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BFD Expert Voices - Retail Deals

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VF Corp., the Denver-based apparel group, completed its portfolio review but was mum on details during an earnings call this week.

Why it matters: VF is reportedly shopping its Supreme brand now, though the firm could take a steep haircut on its investment, a source familiar says. 

What we're hearing: VF would be fortunate to get 25% of the $2.1 billion it paid for the streetwear brand, or about $500 million, the source says. 

Though CEO Bracken Darrell said on the call the brand has recently been growing by low double digits, VF had to write down the value of the asset by $400 million in late 2022.

Its revenue declined nearly $40 million to about $520 million during the fiscal year ended in March 2023, per the Business of Fashion.

What we're watching: Likely bidders for the rest of VF's portfolio include brand management firms like Authentic Brands Group, sources familiar say.

WHP Global and G-III Apparel Group — both of which recently lost Champion to Authentic — would also make sense, as would PE firm Sycamore, they add.

VF's larger brands, namely outdoors brand Timberland, are especially attractive.

Yes, but: A buyer could elect to take the entire business private, two sources say.

Between the lines: Darrell mentioned several of VF's brands on the earnings call by name.

The North Face (in a favorable light) and Vans (how the brand is being fixed) received the most mentions at around 20, while Timberland, Dickies and Supreme were referred to about a handful of times.

By the numbers: Outerwear brand The North Face is VF's largest business, followed by footwear brand Vans, Timberland, and, in distant fourth, workwear brand Dickies.

During its 2024 fiscal year, Vans had the steepest decline, with sales falling 24% to nearly $2.8 billion.

Timberland decreased by 13% to almost $1.6 billion while Dickies was down by 15% to nearly $620 million.

The North Face was up 2% for the year to about $3.7 billion, surpassing Vans to become VF's biggest brand.

Context: VF's total revenue last year declined 10% to $10.5 billion while it generated an operating cash flow of about $1 billion and a free cash flow of approximately $800 million.

It projects free cash flow, which would include the sale of non-core assets, will decline to $600 million this year.

The company's strategic review contributes to VF's projection of $2 billion of liquidity by the end of 2024, even after paying down $1 billion of debt in December and with $750 million needing to be refinanced. 

The latest: VF this week named Paul Vogel as its new CFO, replacing 23-year veteran Matthew Puckett.

Flashback: In 2022, VF had hired Credit Suisse to sell its backpack business consisting of Jansport, Eastpak and Kipling, but the investment bank has since merged with UBS and the process has floundered, sources say.

What they're saying: "We made a decision not to share what we're acting on or what we might be doing publicly, but you can believe completely that we are acting, and we have optionality there," Darrell said during the call.

"We have no further comments beyond what we shared during the earnings call," the company said in an emailed statement.

Vans parent VF completes portfolio review but is mum on details

The apparel group also revealed earnings and named a new CFO.

A store sign for footwear brand Timberland.

A store sign for footwear brand Timberland. Photo: Peter Dazeley/Getty Images

Apparel

VF Corp., the Denver-based apparel group, <a class="gtmContentClick" data-vars-link-text="completed its portfolio review" data-vars-click-url="https://www.axios.com/pro/retail-deals/2024/02/07/vf-corp-northface-timberland-vans-strategic-review-sale-divestiture" data-vars-content-id="c862af0a-7f84-4bf4-9883-cbfc5aa6fe97" data-vars-headline="Vans parent VF completes portfolio review but is mum on details" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/pro/retail-deals/2024/02/07/vf-corp-northface-timberland-vans-strategic-review-sale-divestiture" target="_self">completed its portfolio review</a> but was mum on details <a class="gtmContentClick" data-vars-link-text="during an earnings call" data-vars-click-url="https://www.vfc.com/investors/news-events-presentations/press-releases/detail/1834/vf-corporation-reports-fourth-quarter-revenue-and-earnings" data-vars-content-id="c862af0a-7f84-4bf4-9883-cbfc5aa6fe97" data-vars-headline="Vans parent VF completes portfolio review but is mum on details" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.vfc.com/investors/news-events-presentations/press-releases/detail/1834/vf-corporation-reports-fourth-quarter-revenue-and-earnings" target="_blank">during an earnings call</a> this week.Why it matters: VF is <a class="gtmContentClick" data-vars-link-text="reportedly shopping" data-vars-click-url="https://wwd.com/business-news/financial/supreme-for-sale-vf-goldman-sachs-1236380722/" data-vars-content-id="c862af0a-7f84-4bf4-9883-cbfc5aa6fe97" data-vars-headline="Vans parent VF completes portfolio review but is mum on details" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://wwd.com/business-news/financial/supreme-for-sale-vf-goldman-sachs-1236380722/" target="_blank">reportedly shopping</a> its Supreme brand now, though the firm could take a steep haircut on its investment, a source familiar says.

Vans parent VF completes portfolio review but is mum on details

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