The point of a fashion conglomerate is scale and diversification: resources can be shared across the portfolio, keeping costs down. And if one brand has hit a rough patch, others can pick up the slack.
VF Corp. is getting neither of those benefits right now. Three of its four biggest brands – Vans, Timberland and Dickies – are losing customers, and booming sales at The North Face aren’t enough to make up for it. Behind the scenes, high debt levels are reducing the benefits of its size, as is a wide-ranging portfolio that includes Jansport backpacks, Dickies overalls and Supreme T-shirts.
A pair of activist investors have recently offered up some solutions: sell the non-core brands, cut costs and use the cash those moves free up to pay down debt and resuscitate Vans. Though not mentioned by either fund, Supreme’s struggles since VF’s $2 billion acquisition in 2020 are also weighing on the company’s outlook.
Their proposals probably aren’t too far off from what VF CEO Bracken Darrell is pushing internally. VF had already said it was shopping around its backpack brands before the activists had their say, for instance.
These moves are in keeping with the industry trend toward bigger, narrowly focused conglomerates: Kering sold the last of its non-luxury brands years ago, and there is constant speculation as to why hard luxury-focused Richemont holds onto ready-to-wear brands like Chloé. Tapestry’s pending acquisition of Capri is another example. It’s a bit harder to draw a through line between Vans, The North Face and Supreme than Coach and Michael Kors. But it’ll be easier once VF addresses the problems weighing on its balance sheet.
In a statement, VF said it is “taking immediate and decisive actions to strengthen the company’s position.” This week’s earnings will provide the first public opportunity for executives to lay out their own vision in more detail. Then it’s up to shareholders to decide which path they prefer.
What Else to Watch for This Week
Monday
Phoebe Philo releases her debut collection under her own brand
VF Corp. reports results
Tuesday
Halloween
Prada reports results
Eurozone reports third-quarter GDP
Wednesday
Estée Lauder Companies, Revolve, E.l.f., Next report results
US Federal Reserve interest rate decision (no change expected)
Thursday
Hugo Boss, Kontoor, Figs, Shopify report results
Bank of England interest rate decision (no change expected)
Friday
Eurozone September unemployment report
US October unemployment report
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