Change has come to VF Corp. — where Bracken Darrell in his first year as chief executive officer has changed executive leadership, tweaked strategy, cut costs and inked a $1.5 billion deal to sell off Supreme to EssilorLuxottica.
But those changes have yet to turn around the company’s financial results.
VF’s first-quarter net losses widened to $258.9 million, or 67 cents a share, from $57.4 million, or 15 cents, a year earlier.
Adjusted losses per share tallied 33 cents from 15 cents a year earlier. That was 4 cents ahead of the 37-cent deficit analysts projected, according to Yahoo Finance.
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Revenues for the three months ended June 29 slipped 9 percent to $1.9 billion from $2.1 billion. The declines were most acute in the Americas, where sales were down 12 percent.
Vans — in the midst of a transformation that has seen it close stores — saw sales drop 21 percent to $581.8 million, followed by Dickies, down 15 percent to $116.8 million, and Timberland, off 10 percent to $229.4 million.
The North Face, which has been VF’s strongest business, slipped 3 percent to $524.2 million.
Darrell was looking past the immediate declines and bullish on the company’s future during a conference call with analysts on Tuesday.
“It’s been a full year of transformation and I believe the pace of change won’t slow going forward. This is the new norm at VF, and it’s exciting,” Darrell said.
“As of last Monday, Sun Choe is now officially the president of Vans, relieving me of that job; and Caroline Brown is two months into leading The North Face,” said the CEO, who has made changes in eight of his 11 direct reports.
VF plans to use the proceeds from the Supreme sale to pay down debt and Darrell said the company has no immediate plans to sell off other businesses, although he did keep the door open for the future.
“We don’t have anything specific contemplated, but I don’t think we’re ever really done in terms of reviewing our portfolio,” he said. “We’ve certainly finished our portfolio review, at least for now. We’ll probably recycle that on a regular basis.”
In parallel to the hard look at the company’s various businesses, VF has also been cutting costs.
“While we’re not yet back to growth, the steps we’re taking now will get us there” Darrell said. “Remember, this phase is about reducing costs, lowering our debt, resetting the U.S. business and getting Vans back on track.
“During the quarter, we generated a further $50 million in cost savings as part of our $300 million target….We’re reinvesting some of that back into the business in the key areas of product and brand building.”
Now, it’s just a matter of getting all that to flow down to the bottom line.