VF Corp strikes deal to sell 9 workwear labels

Dive Brief:

Tweaking its portfolio once again, VF Corp. on Wednesday said it has a definitive agreement to sell some of its work apparel brands to a subsidiary of holding company Redwood Capital Investments, for an unspecified amount.
The transaction is expected to close in the first quarter of fiscal 2022, subject to customary closing conditions and regulatory approvals, according to a company press release. Terms of the agreement were not disclosed.
The brands represent the occupational workwear portion of VF's work segment and include Red Kap, VF Solutions, Bulwark, Workrite, Walls, Terra, Kodiak, Work Authority and Horace Small, the company said. The sale doesn't include Dickies or Timberland PRO.

Dive Insight:

Changing up its stable of brands has become a habit at VF. The company made a splash when it acquired cult brand Supreme in November for $2.1 billion — a feat that has stayed a bit under the radar thanks to the ongoing turmoil from the pandemic.

But the company has been scrutinizing and steadily reshaping its portfolio since its 2018 spinoff of classic denim brands Wrangler and Lee. The brands being unloaded now have sported a "for sale" sign for more than a year. In a statement, CEO Steve Rendle reiterated that the move "reflects our continued focus on transforming VF into a more consumer-minded and retail-centric enterprise while further simplifying our portfolio and operating model."

The strategy appears to be working, and analysts don't seem to be holding its overall pandemic-era weakness against it. Its North Face label has been a stand-out, reaping benefits from the "gorpcore" trend, as consumers embrace outdoor activity. Most analysts even dismiss troubled sales at skate footwear brand Vans as a temporary blip because kids have been forced to attend school from home, and are anticipating a boost from skateboarding's debut as an Olympic event in Tokyo (if the games are held). Timberland, with lean pandemic-induced inventory, also appears to be turning around, according to Wells Fargo analysts led by Ike Boruchow.

In all, Wells Fargo sees the conglomerate as "one of the most consistent and well-run operations over the long-term."

"VFC has been a notable laggard in our space since COVID hit," Boruchow wrote in a client note last month. "Since the start of 2020, VFC is the worst-performing stock in our coverage, but we think that the company's portfolio is actually healthy and poised for upside."