The turnaround artist, who formerly led Logitech and helped reinvigorate Old Spice, has had a steep learning curve in fashion, but he said the steps needed to get VF back on its feet are familiar.
“I am a little surprised how similar it still feels to everything I’ve done in the past,” Darrell said in an interview with WWD after VF posted first-quarter net losses of $258.9 million on a 9 percent drop in revenues on Tuesday.
“The similarities overwhelm the differences, and maybe that’s partly because the consumer products business and turnarounds have a lot of similar features,” Darrell said. “You got to get the mojo back, you got to get the consumer back. You got to have great products and you have to tell people about it.”
VF is now working on its mojo across all its business — from The North Face (now led by Caroline Brown) to Vans (now led by Sun Choe) to Timberland to Dickies.
There’s been a lot of movement.
Altogether, the CEO has made changes in eight of his 11 direct reports.
The belt has been tightened with $50 million in first-quarter cost savings part of a $300 million plan for the first half.
Supreme is on its way to a new home at EssilorLuxottica, which agreed to buy the brand in a $1.5 billion deal inked on Darrell’s one-year anniversary, July 17. (The CEO tried to give the business a good send-off on a call with analysts, noting: “I love the Supreme team. … This allows us to sharpen focus on the core business and also improve our [financial] leverage.”)
Shareholders liked what they saw in the first-quarter numbers and traded shares of VF up 7.1 percent to $17.60 on Wednesday.
Now that Darrell is working in the world of fashion, there are other changes the CEO — coming in with his outsider eyes — sees as worthy.
“I’m still … surprised how slow this industry is to bring products to market,” he said. “This does feel slow considering we’re making apparel, we’re not making nano chips. So it seems slow now. I’ve not really focused on that yet because that’s a stage two kind of thing to focus on.”
Stage one at VF has plenty to keep Darrell busy.
Fixing Vans
Vans is a particular focus. The skate brand caught fire for a few years, selling into the consumer’s love for its classic styles, only to fall dramatically when the trend moved on.
Vans is now tightening its distribution and saw first-quarter sales fall 21 percent to $581.8 million as it sought to trim down to get healthy.
While the decline of Vans has surprised analysts and investors, Darrell finds heart in other brands that have ridden the waves of their own growth curves.
“I love the New Balance story,” Darrell said. “I just love it. I grew up a runner, never used New Balance. What they’ve done in the last seven or eight years, just really impressive. They’ve renewed old franchises, they’ve entered new categories, and they’ve started to make a little dent in apparel. And I think that’s a model for a brand like Vans.”
Vans also has still nascent potential in apparel, which only accounts for 19 percent of its business.
“When you think of Vans, you do think more about skate or skate inspired,” the CEO said. “There’s no reason why we shouldn’t have a great apparel business. It’s really small, occasionally it has really cool stuff, but I think I’m sure that will be something the Sun gets excited about.”
Choe, who joined Vans this year from a powerhouse run at Lululemon, is taking on a very different kind of challenge now, but Darrell said the two brands have plenty in common.
“You win with great products and really understanding the consumer and then bringing those to market in a way that’s transparent to the consumer so they can understand what you’re bringing. And that’s exactly what we’re up to,” he said.
“The Vans business, it’s a franchise business where you have these franchisees that are older and quite powerful like the Old Skool and now the Knu Skool, which is a new franchise,” Darrell said. “The ability to keep bringing exciting change to those franchises and also inventing new franchises and entering new categories is exactly what Lululemon’s done extremely well over time.”
The VF Portfolio Remix
While VF took a hard look at all of its brands — and some dealmakers have been buzzing about the potential for VF businesses besides Supreme coming to market — Darrell said the portfolio is in a stable place now.
“There’s not some imminent plan that we’re keeping in secret,” he said, acknowledging that VF has a long history of refreshing its portfolio of brands.
“I don’t see a need to turn the portfolio for any other reason except strategic reasons now,” he said. “I’m not in any rush to do it, nor do I see a burning piece of timber here that we need to quickly get out of here. We’ve got a lot of great brands here. I mean a lot of great jewels that are really a little tarnished that can be dusted off the ground.”
That should be some comfort. But Team VF has already been through a lot.
Mid-turnaround Morale
“I’d say that morale here is about [what] it was at Logitech when I was there at about the same timeframe,” Darrell said. “There is a lot of change, a lot of change in leaders over a one-year period. So morale is, it’s an unstable feeling when you’re working throughout the company.
“On the other hand, I would say you can really feel the energy coming back more and more people in the office,” he said.
The change that’s still to come is more in VF’s control.
“We’re self evolving at a very rapid rate now,” the CEO said. “We changed the business model, we changed the leadership team, we changed a lot of the strategies for the different brands, and now we’re moving.”
And Darrell wants the people who work at VF to be ready to continue to move forward with “a growth mindset.”
He described that as “a company where people inside are constantly trying to find new ways to grow themselves, and the company is trying to help ’em grow, but also they’re trying to find new ways to grow the business, grow the profitability, grow everything. So it’s about growth in every dimension. And that’s really where we’re headed.”
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