Corporate giant VF Corp. agrees to offload Dickies for a whopping $600 million.
VF Corp. Sells Dickies Workwear Brand to Bluestar Alliance for $600 Million
VF Corp., the American multinational corporation known for its portfolio of apparel and footwear brands, has announced the sale of its Dickies workwear brand for $600 million in cash. The transaction, expected to close by the end of the year, subject to certain conditions and regulatory approvals, is part of VF Corp.'s ongoing strategy to streamline its brand portfolio and focus on debt paydown.
The sale of Dickies is expected to improve VF Corp.'s debt leverage by about half a turn. The company has been offloading less well-performing brands, and Dickies is the latest to be sold. According to Needham analysts, the sale of Dickies will not result in a significant loss of EBITDA for VF Corp.
Dickies has shown some improvement in its performance, with declines moderating during the most recent quarter. However, compared to VF Corp.'s strongest performers, Timberland and The North Face, Dickies has struggled. Despite this, VF Corp. held on to Dickies when it sold off nine workwear brands over four years ago.
Bluestar Alliance, the company acquiring the rights to the Dickies workwear business, is committed to supporting the growth of the brand. Bluestar Alliance, which acquired Off-White from LVMH last year and Palm Angels earlier this year, also owns Hurley, Tahari, Kensie, and Justice, among other brands.
VF Corp. reported flat year-on-year revenue of $1.8 billion in its most recent quarter. The company's CEO, Bracken Darrell, has a focus on debt paydown, which is reflected in the company's decision to sell Dickies. S&P Global Ratings analysts predicted in early 2024 that VF Corp. would have to sell off more assets to trim its debt.
The sale of Dickies is expected to enable VF Corp. to bring its net debt level down. In 2020, VF Corp. acquired cult label Supreme for $2.1 billion, but later sold it for less. This transaction, like the sale of Dickies, was part of VF Corp.'s efforts to manage its debt and focus on its strongest brands.
Bluestar Alliance, which acquired Scotch & Soda in 2023, is optimistic about the future of the Dickies brand. The sale of Dickies is expected to be accretive to VF Corp.'s growth on a pro-forma basis. As VF Corp. continues to streamline its brand portfolio, it remains to be seen which brands will be next on the chopping block.
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