That’s the mantra at VF Corp. and one that has served the company over the years, as chairman and chief executive officer Eric Wiseman gets ready to hand over the ceo reins to Steven Rendle in January.
VF on Monday posted third-quarter results that missed Wall Street’s consensus estimates, and WWD caught up with Wiseman following his last earnings call to Wall Street analysts.
“When I look back at my 21 years at VF, the company has done a better-than-average job of anticipating the future and acting appropriately to take advantage of it,” Wiseman said. He explained how the company in the Nineties transitioned its manufacturing model to include a bigger focus on sourcing, particularly in Asia where it has a sourcing office in Hong Kong. The individual who headed that operation is now VF’s head of global sourcing. “One of the strengths of VF — and I’ve spent half of my adult life here — is that we are used to anticipating change and then organizing around it,” Wiseman said.
One initiative more recently that has had an important impact on the group is the company’s big push to go global — Wiseman said, “I don’t know where we would be had we not done that” — and then move more into the business-to-consumer space. International is currently half of the company’s business, Wiseman noted, adding that percentage-wise, it was just in the midteens about 10 years ago. “We made a deliberate push to go international and then a push to speak to consumers ourselves,” the ceo said.
He added that the company still has its international partners, but that the real opportunity in understanding its customer base comes from “owning our own stores, [and that has] made us a better wholesale company. We can go to our wholesale customers and advise on what we’ve learned from our stores and what [merchandise] makes for good bets.”
One question Wiseman said he was asked a lot over the years, more so when he first took over from Mackey McDonald nine years ago, was, “What keeps you up at night?” The ceo said his answer — and big worry — was not knowing whether the company had the talent to grow from $7 billion in annual volume nine years ago to the $12 billion it is today. He said VF has undergone a transition in what it does to develop talent, and that some of that is evident in its innovation of products across the organization. According to Wiseman, the company in 2010 shifted gears in how it thinks about product and branding, as well as where it thinks the world is headed in terms of innovation and use. The difference in mindset is more than just about color change or shape change, Wiseman said: “It’s about bringing features that are important to activity-based brands and to help the customer do what they want to do.”
According to Rendle, currently president and chief operating officer, that question and answer on talent are likely the same ones that will keep him up at night, too. “You can have the right strategy, but can you execute on it…. We aspire to continue to grow as a growth company, and that comes down to talent in all of the key leadership positions within the brands,” he said.
Rendle said it isn’t just about the ability to be good marketers of VF’s brands, but also being intellectually curious and motivated to evolve and stay focused on the needs of the changing consumer. He noted that the company is working with advanced analytics to enhance its ability to access both consumer and supply-chain information and drill down by region and distribution channel so “VF can stay at the forefront” of driving the right product to consumers.
Looking ahead, Rendle also said a relatively new initiative that’s about a year old is its One-Commerce Platform, which is “looking holistically at VF’s stores and online.” That is helping the company understand what needs to be done to be competitive, whether it’s “better knowledge of its consumers to in-store engagement, inventory everywhere and anywhere that the consumer is looking for it, merchandising and planning of assortment, frequency of delivery and storytelling of our brands,” Rendle said.
The company is planning an investor day late in the first quarter of 2017 to update the investment community on initiatives and strategic vision going forward.
VF Corp.’s shares were down 2.9 percent to $53.07 in Big Board trading on Monday. Investors were reacting to the company’s lowered fiscal-year 2016 guidance, which now expects earnings per share to rise 3 percent to $3.13, compared with prior estimates of a 5 percent increase to $3.20, and a revenue forecast of a 2 percent rise to $12.2 billion from prior guidance of 3 to 4 percent growth.
For the third quarter ended Oct. 4, net income was up 8.4 percent to $498.5 million, or $1.19 a diluted share, from $459.9 million, or $1.07, a year ago. On an adjusted basis excluding a tax benefit, earnings per share for the quarter were $1.14. Total revenues slipped 1.2 percent to $3.49 billion from $3.53 billion. Wall Street’s consensus was $1.15 a share on revenues of $3.63 billion.
On Jan. 1, Wiseman will shift from chairman to executive chairman, and while he won’t be actively managing the day-to day-operations, he will continue to be involved to assist the company and Rendle and his team “in any way needed.”