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VF Corp launches turnaround plan

Nov 3, 2023 United States
VF Corp launches turnaround plan
After another disappointing quarter, the US-based footwear announced the launch of Reinvent, a comprehensive transformation programme focused on improving operational performance and brand-building
In the second quarter of fiscal 2024, which ended on the 30th of September, VF Corp recorded a revenue decline of 2% (4% in constant dollars), reaching 3.0 billion US dollars, on a comparable basis to the same period of last fiscal year. Out of its big four brands, only The North Face performed well in this period, delivering a 19% growth (17% in constant dollars) year-over-year to 1.1 billion US dollars.

Vans, whose performance is already not expected to improve this year, recorded a revenue decline of 22% (23% in constant dollars) in this second quarter to 748.8 million US dollars, as compared to the same quarter of the prior year. At the same time, Dickies and Timberland’s revenue decreased by 14% and 6% (14% and 8% in constant dollars), respectively, year-over-year.

While the international business registered, overall, a revenue increase of 10% (5% in constant dollars) in the second quarter of the current financial fiscal, totalling, 1.7 billion US dollars, the domestic business continues to struggle. In particular, revenue in the APAC and EMEA regions rose by 2% (6% in constant dollars) and 14% (6% in constant dollars), respectively, whereas the Americas’ region recorded a revenue decrease of 12% (13% in constant dollars), on a comparable basis to a similar period in fiscal 2023.

This resulted in a loss per share of 1.16 US dollars in the three months end of September, as compared to a loss per share of 0.31 US dollars in the same quarter of the previous year; accordingly, the adjusted loss per share was 0.63 US dollars in this period, against 0.73 US dollars in the same period a year ago. In addition, VF Corp withdrew its previous full year 2024 revenue and earnings guidance.

Reinvent Transformation Plan

“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”, explained Bracken Darrell, President and CEO of the company.

In practical terms, among other measures, the company is planning the establishment of a global commercial structure, including the creation of an Americas regional platform, modelled on the VF’s operations in EMEA and APAC. To this end, Martino Scabbia Guerrini has been promoted to the newly created role of Chief Commercial Officer, with responsibility for go-to-market execution globally.

In addition, Kevin Bailey will step down from his role as Global President of Vans, transitioning to lead the Reinvent programme. The search for a new brand President is already underway, but in the meantime, Bracken Darrell “will take a more active role in leading the brand and delivering its turnaround strategies”.

VF also highlighted that will implement a large-scale cost reduction programme, which should result in 300 million US dollars in fixed cost savings, by removing spend in non-strategic areas of the business and simplifying and right-sizing our structure.

“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”, concluded Darrell.


Image Credits: officesnapshots.com

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