VF Corporation on Tuesday announced that it would carry out a “strategic review” of its brand portfolio, following another disappointing quarter for the shoe and apparel company. Now insiders are speculating that Timberland could be a likely contender for divestiture.
The company, which reported a sales decline of 16 percent to $3 billion and a net loss of $42.5 million, did not specify which brands would be likely to go. But chief executive officer Bracken Darrell said in a call with analysts that any of the company’s brands could potentially be on the chopping block.
“We meant it when we said no sacred cows,” Darrell said. “We’re really taking an objective look at all the brands. And other than that, we’ll come back and update you over time.”
Vans, which has struggled for several quarters, posted a 29 percent revenue decline to $668.2 million in Q3. VF in October laid out laid out a strategic business transformation plan, part of which involves revitalizing the Vans brand with a new president. Darrell said in October that it was unlikely the turnaround would come to fruition in fiscal year 2023, but it appears that the company is putting energy and resources into the turnaround.
According to analysts, Timberland, which was down 21 percent to $473 million in Q3, could be one of the brands that could be on VF’s for-sale list.
“Timberland has been a disappointment for VFC since it was acquired in 2011,” said Williams Trading analyst Sam Poser in a Wednesday note to investors. “We believe that VFC should sell Timberland, though we know not who the buyer might be.”
Stifel analyst Jim Duffy said in a Tuesday note that he sees VF’s apparent “willingness to divest the Timberland business as an appropriate strategic direction and potential catalyst for shares.” He projected that the divestiture of the outdoor brand could yield the company more than $900 million.
Jane Hali & Associates analyst Jessica Ramirez also said that Timberland could be a potential contender for a sale as well but noted that VF would likely be able to give more attention to revamping Timberland if it offloaded some of its other lower performing brands instead.
“There are bright spots within Timberland,” Ramirez said, highlighting the brand’s favorable position in the outdoor and workwear categories. “There just hasn’t been a cohesive strategy that we’ve seen to be really solid in the U.S. market.”
She added: “It could bring some value to someone who knows how to run it properly.”
As for a potential buyer, the footwear industry’s M&A market typically centers on the same few eager acquirers of struggling, heritage shoe brands. Authentic Brands Group, the company behind dozens of brand and retailer acquisitions such as Forever 21, Barneys New York and JCPenney, has made several noteworthy shoe buys in recent months, including the purchases of Hunter Boots, Rockport and Boardriders, the parent company of Quiksilver, Billabong, Roxy, DC Shoes and others.
And earlier this year, Authentic snapped up the iconic, yet distressed Sperry brand from Wolverine Worldwide, which also sold its struggling Keds business to Designer Brands Group last year.
Given this pattern, the more than 50-year-old Timberland brand could likely fit in nicely with Authentic’s existing portfolio of heritage brands.
