Benno Dorer, lead independent director of the VF board of directors, has been named interim president and CEO, effective immediately, as the company undergoes a search for a successor.
Shares of VF Corp were down 8% in the wake of the news, with other athletic retail stocks responding to the news as well. Shares of Adidas, Nike and Under Armour also dipped Monday morning.
The sudden CEO shift comes amid a generally turbulent time for VF and the athletic footwear industry which is experiencing headwinds from an increasingly promotional environment, a demand slowdown in North America and wholesale order cancellations as brands manage inventory excesses.
VF downgraded its outlook for full-year 2023 and now expects revenue for the full year to increase 3% to 4%. Adjusted diluted EPS for the full year is now expected to be between $2.00 and $2.20.
Rendle, a 25-year company veteran who served as CEO for 6 years, steps down amid this challenging time for the company after leading during a period of considerable growth. As Wedbush analyst Tom Nikic pointed out in a note, Rendle’s CEO tenure began during the “wave of the Vans mega-trend.”
“But between the COVID disruption in 2020 and a slower-than-expected recovery from the pandemic (particularly at Vans), the last few years have been far more challenging,” Nikic said in a note.
CEO and high level executive shifts have become common in the athletic retail sector last year, as the industry experiences volatility. Leading brands like Nike and Adidas are pulling out of wholesale retailers in favor of their own DTC channels and have been grappling with tense situations regarding controversial partners. Newer brands like On and Hoka are also reshaping the market, which is reeling from the recent loss of Adidas Yeezy.
“Rendle’s exit is one of many management changes that seem to be taking place as the retail and consumer space becomes more turbulent,” GlobalData managing director Neil Saunders told FN.
And as JP Morgan analysts pointed out in a note, this departure represents the fourth major senior management change at VF Corp this year, following the appointments and promotions of Nicole Otto as The North Face’s global brand president, Kevin Bailey as Vans’ global brand president and Marissa Pardini as chief product and merchandising officer.
In October, VF downgraded its earnings outlook for fiscal year 2023, reflecting foreign exchange headwinds, higher-than-usual inventory levels and more promotional activity in the marketplace. The company reiterating its long-term plan to grow its business by 2027, which hinges on innovating within an existing brand portfolio, building and developing new brands, leveraging a DTC focused supply chain and becoming more agile.
The sudden departure could represent an “urgency” from the board to initiate this change, said Baird analyst Jonathan Komp in a note. And as the company undergoes these changes, it will need to find a new leader to steer it in the right direction.
“We are hopeful that VFC’s new CEO will have operational intelligence and, more importantly, have branding skills, and put the health and sanctity of VFC’s brands ahead of potential growth,” said Williams Trading analyst Sam Poser in a note. “If a brand is healthy, compelling, and managed well, profitable sales come. Focus on short term gains causes long term pains.”