VF Shows How to Work With an Activist Investor
Kudos to VF Corp. and its activist investor Engaged Capital, both of which deserve credit for showing that it’s possible for a board and its agitator to reach a consensus without letting animosity get in the way.
Known for a low-key constructive engagement approach, Engaged has been pushing for change at the apparel giant, including shaking up the board of directors. And on Tuesday, VF appointed Caroline Brown to the company’s board.
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VF said the appointment “follows constructive engagement with VF’s shareholders, including Engaged Capital.” Moreover, VF said not only will it appoint another independent director in the near term, it will also give priority to candidates identified by Engaged. VF said Brown and the additional director will be nominated at VF’s 2024 Annual Meeting of Shareholders. The two new board members will bring the Board total to 13 directors, up from 12. That means that one current director will not be standing for re-election to the board.
“We are excited to welcome Caroline to the VF Board,” VF chairman Richard Carucci said. “Caroline is highly respected in the apparel industry, with a proven track record of turning around, scaling and transforming global brands, and her insights will be valuable as the company continues to execute its Reinvent strategy.”
Brown from 2019 to 2023 was a managing director and headed up the fashion practice at Closed Loop Partners, a N.Y.-based investment firm and innovation center focused on the development of the circular economy. Brown is also a former CEO at Donna Karan International (DKI) and DKNY from 2015 to 2017, where led the transformation of the company and its sale from LVMH to G-III Apparel Group. Before DKI, she was president of luxury fashion house Carolina Herrera. Brown has also served as the U.S. CEO of Swiss-based luxury fashion brand Akris. She began her fashion career at Giorgio Armani, where she spent more than a decade in marketing and communications leadership roles.
Brown has also served on a number of boards, including Eileen Fisher, Browzwer and Dimpora, among others, and is a member of the MIT Sloan Sustainability Initiative Advisory Board. She is also an advisor to the Martin Trust Center for Entrepreneurship at the MIT Sloan School of Management.
“Having worked on the leadership and investment sides of the apparel and fashion industry, I recognize the tremendous potential of VF’s portfolio of beloved brands,” Brown said. “I believe VF has what it needs to return to strong and sustainable profitable growth, and I look forward to capitalizing on my experience to help the company deliver enhanced value for shareholders over time.”
Carucci also gave credit to Engaged Capital for the constructive input provided over the past several months, and said board will continue the dialogue with the activist and other shareholders.
“We look forward to continuing to work collaboratively with Caroline and the rest of the Board on the appointment of the Additional Director. We believe these appointments will help support Bracken Darrell and the management team as they lead the turnaround of this iconic portfolio of brands,” Glenn W. Welling, Engaged’s founder and chief investment officer, said.
Engaged took a stake in the apparel giant last October. It said The North Face, Vans, and Timberland owner should sell some of its real estate and look at options for assets beyond its biggest powerhouse brands, in addition to shaking up the board. It also wasn’t keen on VF’s “risky M&A strategy” when it bought the streetwear brand Supreme in 2020 for $2.1 billion.
The ability for VF and Engaged to work together is in contrast with other activist battles in fashion, whether that’s the very public back-and-forth between Gildan Activewear and Browning West or the battles Kohl’s Corp. has had with its activist investors. In addition to Engaged, activist heavy-hitter Legion Partners Asset Management reportedly also is looking to shake things up at VF.
And while Engaged was able to secure the support of a family member—who wants certain directors out—connected to the founder of VF, it will be interesting to see which board member is stepping down. With the collaborative approach VF seems to be taking, it would appear that having Engaged involved could do much to help the apparel giant with its turnaround plans.
Those plans now are expected to include sales of non-core assets. VF has debts totaling $1.7 billion coming due and CEO Bracken Darrel has said the current plan is for the company to complete the repayments without the need for any refinancing. The firm has $1 billion in debt due Dec. 30, 2024 and $700 million due on April 23, 2025.
