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The Street
The Street
James Ochoa

Why these beloved classic fashion brands are in danger of dying off

Several beloved clothing and accessory brands spanning from outdoor gear to workwear are under the microscope by investors looking to shake things up.

Related: Popular mall retailer facing potential Chapter 11 bankruptcy

A recent report in the Business of Fashion says that large stakes in the VF Corporation (VFC) -) have been made by two separate activist investors this month, and can cause a rift in the corporation’s brand portfolio.

Investment fund Legion Partners Asset Management joins hedge fund Engaged Capital, as they both bought large stakes in the Denver-based brand manager this month, and are already asking for some big shifts that could spell demise for loyal shoppers.

CENTRAL VALLEY, NY - AUGUST 26: The NORTH FACE sign hangs in front of their store at the Woodbury Common Premium Outlets shopping mall on August 26, 2018 in Central Valley, New York. (Photo by Gary Hershorn/Getty Images)

Gary Hershorn/Getty Images

The California-based Engaged Capital is urging the VF Corporation to cut costs and review its portfolio of brands (except for Vans and the North Face, both of which are performing well), use cash flow to pay back their debt and to replace some members on the board. Legion shares a similar sentiment; they are asking VF to sell off poorly performing labels like the outdoor boot brand Timberland.

According to WD Partners retail consultant Lee Peterson, VF’s stock is down 35% since last year.

The moves of the activist investors comes as no surprise to other outside analysts, particularly GlobalData Managing Director Neil Saunders.

“Quite honestly, what they’re asking of VF is not unreasonable,” said Saunders. “Cutting costs and streamlining operations are what VF should be doing anyway.”

PARIS, FRANCE - SEPTEMBER 18: A trunk and a skateboard for Louis Vuitton and Supreme are displayed during "Mode Et Sport, D'un Podium A L'Autre" exhibition at Musee Des Arts Decoratifs on September 18, 2023 in Paris, France. (Photo by Chesnot/Getty Images)

Chesnot/Getty Images

Currently, VF has a portfolio of 12 brands, including the elusive streetwear and skateboarding label Supreme, skateboarding brand Vans, outdoor brands Timberland and The North Face, Dickies workwear, as well as backpack makers JanSport and Eastpak.

With all these brands under their belt, it can be hard to manage.

“We’re not seeing VF’s acquisition strategy work as well as it once did,” Saunders said. “Divesting some of its brands would be sensible because it allows the company to focus on areas of best growth.”

Engaged and Legion’s moves come after newly appointed VF chief executive Bracken Darrell told investors that he would turn around the company’s slumping portfolio of brands with “a sense of urgency.”

More Retail:

In a statement, VF Corp. said that they “value the views of our shareholders and seek to maintain an open dialogue with the investment community,” and that “VF’s Board and leadership team, including our recently appointed CEO Bracken Darrell, are taking immediate and decisive actions to strengthen the company’s position and return VF to strong, sustainable, and profitable growth in the interests of all our shareholders.”

Earlier this year, VF Corp. announced that it will be selling its backpacks division, which includes brands Kipling, Eastpak and JanSport. On October 23, VF announced that it tapped former Nike executive Trevor Edwards as a new board member.

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