Takeaways
- Shares from VF Corp. soared nearly 14% on Tuesday after activist investor Engaged Capital revealed plans to try to increase the clothing retailer's value after taking a major stake in the company .
- Engaged Capital blamed former VF Corp. CEO Steve Rendle for a failed strategy that led to VF's problems.
- The investment firm said VF was 'mature' and said it was 'ripe'. so that an activist investor gets involved and the problems the company faces are “fixable”.
VF Corp. (VFC) was the best-performing stock in the S&P 500 on Tuesday after activist investor Engaged Capital took a major stake in the clothing retailer and outlined plans to improve its performance.
Engaged Capital blamed Former CEO Steve Rendle, who left the owner of the Vans and North Face brands last December, for implementing a strategy that caused “value destruction”. He also accused the board of neglecting to intervene urgently when the strategy failed.
The investment company argued that Rendle had significantly expanded the company's cost structure, pursued growth mergers and acquisitions (M&A) at high valuations, and reduced brands' autonomy in running key functions, among other things errors.
Engaged Capital said in a presentation that its plan turnaround plan for VF includes removing duplicate costs, restoring brand autonomy, changing the capital structure and reshuffling the board of directors to include members “who will prioritize value creation.”
He added that he believed the issues affecting VF's performance were 'fixable,' and the company constitutes an “attractive opportunity for an active investor”. It's unclear how many shares Engaged Capital owns, but it is now considered one of the company's top 10 shareholders, The Wall Street Journal reported Tuesday.
VF Corp. shares. surged nearly 14% on Tuesday after the news about Capital's Engaged It's Plan, but they still lost more than a third of their value this year.
