Why would Dickies move to California? A closer look at parent company VF offers clues
The announcement last week that Dickies is leaving its home base in Fort Worth for a new headquarters in California shocked city leaders and left the brand’s most loyal fans in Texas dumbfounded.
But a closer look at the finances and strategies of Dickies’ beleaguered parent company, VF Corp., offers some insights into why the nearly $10 billion publicly traded company is making the surprise move.
Founded in Fort Worth in 1922 by C.N. Williamson and E.E. “Colonel” Dickie, the Dickies headquarters will be relocating to Costa Mesa in Orange County, California, where VF-owned footwear company Vans is located. The move is expected to be complete by May and will impact about 120 employees. Dickies’ Fort Worth distribution center, warehouse and retail locations will remain open.
VF Corp., founded in Pennsylvania in 1899 as a glove and mitten manufacturer, has evolved over the past 125 years from silk lingerie in the early 1900s, to the denim business starting in the 1970s with Lee, Wrangler and other brands. In the 2000s, VF shifted to active lifestyle and workwear apparel.
In 2019, VF moved its corporate home from the denim belt of North Carolina to the mountains of Denver, where it has headquarters for The North Face, Altra footwear, JansSport backpacks and the Smartwool and Icebreaker brands of high-performance cold weather clothing.
VF Corp. losing revenue
But the company’s net revenue has declined annually since its 2022 fiscal year. Bracken Darrell, described as a corporate turnaround specialist, was appointed VF’s president and CEO in mid-2023. He has focused on lowering costs, strengthening the company’s balance sheet and improving its U.S. sales. Consolidating VF’s real estate portfolio is part of that, too.
Darrell came from Logitech International S.A., a Swiss technology manufacturer where he served as president and CEO since 2013. During his time at Logitech, the company expanded into more than 20 new product categories and more than doubled revenue. Earlier in his career, Darrell was credited with leading the turnaround of the Old Spice brand at Procter & Gamble, where he also oversaw the Braun brand of shaving and grooming products.
Darrell has spent the past year and a half working on a turnaround plan for VF. The company says it is on track to cut $300 million in costs by the end of its 2025 fiscal year in March.
Dickies’ Fort Worth team ‘a shining example’
Dickies got a new leader in October, when former Gap executive Chris Goble joined VF as the global brand president responsible for driving growth at Dickies. About two weeks ago, he visited Dickies’ Fort Worth distribution center.
“Staying closely connected with our frontline leaders — and maintaining a strong feedback loop — allows us to make impactful decisions that resonate throughout the organization and ultimately benefit our customers,” he wrote in a LinkedIn post about his visit. “Our Fort Worth (distribution center) team is a shining example of the passion and pride that defines our Dickies family!”
VF Corp. acquired Dickies in 2017 for $820 million in cash. Last year, Dickies relocated from its historic West Vickery Boulevard campus to a downtown Fort Worth tower on Taylor Street, spending roughly $4.5 million to renovate the 65,000-square-foot space.
Raking in over $618 million in revenue in 2024, Dickies is one of VF Corp.’s top four performing brands. But VF’s announcement about moving Dickies to California suggests it is looking at changes to “revitalize” the brand.
The Fort Worth Chamber of Commerce, the organization that leads local business retention efforts, plans to continue backing Dickies’ remaining facilities in the area.
“While it’s always difficult to see a company move its headquarters—especially one as iconic as Dickies—Fort Worth will forever remain the birthplace of the brand. We are committed to supporting their local operations and ensuring the continued success of both the company and its employees here in the community,” the Chamber’s president and CEO Steve Montgomery said in a statement.
‘Stabilization period within Dickies’
Vans, the footwear brand born in early 1970s Southern California skateboard culture, has become a thorn in the company’s side, struggling to turn a profit in recent years. Vans saw a 24% decrease in revenue between VF’s 2023 and 2024 fiscal years. In a CNBC interview, Darrell described Vans as a brand that once catered to “outsiders” in the skater community but lost its way by trying to appeal to broader segments.
VF’s year-over-year revenue for the quarter ending in September was down 6% among all of its brands; Dickies’ revenue was down 11%. Despite the drop in revenue, the results were better than investors had expected.
“We’re definitely at the, just the stabilization period within Dickies,” Darrell said during VF’s most recent earnings call.
Dickies’ Fort Worth headquarters isn’t VF’s only recent cut in workforce. The company, which has roughly 30,000 associates worldwide, also plans to lay off 252 employees at a Virginia distribution center.
Some Wall Street institutions seem to have lost faith in VF. Wells Fargo cut the company’s stock rating in October. S&P Global downgraded its credit rating for the company on Nov. 14, citing poor earnings that are unlikely to turn around soon.
What analysts say about VF’s strategies
Amanda O’Neill, director and lead analyst for apparel and cosmetics at S&P Global Ratings, said it will take time for VF to turn its finances around.
O’Neill said though Dickies’ relocation is likely for cost-cutting purposes, it may not drive significant improvement for VF Corp.
“They need to really invest in their brands to be able to cater to changes and innovations that they may have missed that got them in this position,” O’Neill said.
O’Neill said VF was hit hard by inventory gluts created by pandemic supply chain disruptions. The company also stumbled after purchasing streetwear brand Supreme in 2020. VF sold Supreme for $1.5 billion in July, a significant loss compared to the $2.1 billion the company paid to acquire the brand.
VF’s debt was roughly $5.7 billion as of its most recent earnings release in October.
Lorynn Divita, an associate professor of apparel design and merchandising at Baylor University, said the Dickies relocation is a perfect example of the modern fashion industry. She said the move, though disappointing for North Texas, isn’t surprising amid an industry dominated by large conglomerates.
Divita said it makes sense for VF to move Dickies to Vans’ headquarters, since both brands share some target audiences.
“It’s a huge deal to us because it’s our hometown brand,” Divita said. “I don’t know if that part of their story resonates with the young skateboard crowd.”
Divita said VF is plagued by the same problem as all publicly traded fashion conglomerates — the company has to show growth to investors every quarter. Constant growth can be extremely difficult to achieve for clothing companies that are subject to shifting trends. Divita said companies seeking growth can eventually be faced with the choice of lowering costs or finding a way to increase sales.
“It’s not enough now to just make great clothes that people want,” Divita said. “You have to show not even limited growth, you have to show acceptable growth every quarter to keep your shareholders satisfied.”
This story was originally published November 25, 2024 at 12:18 PM.
