Dive Brief:
- Steve Rendle has stepped down from his roles as CEO, chairman and president of VF Corp., effective immediately, the company said Monday. VF runs Supreme, Vans, The North Face, Timberland and Dickies.
- The board’s lead independent director, Benno Dorer, has taken over in the interim as president and CEO while the board searches for Rendle’s replacement. Board member Richard Carucci is serving as interim board chair, according to a company press release.
- Citing deterioration in demand, VF again lowered guidance, saying it expects revenue growth in the second half of its fiscal year to be “modestly lower,” and full-year revenue to rise 3% to 4%, (excluding the strong dollar), down from 5% to 6% previously. The promotional environment, primarily in North America, and higher costs on lower volumes threaten profits in the near term, per the release.
Dive Insight:
In its press release, VF Corp. noted that Rendle has decided to retire after nearly 25 years with the company, closing in on six years as CEO.
“Steve’s commitment to the business, passion for building strong brands and focus on culture have helped VF evolve our portfolio of strong active-lifestyle brands and establish VF as a purpose-led company,” Dorer said in a statement.
But Credit Suisse analysts led by Michael Binetti said the “transition seems abrupt,” noting that VF Corp “historically grooms internal candidates” for years.
“[C]learly fundamentals are worsening,” Binetti said.
The company said it’s encountering difficulty across categories, channels and regions. Weaker demand, especially in North America, is leading to more promotions as well as wholesale order cancelations. The effect of inflation on discretionary spending in Europe “and ongoing COVID-19 related disruption in China” are also pulling down its outlook, to a lesser extent, the company said.
VF on Monday said that it’s sticking with its longer-term targets, as outlined in September. At that time the company cut its full-year guidance, however, citing its Q2 results, weak back-to-school sales at Vans and mounting inventories in North America going into the fall season.
This “steady stream of guidance cuts announced by VFC over the past 4+ months” and now the absence of a permanent chief executive are clouding visibility into the business, Wedbush analysts led by Tom Nikic said in emailed comments. They also noted pressure from $5.5 billion in net debt at the end of Q2, plus a one-time $876 million tax payment.
“[T]here's legitimate concern over the state of the company's balance sheet right now,” Nikic said.
