VF Corp’s financial struggles persist despite significant strategic adjustments under new CEO Bracken Darrell
VF Corp. is undergoing significant changes under the leadership of Bracken Darrell, who has been CEO for the past year. Darrell has overhauled executive leadership, refined strategy, cut costs, and finalized a $1.5 billion sale of Supreme to EssilorLuxottica. However, these efforts have not yet improved the company’s financial performance.
In the first quarter, VF’s net losses widened to $258.9 million, or 67 cents per share, compared to $57.4 million, or 15 cents per share, a year earlier. Adjusted losses per share were 33 cents, up from 15 cents last year, but this was 4 cents better than the 37-cent deficit projected by analysts according to Yahoo Finance. Revenues for the three months ending June 29 fell 9 percent to $1.9 billion from $2.1 billion, with the most significant declines in the Americas, where sales were down 12 percent.
Vans, currently undergoing a transformation that includes store closures, saw sales drop 21 percent to $581.8 million. Dickies experienced a 15 percent decline to $116.8 million, and Timberland saw a 10 percent decrease to $229.4 million. The North Face, VF’s strongest brand, slipped 3 percent to $524.2 million.
During a conference call with analysts on Tuesday, Darrell expressed optimism about the company’s future despite the current declines. “It’s been a full year of transformation and I believe the pace of change won’t slow going forward. This is the new norm at VF, and it’s exciting,” Darrell stated.
He highlighted recent leadership changes, noting, “As of last Monday, Sun Choe is now officially the president of Vans, relieving me of that job; and Caroline Brown is two months into leading The North Face.” Darrell has made changes in eight of his 11 direct reports.
Proceeds from the Supreme sale will be used to pay down debt, and while there are no immediate plans to sell off other businesses, Darrell left the possibility open for the future. “We don’t have anything specific contemplated, but I don’t think we’re ever really done in terms of reviewing our portfolio,” he said. “We’ve certainly finished our portfolio review, at least for now. We’ll probably recycle that on a regular basis.”
VF is also focused on cutting costs. “While we’re not yet back to growth, the steps we’re taking now will get us there,” Darrell said. “Remember, this phase is about reducing costs, lowering our debt, resetting the U.S. business and getting Vans back on track.”
During the quarter, VF achieved $50 million in cost savings as part of its $300 million target. Darrell emphasized that some of these savings are being reinvested into the business, particularly in product and brand building. Now, the challenge lies in translating these efforts into improved financial results.