VF Corp. is taking on even more financial cushion to see it through the coronavirus shutdown — but is still paying its workers and its dividend.
The parent to Vans, The North Face and Timberland said Tuesday its North American offices and stores will stay closed until May 3 and that both store and office employees would continue to receive their full pay and benefits.
That sets VF apart in a world where most retailers have had to furlough their staffs to conserve cash as they try to survive the crushing shutdown. (Another exception is Lululemon Athletica Inc., which said recently it would continue to pay its employees until June 1 even if its stores remained closed.)
VF also said it would draw down the remaining $1 billion in its unsecured revolving credit facility, giving it $2.4 billion in cash on hand. VF already took $1 billion from the facility just 15 days ago, a move that left it with enough money to fund its working capital through September.
Clearly, VF is getting ready for the long haul and also just starting to get a sense of opportunities amid the massive market disruption.
“In an abundance of caution and to best position VF to capitalize on opportunities as it emerges from the COVID-19 pandemic, VF is exploring alternatives to further enhance financial liquidity and flexibility of its capital structure,” the firm said.
And while VF has hit pause on its share repurchase program, the company plans to continue to pay its dividend, a sweetener to investors that many companies have abandoned for now and a show of financial strength.
“Since the beginning of the COVID-19 outbreak, we’ve managed our response strategies with a people-first approach that prioritizes the health and well-being of our employees around the world,” said Steve Rendle, chairman, president and chief executive officer. “These new actions position us to continue supporting our people while also taking prudent measures to protect the financial integrity of our company as we manage through the prolonged disruption caused by this global health crisis.”
Rendle cut his base salary in half for the next four months and board members will forgo their cash retainers.
“Throughout VF’s storied 120-year history, we’ve weathered many storms, and each time we’ve emerged as a stronger company with a renewed sense of focus and determination,” Rendle said. “The full breadth of actions we’re taking in response to the COVID-19 situation are intended to not only address the challenges of today, but also to position our brands and businesses to thrive in the years ahead as we build on VF’s proud legacy.”