- Cybersecurity breach latest blow
- Vans brand is struggling
- New CEO focused on cost-cutting, debt reduction
2023 has been an annus horribilis for VF Corporation (VFC:NYSE), with shares in the American fashion-to-footwear firm down some 30% to $19.21, extending five-year losses to more than 70%.
The latest bout of price weakness was triggered by news (18 Dec) of a cybersecurity breach expected to have a deleterious impact on the loss-making owner of iconic outdoor, active and workwear brands including The North Face, Vans and Timberland.
MATERIAL IMPACT
In an SEC filing, VF Corp warned the hack, first identified on 13 December, is likely to have a ‘material impact’ on its operations ‘until recovery efforts are completed’.
The hack occurred at the worst possible time, with Christmas a key selling season for the retailer, whose other brands include Supreme, Eastpak and Dickies.
The cyber attack is certainly a setback for new CEO Bracken Darrell, who is attempting to turn around VF Corp’s fortunes under his bold ‘Reinvent’ transformation plan unveiled alongside the second quarter results on 30 October.
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While the company behind the North Face brand delivered another quarter of double-digit revenue growth in Q2, up 19% to $1.1 billion, Vans sales slumped 21% to $0.7 billion and with the US consumer feeling the pinch from inflation and higher interest rates, VF Corp doesn’t see the performance of Vans improving in the second half.
With turnaround efforts in focus, VF Corp also withdrew its full year 2024 revenue and earnings outlook and the quarterly dividend was cut to $0.09, a 70% decrease from the first quarter payout with debt reduction a priority.
DARRELL SEES ‘SIGNIFICANT’ POTENTIAL
‘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,’ said Darrell.
He insisted the Reinvent transformation plan 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.’
A former Procter & Gamble (PG:NYSE) and General Electric (GE:NYSE) man, Darrell joined VF Corp in July 2023, having driven the successful turnaround of Logitech (LOGI:NASDAQ), the Switzerland-headquartered maker of computer peripherals and software.
