In a noteworthy turn of events, VF Corp. witnessed a remarkable upswing of nearly 14% on Tuesday following a bold move by activist investor Engaged Capital, who unveiled their intentions to bolster the apparel retail giant’s standing in the market. Engaged Capital squarely placed the blame on the former VF CEO, Steve Rendle, for a flawed strategy that ultimately led to the company’s woes.
Engaged Capital, seizing a substantial stake in the company, voiced their concerns about Rendle’s approach, characterizing it as a catalyst for “value destruction.” Moreover, the investment firm criticized the board’s inaction in addressing the unfolding crisis.
Engaged Capital’s critique delved into Rendle’s decisions, which encompassed an aggressive expansion of VF Corp.’s corporate cost structure, pursuing high-valuation mergers and acquisitions (M&A), and diminishing brand autonomy in the management of crucial functions, among other missteps. In a comprehensive presentation, Engaged Capital outlined their turnaround blueprint for VF, encompassing the streamlining of duplicated costs, the restoration of brand autonomy, an evaluation of the capital structure, and a reshuffling of the board to include members who prioritize value creation.
Crucially, Engaged Capital remains optimistic about VF’s prospects, deeming the issues plaguing its performance as “fixable.” While the exact number of shares held by Engaged Capital remains undisclosed, reports suggest that it has ascended to become one of the company’s top 10 shareholders, according to The Wall Street Journal.
Although the announcement of Engaged Capital’s strategy sent VF Corp.’s shares soaring by almost 14% on Tuesday, it is important to note that the company’s stock had still experienced a significant decline of more than one-third of its value over the course of this year.
