Corp has made its name in the apparel and footwear world by acquiring beloved but once struggling names like The North Face, Vans and Timberland and using its tech, management and manufacturing acumen to turn them into mega-brands.
But the company’s financial performance of late has been wanting, with profit per share and revenue growth between 2013 to 2016 falling short of the targets promised to investors. Notably, VF had promised compounded sales growth of 8% a year, but delivered only 6%.
On Thursday, the company, led by new CEO Steve Rendle, acknowledged investor frustration with the lack of a major potentially transformative deal, even as it laid out a new multi-year plan through 2021. The new blueprint left many on Wall Street unimpressed: Shares, which had fallen about 28% since a high 19 months ago, fell almost 4% further.
The company, which has missed analyst revenue estimates in the last three quarters and posted two consecutive annual revenue declines, according to Bloomberg News, clearly needs a new catalyst. VF told Wall Street to expect a compound annual growth rate through 2021 of 4% to 6%, an ambitious goal in a difficult apparel and footwear market. For the company to hit that mark, the top line could stand the kind of big boost that a new, growing brand could bring.
Rendle was one of the architects of The North Face’s industry-leading success in recent years; he was president of that brand from 2004 to 2011, on his way to becoming COO of the parent company four years later, the job that landed him the CEO position. In an interview, Rendle told Fortune the company is looking for its next big deal, even as he said VF would focus on building up its online and international businesses to spur growth, and touted a $5 billion share buyback program to boost the stock.
Dealmaking has long been VF’s hallmark. In the 1990s and early 2000s, the company picked up The North Face and Vans. Rendle’s predecessor and mentor, Eric Wiseman, oversaw the $2.3 billion purchase of Timberland in 2010, instantly doubling VF’s footwear business. The three are now among VF’s five billion-dollar brands. Other deals haven’t played out as well: The online athleisure wear brand Lucy, which it bought in 2007, was a bust and will be shut down this year and folded into The North Face. And the company last year sold off some of its brands, including designer-denim maker 7 For All Mankind.
Beyond the M&A drought, VF is contending with a weak apparel market and failing U.S. department and big box stores. Last year, The North Face suffered a rare setback when too many of its coats ended up in discount stores, a blow for a brand that has trained shoppers to pay full price for a premium product. Still, the company is redoubtable for its discipline and the desirability of its brands: Vans, for one, is growing as fast as ever.