The VF Corp. coronavirus playbook is pretty simple, having built up the balance sheet, chief executive officer Steve Rendle plans to “navigate the now” in a way that lets the fashion giant “accelerate out” of the crisis.
That might be easier said than done, but Rendle, who is also president and chairman, told WWD that VF’s 2017 strategic plan set it up to do just that.
Still, the “now” at VF and almost everywhere else (outside of big tech) is pretty tough. The parent to Vans, Timberland, The North Face and Dickies reported that revenues for its first quarter ended June 27 dropped 47.5 percent to $1.1 billion while losses totaled $285.6 million, down from earnings of $49.2 million a year earlier.
But Rendle said “VF is built for this” crisis.
Shortly after he was named ceo in 2017, Rendle charted a course that had the firm and its brands focused on outdoor activities — from skateboarding to hiking and beyond — and zeroing in on the trends toward casualization, sustainability, digitization and purpose-led organizations.
The Dickies and Icebreaker brands were bought, the jeans business was jettisoned and VF moved to Colorado.
Rendle maintained the pandemic has supercharged the themes VF was oriented around and now, despite the first-quarter hit, the company’s business sits right in the middle of the themes shaping the future.
Despite that handy bit of foresight, Rendle maintained he doesn’t have a crystal ball, but when pressed did offer some thoughts on just where all this change is going to lead fashion in the years ahead.
“Consumers absolutely are driving the marketplace,” Rendle said. “Their behaviors, what they’re expecting, that really manifests itself.
“This shift to stronger digital engagement — and that’s not just transactions — but it shows they’re interacting with business and that’s how they’re interacting with one another in their communities,” he said. “That will only get stronger and businesses like ours need to continue to build out the capabilities to have those connections to gather those insights from the data that we have to make business decisions.
“We want to walk you across that consumer journey of awareness to consideration, certainly we want to convert you online, but more importantly, we want to create loyal relationships where people become advocates for our brands, that’s where you get the lasting, more durable relationships,” Rendle said.
That means that the conversation between brands and consumers will become only more nuanced.
Broad-based marketing e-mails on things that the recipient isn’t interested in only make consumers think “all you want is my money,” added Scott Roe, executive vice president and chief financial officer, by way of example.
He also pointed to VF’s programs to customize products and noted they lead to three times more engagement from shoppers.
But even as VF’s brands are rushing to create more direct and personal connections with consumers, Rendle and Roe were both careful to note that stores — the company’s own and wholesale accounts — will remain a key part of the consumer equation in the future.
“We don’t see the death of stores by any means,” Roe said. “But how we talk to consumers, how we meet them on the path to purchase and even what those stores look like and what role do they play will absolutely continue to evolve. We don’t see the complete abandonment of the wholesale channel by any means, but we’re all evolving and have to continue to evolve.”
And in the age of COVID-19, changes are happening across the board, including in how and where people work, at least for now.
“We’re spending a lot of time thinking about the future of work,” said Rendle, who very much plans to get people back into the office, eventually. “We frankly enjoy being together and we gain a lot of value to be able to have those cross conversations.”
For now, VF’s offices are reopening in phases. While most of the company’s offices are open, only about 15 percent of the workforce is going in. “We think by the end of the year all employees will have access, but we’ll never be more than 50 percent occupied until we have a strong solution to the virus,” Rendle said.
That is really the X factor for everyone and, until the economy can open back up fully, companies are going to have to muddle along as best they can.
The picture was brighter online and VF’s digital revenues jumped 78 percent as customers stayed home and clicked. And in Greater China, where the coronavirus first took hold and started to disrupt commerce in late January, revenues were flat for the quarter, with a 5 percent increase in mainland China.
VF has taken a “fortress balance sheet” approach to stocking up during the coronavirus crisis and, in keeping with its long history of dealmaking, is also keeping a keen eye out for opportunities in the market.
The company ended the quarter with $2.1 billion in cash and equivalents on its balance sheet, a big jump from the $561 million held a year earlier.