VF Corp. Shares Surge as Activist Investor Calls for New Strategy

VF Corp. (VFC) was the best-performing stock in the S&P 500 Tuesday after activist investor Engaged Capital took a major stake in the apparel retailer and outlined plans to boost its performance.

Engaged Capital blamed former Chief Executive Officer (CEO) Steve Rendle, who left the owner of the Vans and North Face brands last December, for implementing a strategy that caused “value destruction." It also accused the board of neglecting to intervene with urgency when the strategy failed.

The investment firm argued that Rendle dramatically expanded the company's corporate cost structure, pursued growth mergers and acquisitions (M&A) at high valuations, and reduced autonomy of brands to manage key functions, among other mistakes.

Engaged Capital said in a presentation that its turnaround plan for VF includes unwinding duplicative costs, restoring brand autonomy, addressing the capital structure, and shaking up the board to include members “who will prioritize value creation.”

It added that it believes the issues affecting VF’s performance are "fixable," and the company is a “ripe opportunity for an active investor.” It’s unclear how many shares Engaged Capital owns, but it's now thought to be among the company's top 10 shareholders, The Wall Street Journal reported Tuesday.

VF Corp. shares jumped close to 14% Tuesday after the news about Engaged Capital's plan, but they’ve still lost more than one-third of their value this year.