Second Activist Investor Gunning for VF
The activist hedge fund that went after Kohl’s, Guess and other fashion giants is coming after VF Corp., little more than a week after Engaged Capital launched a campaign calling for change at the Timberland and The North Face owner.
Activist heavy-hitter Legion Partners Asset Management has now put a bullseye on the Denver-headquartered apparel giant, Bloomberg first reported Tuesday.
More from Sourcing Journal
Engaged got things started last week when it laid out a plan for how the Supreme parent can cut more than $300 million in costs and reinvest much of those savings in The North Face and Vans, two of VF’s biggest and best-known brands. It also wants the clothing and footwear giant to sell some of its real estate and get some fresh faces on the board. VF has already made some headway on that front by naming former Nike Inc. president Trevor A. Edwards to its board of directors—its fourth new appointee in the past 18 months. An expert in global branding in apparel and footwear, Edwards is a strategic advisor to direct-to-consumer brands and investment firms.
Whether Engaged is pleased with the board addition remains to be seen.
But the activist investor’s agitation could put Timberland and Supreme up for strategic review and even under new ownership. Engaged wants VF to sell assets to pay down some of the $5.72 billion it has in debt as of this summer, per a regulatory filing. VF has $11.33 billion in liabilities and $14.04 billion in assets.
There’s a strong chance Legion’s demands look a lot like Engaged’s.
In terms of its track record, Legion has walked away from previous activist campaigns in fashion and retail with a mixed bag of successes and failures.
Back in 2015, Legion and CalSTRS, the California State Teachers’ Retirement System, ended their proxy battle when apparel company Perry Ellis International Inc. agreed to their leadership succession demands. But more recently, Legion’s proxy battle at Guess Inc. last year was a bust when Guess co-founders Paul and Maurice Marciano were re-elected to the company’s board. Legion wanted them gone because of long-running sexual harassment allegations against Paul, and Maurice for his perceived enablement. Legion also failed in its bid to revamp Genesco Inc.’s board in July 2021 when the footwear manufacturer and retailer’s slate of nine-director nominees succeeded in getting elected.
Also in 2021, Legion joined forces with hedge funds Macellum Advisors and Ancora Holdings Inc. to push for board change at Kohl’s. They wanted to replace the retailer’s nine board directors, but dropped their challenge when Kohl’s expanded its 11-member board by three. The trio had worked together back in 2019 to target the now-defunct Bed Bath & Beyond. The battle with the home goods retailer ended when it agreed to form a committee to evaluate options for its underperforming businesses, nominate four new board members, and find a permanent CEO replacement.
Bed Bath & Beyond kept Buybuy Baby, and sold Cost Plus World Market, PersonalizationMall and Christmas Tree Shops. Both Bed Bath & Beyond and Christmas Tree Shops ended up in bankruptcy court this year and subsequently liquidated. The Bed Bath & Beyond intellectual property was sold for $21.5 million to Overstock.com, which in August rebranded its website to Bed Bath & Beyond, and on Tuesday said it would change its corporate name to Beyond Inc. Buybuy Baby was sold for $15.5 million to Dream on Me Industries Inc., which is relaunching the baby products retailer next month starting with 11 stores from Maryland to Massachusetts.
In a statement Tuesday, buybuy Baby CEO Pete Daleiden said the retailer has a “bright” future and a staff “committed to ensuring that [the chain] remains the go-to destination for all parents, caregivers, and families seeking thoughtfully designed and quality baby and child-focused products, and exceptional customer service.”
Neither executives at VF Corp. nor at Legion Partners responded to a request for comment.
