?)

Canada's Lululemon (NASDAQ:LULU), which also targets the high-end yoga apparel market in the U.S., recently went public. I'm still gearing up to dig into Lululemon's massive final prospectus filed with the SEC; meanwhile, cautious investors should ask themselves whether Lulu's yoga duds will turn out to be a dud in the less positive sense.

The risks are there, but the reasoning behind VF's latest purchases is undeniably sound. The company does have a history of stable growth and steady dividends -- it's a Motley Fool Income Investor pick, after all. And its ability to continue to snap up well-known brands with room for growth should give its shareholders the same comfort they'd get from a good pair of jeans or some stretchy workout clothes.

In that light, VF seems to be poised to exceed expectations. Still, buying into it now sounds a bit pricey, given its forward price-to-earnings ratio of 14 and PEG ratio of 1.57. Its increasing debt also merits some Foolish concern. I could end up kicking myself for being too conservative, should VF's aggressive brand-building yield higher growth. All the same, I'd personally prefer to wait for a better price.

VF is a Motley Fool Income Investor recommendation. Berkshire Hathaway and eBay are Motley Fool Stock Advisor picks, and Berkshire Hathaway has also been recommended by Motley Fool Inside Value. See what other stocks the advisors are checking out these days with a free 30-day trial in any service.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.