Activist Investor Gains Support from Founding Family of NorthFace, Vans, Timberland Owner in Push for Change

Activist investor Engaged Capital has gained the support of the founding family of VF Corp to secure board seats and drive faster change at the struggling owners of renowned brands such as North Face, Vans, and Timberland. Kelly Barbey, one of the heirs, announced the backing received by Engaged Capital, which currently holds a 1.3% stake in VF.

The descendants of John Barbey, who established VF in 1899, now own approximately 15% of the company.

Call for Board Replacements

Reuters reported that the Barbey family, aiming to bring about change, is advocating the replacement of two directors on VF's 12-member board. Kelly Barbey expressed the family's concerns and cited Clarence Otis, a director since 2004, and Juliana Chugg, a director since 2009, for failing to address VF's challenges over recent years.

According to MSN, VF shares have experienced a significant decline, losing 42% of their value in the past 12 months, in contrast to a 16% drop in the S&P 500 Apparel, Accessories & Luxury Goods index.

Engaged Capital, led by hedge fund veteran Glenn Welling, has pressured VF to reduce costs and explore strategic alternatives, including the potential sale of non-core brands. The hedge fund has identified individuals with expertise in the retail sector and turnarounds to serve as director candidates.

While Engaged Capital has been advocating for changes at VF since October, the support from the Barbey family was previously undisclosed, making VF's response to these demands uncertain.

Concerns about Board Level Urgency

Barbey expressed concerns about the lack of urgency at the board level, highlighting that directors are deeply entrenched in bureaucracy, hindering effective communication of the vision and ideas necessary for a swift turnaround.

VF recently fell short of analysts' expectations in its third-quarter results, reporting an adjusted profit of 57 cents per share, missing estimates of 77 cents. This performance was accompanied by declining revenue and operating margins.

VF's attempted turnaround is under the leadership of CEO Bracken Darrell, who assumed the position in July 2023, having previously headed computer peripherals maker Logitech International. Darrell has implemented staff layoffs and cost-cutting initiatives to drive positive change within the company.

The deadline to nominate directors for VF's board is approaching, and sources familiar with the matter have revealed that Engaged Capital has identified individuals with expertise in the retail sector and turnarounds as potential candidates. This development comes as the company faces challenges in strengthening the appeal of its brands to consumers amidst reduced discretionary spending.

Photo: Vans Newsroom