VF Corp announces reinvention plan as revenues dip

VF Corporation, the parent company of The North Face, Vans and more, announces the ‘Reinvent’ transformation plan as revenues slip during the second quarter of the fiscal year 2024, ending 30 September.

During the second quarter, VF Corp's revenue was down by 2% (down 4% in constant dollars) to £2.47 billion ($3 billion). Loss per share stood at £0.95 ($1.16) versus £0.25 ($0.31) the year prior, impacted by the additional tax expense booked as a result of the Timberland tax case ruling.

Brand revenues are as follows:

• The North Face was up by 19%
• Vans was down 21%
• Timberland was down by 7%
• Dickies was down by 8%
• Other brands were up by 6%

Wholesale was down by 1% (down 3% in constant dollars), primarily driven by the Americas. Direct-to-consumer (DTC) was down by 3% (down 5% in constant dollars).

As a response to its slipping revenues, the company has introduced Reinvent, a transformation program to enhance focus on brand-building and to improve operating performance.

Reinvent sets out the following goals:

• Establish a global commercial organization, inclusive of an Americas region
• Sharpen brand presidents' focus on sustainable growth
• Appoint new Vans president
• Optimize cost structure to improve operating efficiency and profitability
• Reduce debt and leverage

Bracken Darrell, President and CEO of VF Corp, said: "In my first 100 days, as I have spent time with our brands, teams, and customers around the world, I have developed even stronger conviction in the company's significant potential, which is far greater than what we are delivering today.

"Our transformation plan, Reinvent, will improve our brand-building and execution while addressing with urgency our top priorities of improving North America, accelerating the Vans turnaround, significantly reducing our fixed costs and reducing leverage. We are excited about the long term, starting with these first major steps toward improving our near-term performance, positioning us to return to growth and generate shareholder value."

Looking ahead, the company has readjusted its free cash flow expectation to sit at £493 million ($600 million) compared to the previous guidance of approximately £740 million ($900 million).

Matt Puckett, CFO at VF Corp, added: "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.

"Our transformation plan, Reinvent, directly addresses these areas in particular and importantly, commits to lowering our cost structure by $300 million. Through this effort and our ongoing evaluation of all aspects of our business, we remain laser-focused on cash generation and debt reduction, with the intent to return to growth, drive higher ROIC and reduce leverage."