An activist investor with a stake in VF Corp. has outlined a plan it says can increase shareholder value and cut costs at the footwear and apparel conglomerate.
Engaged Capital on Tuesday said it has amassed an investment in the retail powerhouse that owns Vans, The North Face and other brands. The size of the stake was not disclosed.
In a slideshow made to be presented at the 13D Monitor Active-Passive Investor Summit on Tuesday and viewed by FN, the firm outlined a strategy to lift VF’s share price to somewhere in the mid-$40’s within three years. This plan includes measures meant to reduce costs by $300 million and restore brand authority by reinvesting $100 million of savings into VF’s largest brands, Vans and The North Face. The firm also called for a full review of non-core assets and asked for VF to “publicly commit to no further acquisitions.” Engaged also called for the appointment of new board members that “prioritize value creation.”
In a statement, VF said it was aware of Engaged’s investment and recent statements.
Watch on FN
“We value the views of our shareholders and seek to maintain an open dialogue with the investment community,” the company said. “VF has globally recognized and iconic brands and best-in-class talent. VF’s Board and leadership team, including our recently appointed CEO Bracken Darrell, are taking immediate and decisive actions to strengthen the company’s position and return VF to strong, sustainable, and profitable growth in the interests of all our shareholders.”
VF Corp. in June appointed Logitech International CEO and president Bracken Darrell as its new president and CEO. Analysts were overall positive on Darrell’s potential to turn around the company, which has been impacted by higher-than-usual inventory levels, executive turnover and a challenging wholesale environment. Engaged said in the presentation that it sees this CEO appointment as a turning point for the company and said “Darrell appears to have the transformation experience VFC urgently requires.”
In August, VF Corp. reported a rough first quarter, largely driven by weakness at the Vans brand. Net losses for the first quarter widened to $57.4 million from $56 million a year, with adjusted losses per share of 15 cents. For Vans, business was down 22 percent, largely from a 40 percent dip in the Americas wholesale business. At the time, rightsizing Vans was a top priority for VF.
Engaged attributed VF’s recent pitfalls to mismanagement under its former CEO, a costly headquarters shift to Denver, Colo. and a flawed acquisition strategy that included the purchase of Supreme in 2020. When it comes to Vans, Engaged said the brand suffered from a “lack of marketing” and “innovation.”
“Weak financial performance in the portfolio’s formerly most profitable brand has been a key driver of margin erosion in the consolidated portfolio,” read the presentation.
Engaged Capital was founded by Glenn Welling in 2012.
