Shares of Vans owner VF Corp are rising after an activist investor increases his stake
A shopper walks in front of a North Face store at the Easton Town Center shopping center in Columbus, Ohio, on January 7, 2021.
Luke Sharrett | Bloomberg | Getty Images
Activist investment firm Engaged Capital took part VF CorporationOwner of the Vans and The North Face brands, and is pushing for cost cuts and board changes.
VF Corp. shares closed 14% higher on Tuesday, closing at $18.45. The stock is down more than 33% so far this year. Engaged said shares of VF Corp. could rise to a share price of $46 within three years if the proposed changes were implemented.
It’s unclear exactly how much Engaged invested in VF Corp. is involved.
Engaged said former VF Corp. CEO Steve Rendle, who abruptly left the company late last year, made a series of strategic mistakes during his tenure. According to Engaged, these include reduced autonomy of individual brands, under-investment in vans and the takeover of the Supreme brand, which had a negative impact on the balance sheet. Rendle was named CEO in early 2017 and took over as chairman later that same year.
“We believe that VFC’s value destruction is directly attributable to Mr. Rendle’s failed strategy and the board’s apparent unwillingness to intervene,” the company said.
Engaged is pushing for several sweeping changes, most notably more than $300 million in cost reductions by “eliminating duplicative costs and corporate excesses.” The company should also undertake not to undertake any takeovers.
However, the company supports current CEO Bracken Darrell, who took over the position in July. “Mr. Darrell appears to have the transformation experience that VFC desperately needs,” said Engaged.
VF Corp. said it was aware of Engaged’s comments and investments.
“VF has globally recognized and iconic brands and world-class talent. VF’s Board of Directors and leadership team, including our recently appointed CEO Bracken Darrell, are taking immediate and decisive action to strengthen the company’s position and return VF to a strong, sustainable and successful company.” “We will be in the interest of all our shareholders to focus on profitable growth,” the company said.
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