Oct 31, 2023
VF Corp. withdrew its guidance for the fiscal year and said it will replace the president of the Vans brand — an attempt to satisfy Wall Street as two activist investor groups raise the pressure on the apparel and footwear conglomerate.
The company introduced a new transformation plan, which includes steps to improve results in North America, cut costs, reduce debt and overhaul the Vans brand. In the fiscal second quarter ended Sept. 30, revenue at Vans fell 21%. Excluding Vans, sales in the Americas declined 11%.
The shares fell as much as 18% in late trading in New York. The stock has lost 38% this year through Monday’s close.
The footwear brands’ performance isn’t expected to improve in the second half of this fiscal year, which ends in March, the company said. Kevin Bailey, who had been serving as head of Vans, will step down and Chief Executive Officer Bracken Darrell will help lead the unit while the company does an external search for a replacement.
Two activist groups, Engaged Capital and Legion Partners Asset Management, have taken stakes in VF as it has failed to meet expectations. Engaged wants the company to divest some of its brands and pay down debt.
“Despite pockets of continued strong performance throughout the first half and solid profit margins in the second quarter, it’s not enough and we are not making sufficient progress at Vans or in the US,” Chief Financial Officer Matt Puckett said in a statement.
The company now expects free cash flow of about $600 million in the fiscal year, down from its previous projection of $900 million. In addition to lingering woes at Vans, VF expects “a more difficult US wholesale environment” and its new strategy will “likely result in charges including cash and noncash items.”