Happy now? That may be what Vans parent VF Corp. is asking or muttering under its breath toward Engaged Capital and other activist investors.
The Denver-based company – also owner of The North Face, Supreme, Dickies and Timberland – said Tuesday evening it’s adding two seats to its board, largely done to appease shareholder Engaged Capital.
VF Corp. said the addition of Caroline Brown to the board “aligns” with the Newport Beach-based investment firm. Brown officially joins the board Wednesday.
VF will add a second director – placing people supported by Engaged – at the front of the line for consideration, the company said.
Engaged founder and CIO Glenn Welling said his firm’s “excited” about Brown’s appointment and that the two new directors will help support VF CEO Bracken Darrell with the company’s turnaround.
To recap, Engaged and other activists have been on the heels of VF since the righting of its largest business, Vans, has sputtered and stalled.
For Engaged’s part, what’s imperative is cutting the debt levels and, based on the firm’s estimates, being able to triple share price in a matter of three years. Engaged’s suggestion for how to go about that would be to consider selling brands such as Supreme, Dickies, Timberland, and Altra among others to focus on the larger Vans and The North Face businesses.
The strategic review happening currently within VF will determine what might get put up for sale.
A Turnaround That Doesn’t Stick
A lot’s happened in the lead up to the emergence of activist investors, such as Engaged.
First, the company brought back Kevin Bailey in the spring of 2022 in hopes of cleaning up what has been publicized as the messes created by the predecessor management team.
Bailey succeeded Doug Palladini, the long-time marketing executive, later elevated to North America general manager and then global president. Under Palladini’s watch, Vans more than doubled its revenue to in excess of $4 billion as it expanded in apparel and items beyond the Classics.
There was a New York press tour following Bailey’s appointment in which he spoke of the issues to Footwear News, Business of Fashion and WWD.
The executive told FN in March of last year: “When Marissa [Pardini, chief product and merchandising officer] agreed to come back and help, the look in her eyes two weeks in was pretty similar to the look in my eyes, like, ‘What the heck happened here? How did we lose some of our practices? How did we lose some of our discipline? How are we this unfocused? How is our execution this poor?’”
There was also the Business of Fashion headline that same month: “Vans Knows You’re Sick of Their Shoes.”
The reports didn’t sugarcoat things and Bailey subsequently called the negative press bad for internal morale.
The theme since Bailey’s return has been product innovation and segmentation, with grassroots, community-based marketing that made Vans cool.
Analysts and reporters have heard ad nauseam about the new spins on classics, particularly the Knu Skool and its growing popularity. Still, that business isn’t large enough to move the needle in a positive direction, executives have repeatedly said in quarterly earnings calls.
Key players have left Vans, including former Americas Vice President David Tichiaz and Global Chief Marketing Officer Kristin Harrer.
Beating the Same Drum
And then in October, less than two years after returning to Vans, Bailey was out to focus on VF’s larger turnaround as chief transformation officer.
A new global brand president is being sought out for Vans, but VF CEO Darrell has assured analysts he’s keeping a close eye on the business in the interim.
Last week he offered some choice words about how Vans lost its way. That probably did little to boost the already ragged internal morale.
Darrell then assured analysts Vans was going to fire away at product development – again.
While the Knu Skool (a puffed up, platform version of the Old Skool) was pointed to once again, Darrell said the turnaround will rest upon more than one shoe, with “a cascade of new products over the next several years.”
“We have created a package of a deeply-rooted brand purpose, clear segmentation, 18-month marketing plan and a solid product roadmap,” Darrell said to analysts last week. “This package is in place; we have a map back to growth for Vans. I’m not ready yet to commit to when the brand will return to growth, but it will.”
He also declined to specify what the 18-month marketing gameplan consists of and if, more specifically, bringing back the Vans Warped Tour made sense.
“We do not have plans to bring back the Warped Tour, although that certainly crossed our mind,” Darrell confirmed last week. “We were talking about it a little bit. The Warped Tour was a really powerful thing, but it took time to grow. And it would take quite a bit of time to rebuild.”
Most brands do.
If the thought process is management needs to hurry up and make Vans look good again, will those same tactics also translate to long-term brand equity? Looks like the answer will arrive in 18 months.
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