Narrow-Moat VF’s CEO Resigns as Results Deteriorate; Shares Very Undervalued

Narrow-moat VF announced the unexpected and immediate retirement of long-time executive and CEO of the last five years, Steve Rendle. VF has launched a search for his successor, with Benno Dorer, a board member and former CEO of wide-moat Clorox, serving as interim CEO. Rendle, who has been instrumental in VF’s success, oversaw an upbeat analyst event just two months ago. However, the firm has repeatedly lowered guidance this year, and did so again in conjunction with the CEO announcement due, primarily, to a heavily promotional environment and canceled wholesale orders in the U.S. The firm now expects fiscal (March-ending) 2023 adjusted EPS of $2.00-$2.20 (down from $2.40-$2.50 prior) on 3%-4% constant-currency sales growth (down from 5%-6%). For comparison, VF initially guided to $3.30-$3.40 in EPS when it provided its fiscal 2023 outlook back in May. Since then, lockdowns in China have intensified, the U.S. dollar has weakened, inflation has remained high, and Vans has failed to return to growth.