CEO Bracken Darrell on VF’s Big Pivot
Bracken Darrell isn’t taking any half measures at VF Corp.
The still-new chief executive officer is hands-on in the effort to rejuvenate Vans, cutting costs (including the corporate jet), deciding which brands to sell off, rearranging the C-suite, changing the organizational structure in the Americas and more.
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Just about everything at the once staid and steady company is in motion.
In an interview with WWD, Darrell offered a peek at his management style, his outsider view on fashion and his enthusiasm for the wayward Vans brand. Darrell generally gave the air of a happy warrior taking on his next big task with eyes wide open.
Still, he’s not sugar coating much these days. Darrell described VF’s third-quarter to analysts as “terrible,” a fair assessment with double-digit declines across all the major businesses, including Vans, Timberland and even The North Face, which was strong until recently.
But transparency is something the former Logitech CEO and Procter & Gamble veteran has grown into, even when it comes to managing the guessing game of who stays and who goes as the company pushes through the crucible.
“Early in my career, I would’ve said, well, let’s not talk about it broadly until we absolutely have to, because we don’t want to give people anxiety for no reason because 99 percent or 95 percent of the people who work here are going to work here a year from now,” Darrell said.
Now, he’s letting it all hang out.
“Transparency to me is more important than even avoiding the anxiety that could come with it. For most people, they’d rather know that they’re working for somebody they trust than have the anxiety of a little instability.”
It’s a point well made, but there’s a little more than a little instability right now at VF.
Shares of the company fell 9.7 percent to $15.31 on Wednesday — giving VF a market capitalization of $6 billion, a big drop from the nearly $40 billion at the start of 2020.
The portfolio review the group officially unveiled on Tuesday raises the question of just what the company will look like in the near future.
Already, VF has been shopping its Kipling, Eastpak and JanSport backpack businesses. The question now is, which is the next brand on the chopping block? Supreme? Timberland? Dickies? (Last year, activist investor Engaged Capital pushed for the company to consider selling off all of its brands outside of Vans and The North Face.)
While Darrell telegraphed the portfolio review earlier, analysts were surprised by the quarter’s sales declines, which led to a net loss of $42.5 million, down from earnings of $507.9 million a year earlier.
“You know things are bad when management starts flying commercial,” wrote Tom Nikic, an analyst at Wedbush, in a research note that described VF as “a highly challenged business.”
Ike Boruchow, analyst at Wells Fargo, said “there was nothing good” in the quarterly report, adding: “The turnaround plan just became that much harder. All three big brands are trending negative.”
VF said on Tuesday that chief financial officer Matt Puckett would be leaving after a transition period, another change that analysts saw as adding complexity to the company.
Clearly, Darrell is firmly focused on getting to a future where VF is growing again. But with this sharp a downturn at a company that for years was the stand-out operator in fashion, he did, when pressed, offer something of a diagnosis of what went wrong.
“This company really ran the play so well when we brought in brands that were kind of in trouble but needed fixing,” the CEO said. “And the fix for us was we ran them efficiently. We had a supply chain that was rock solid, and we gave those people who were running those brands enough independence that they could come up with new products and do well. So it was really kind of really nuts and bolts, good solid stuff. We were in the right place at the right time. We picked the right categories.”
Then, he said, VF simply “lost the plot a little bit.”
“If it hadn’t been them.…I probably would’ve done the same thing when the gravy train was really running well. I think we probably didn’t keep the innovation lights on as strongly as we could have. My experience with products is, if you don’t have great product, you don’t have a great company for very long.”
Vans, which for years was a powerhouse for VF, is a good example.
While the company is working to bring in a new head for the business, Darrell has been rolling up his sleeves and digging into how the brand works.
“I’ll avoid all the business speak,” he said. “It’s super fun. I mean, the brand has such an amazing history. My tendency with brands and businesses is always to go to the start with the history, because usually the answer to the unlock is somewhere in the past, and it’s like an archeological dig to find the pieces that can help you discover the future.
“It was really this kind of brand that stood for the youth and what you wore when you were young and feeling kind of independent and not like everybody else,” he said.
But as the brand got bigger, it kept churning out its classic looks. It was an approach that worked well — until it didn’t as the fashion trend finally moved on quicker than the brand could react.
The once bulletproof VF organizational structure is also being revamped, with a global commercial structure that for the first time also sits over the Americas business, which has a new set-up.
One of the changes is a division of labor that separates the job of getting the design and brand right and the task of executing on the business side.
“The dividend on this one’s going to be big,” said Darrell, who knows he’s running a little countertrend.
“The pushback on this is always the same, which is, ‘Wait a minute, you want to have somebody who can control…from the brand creation all the way into the store,’” he said.
The CEO called that “a luxury view of the world.”
“You want one continuous flow right into there,” he said. “But unless you’ve got a luxury brand’s margins, you really can’t afford to staff that.”
While the consumer market has become a little iffy, particularly with U.S. wholesalers, Darrell is focused internally, not externally.
“It’s a pretty good world out there,” he said, adding that not so long ago a soft landing for the economy after the pandemic seemed “impossible.”
“At a very, very macro level, we’re in a pretty first world situation here,” he said. “Companies like us shouldn’t complain too much. We just need to better innovate, better market and make sure the value’s there because the market’s there.”
So the mission is to reinvent at VF and reconnect with the market.
With all the moving parts, it might look like a rush from the outside, but Darrell sees something else.
“Believe it or not, I feel like we’re pacing this,” he said. “I realize we’re moving very fast, but I think it’s better to clean the table. Whatever pain you need to take, whatever products you need to be returned from wholesale, get it done early. Don’t drag that through the next several years.”
That goes for management changes too.
“Twelve years ago, I probably would’ve waited a year or two,” he said. “Now let’s do it early. If I learned one thing, it’s that these things don’t get better over time. They usually get worse. So just put them behind you. I want to solve problems now and then go forward and build and grow. I want to be about growth.”
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