Welcome to Hedge Fund Tips with Tom Hayes. I'm Tom Hayes and this is your 304th videocast podcast for the week ending August 14th, 2025. We got a lot of incredible stuff to cover today. A very special guest interview with the CEO of one of our larger holdings and a lot more.
But as always, family first. Got to take the girls to the Orange County Fair out here in California. Had a blast. Then we got them set up a lemonade stand — Mimi and Annabelle did, and their friend Grace joined them to help. They sold a lot. The big seller was this soda called Poppy. They were very creative, very successful, and she's been doing that actually and making some bank. She's got some triple-digit days in the last week. So, there's another great picture of Mimi and Annabelle.
I hit my goal inside of four years with three months to spare. Earlier this week, I hit a 9.8 index. So, the two goals inside of four years — break 80s, get to a single-digit index — accomplished, only to be taken away two days later up to a 10.1. But mission accomplished and now I can look out two years for the next goal, because that's the key thing: set the next goal not for what you get but for who you become to get it done. My goal is down to a seven inside of the next 24 months. I think that'll probably top out my maximum capacity with a little bit of luck to get there. I've only been playing about three and a half years. December will be four years. It took a lot of effort and I really enjoy it.
Without further ado, we had the most incredible interview, highest-viewed interview of all time for five-plus years we've been doing hedgefundtips.com — with the CEO of VFC Corp. That's Vans, Timberland, North Face, Dickies, Altra, Icebreaker, and more. You got to listen in here. As great as Cooper Standard has been — went from whatever, five and change from our initial basis to now knocking on the door to $30 and probably going to double again — all of this, by the way, is opinion, not advice. Go to hedgefundtips.com and click on terms. Talk to your financial advisor. I think VF is going to be the next Cooper Standard and this interview gave me a lot more confidence in that outlook.
Well, without further ado, I would like to welcome and I'm truly honored to welcome the President and CEO of VF Corp, Mr. Bracken Darrell. Thank you so much for joining us today.
Thank you, Tom. Thank you very much. Well, what an announcement — I feel like the Chicago Bulls opening when Michael Jordan was there.
VF Corp has major incredible brands — Vans, North Face, Timberland, Dickies, and a lot more. Mr. Darrell will speak with us about that. But I do know that you're on a timeline, so I want to get right down to some of the questions and give our investors as much valuable information as we can. We've heard your quarterly earnings call. Congratulations on a great quarter, by the way. The turnaround is going along exactly as you promised when you took the helm just a couple short years ago. One of the core things I'm going to start with — compensation. Most management would say, uh-oh, here we go. But it's just the opposite. We're really excited about how VF Corp has set this up. One of the core things we look for in potential investments is the overall alignment of management with shareholders — are they acting like owners, and do they respect shareholder equity? Since joining VF Corp in 2023, you have personally written over $3 million worth of checks from your own pocket to purchase stock, and several other board members and executives have made material open market buys. You have a policy requiring significant share ownership over a 5-year period, ranging from 2x to 6x current annual base salary, with credit given only for direct holdings. On top of that, 90% of your compensation is tied to financial targets including revenue, operating income, gross margins, with 50% of stock option awards linked to long-term performance goals. Can you speak to how you and the board think about alignment with shareholders and why you believe this culture is so important for the VF Corp turnaround?
You know, I don't know if most people are as financially motivated as a lot of investors might think, but certainly some people are. In my experience, good boards and good leaders understand that the scorecard for winning is about increasing shareholder value dramatically. So whether they're there because they want to make a ton of money or they want to be viewed as a big winner, both of those arrive at the same place — which is you should absolutely have the performance tied to the performance of stock. And the performance of stock is usually a direct reflection of the growth of the top line and the growth of the bottom line. So I couldn't feel any more strongly that especially the CEOs, but also the rest of the management team, should be very directly tied to that. And we are. And I think every company really ought to be.
Yeah, I agree and I'm really happy to hear you say that. When I got involved in the stock, pre-tariff fears, I was just sharing with your colleagues that we've got a pretty low basis — $13 and change across the board — and we saw you start to implement the turnaround plan and the stock ran up from 13 to 28, and then there were some fears about tariffs and it got knocked down. But when I originally wrote this, and I wrote a personal check and I wrote big checks for my clients to buy stock — my basis, and by the way my nickname on Wall Street is Turnaround Tom, so we do have something in common as you're a turnaround specialist as well — I had originally underwrote this. I said, look, the number one thing with a turnaround is take solvency risk off the table. So I underwrite for that first. If they do that, you get a double. If they actually stabilize the business, you get more than that. And if they execute and grow and turn it around, you can get upside. My initial underwriting was $40 stock. And as I've listened to you over the quarters and seen what you said you were going to do and see what you've done — leaving aside the short-term noise — I've taken my internal underwriting up from that 40-50 range, because you've already taken solvency risk off the table, you're already stabilizing and growing most of the brands — to, I think over, I can't tell you if it's going to be three, four, five, six years, but generally three to five years, I think this stock could work its way back to new highs. A little bit of a curveball here: when you forget about the guidance, forget about — you're an individual investor. You wrote $3 million worth of your own money into stock. Did you have a similar view to me, or do you think I'm too optimistic?
Well, since I can't talk — I could, but it'd be naive of me to go out and start predicting stock prices like that.
I can't really respond directly to your question, Tom. But I'll talk about why did I invest. I invested for a couple of reasons. First, I wouldn't be here — and you deserve the name Turnaround Tom because you've invested in turnarounds serially and they've worked. I don't think I deserve the name. I'm not Turnaround Bracken because I really never go into any of these with that first objective, that double objective. That is not my objective. In fact, I just view that as like if you're on a stairway, the turnaround part of it is the first two or three steps — that's just part of the pathway to what I really want to do. I love creating long-term growth businesses. That's my game. That's all I'm here for. That's all I ever cared about in my life from a career standpoint. I love to grow people, I love to grow businesses, I love to grow brands, I love to create great things, great products. So that's why I came here. It wasn't to do the turnaround. The turnaround is just a step along the way. My second point is in terms of the investment itself — I think we're a tremendous investment, or I wouldn't put my own money in. I also wouldn't be here if I didn't feel that way. We're trading at pretty low prices relative to even four or five years ago. And the brands are fantastic. We really have tremendous spread. The rest is really leadership, getting the right team in place, putting the process in place and executing. And I think I know how to do that. The most important one is getting the right people here. We definitely have, at least at the top now, a fantastic team.
We're going to get to that. Something we always prioritize at Great Hill Capital is investing in companies with high-quality sound management — what we call betting on the jockey. And that's exactly how we view VF Corp because, by all means, Bracken, you're a turnaround specialist whether you want to call yourself that or not. For those in the audience who may be less familiar, Bracken's first major turnaround was Old Spice, where he tripled market share in two years, creating one of the most successful turnarounds in P&G history. Then he took over Logitech in 2013 when the stock was down 82%, sales were declining, operating margins had collapsed. Over the next eight years, the stock went from $5 to $133, delivering a 26-bagger. The setup sounds very familiar to what you faced when you joined VF Corp — a stock that had fallen 85% with declining sales and operating margins cut in half. Could you first discuss what you've learned from your track record of successful turnarounds, and now that you're approaching the two-year mark at VF Corp, compare and contrast your plan, execution, and results to date and expected outcome between Logitech and VF Corp. Logitech being a 26x because of you.
The most important thing — what have I learned? I've been very lucky to work around great people. I had great people at Logitech and I built that team over probably five or six years to really get it to where it was — that kind of performance. It didn't take five or six years to perform, but it took five or six years to get there. I've gone much faster on the people side here. It's taken me really a year and a half to get to the same kind of caliber team. That super team is still over there at Logitech and I've got a super team here now. So I feel really, really good about that. Those two things are very parallel. The second thing is, if you think about it — aside from financial discipline, which is a given — we only do two things. We create products that ideally make people feel better about themselves and are preferred to other people's products, and we build brands that people want to join, want to be part of. Those are the two things we have to do exceptionally well. To do that, you need a great product machine. One of the first things we worked on here is getting to one product process. We had 13 or 32 different factors for creating products, all doing it differently. We've gone to one now — a best-in-class process. By the time we get to over the next 6 to 12 months, we'll be on that one common best-in-class process of ideating and creating product and bringing it to market. That's the most important step from a process standpoint. We're going to do that for every major process at this company. It's like opening your phone and having apps — once you've got one really good process, it's like an app. Every time there's an improvement, you can update all the different brands' apps or processes at the same time. I dreamed of doing this before when I was back at P&G. P&G generally had one good strong process. Ever since I experienced that, I wanted that in every company I was in. Logitech, we didn't have that problem because we were on one process. Here we weren't, so we've done that. So, first people, second processes. The third is functional excellence — bringing in people who are the best in class at what they do, constantly pulsing the industry and outside our industry in areas like AI where the best things are happening. Those three things are super critical. We're well downstream on all three. All three were really critical to the performance of Logitech. The second one was easier because we were already on one process. The people side and functional excellence took years to develop, and that's exactly what we're doing here.
Thank you. That's really, really helpful. I want to talk a little bit about the cleanup phase, which you've been going through the last 24 months. Probably the one you hear the most about and arguably the biggest piece — and that's Vans. I now have five pairs, by the way. Picked up another pair at Vans in Laguna Beach this weekend with my girls. This is a brand VF acquired back in 2004 that went on to grow 10x over the next 15 years. But it's been under real pressure since. Revenues in the most recent fiscal year were more than 40% below their peak in fiscal year 2022. You've been open about what went wrong — Vans lost touch with its core audience by chasing trends, became overexposed to value channels which diluted the brand, and leaned too heavily on legacy franchises. Since you stepped in back in 2023, the focus has been on taking your medicine — cleaning things up from existing value channels, closing unprofitable stores, rightsizing inventories — all of which have helped to drive significant gross margin improvement. Could you speak to that initial phase of the Vans turnaround, what you prioritized, what you think needed fixing most urgently, and how you've approached setting the brand up for a comeback?
Yeah, you know, this happens a lot in very successful businesses. It's like the thing that gets you there, you overdo it. You get a really strong muscle and then you just keep going and going and going, and then suddenly one day you're so overdeveloped that the rest of your body's in trouble. And that's exactly what happened here. They did some really great things with the brand — the Warped Tour, just fantastic. They had fantastic products that were really appealing and they did really good things with them, and then they just, you know — it's so easy to be 20/20 in hindsight. I'm not critical of anybody who was here at the time, because by the grace of God, it could have been me. But I think they had a few things that were really working and rather than keep that innovation funnel filled — constantly putting in new ideas, product innovation ideas, marketing innovation ideas — they had things that were working and they just poured more and more fuel into those. They took them broader and broader in distribution and deeper and deeper into the value channel, and they just went deeper and deeper and broader and broader on some of the same styles. There wasn't something behind them — they had cut the spending, or at least hadn't increased spending on the innovation pipeline. The problem is at some point that music stops. If that sounds overly simplistic, I don't think it is. The cool thing is the brand is as strong as ever. It's a fantastic brand. You really have a very hard time finding anybody who doesn't think the brand is really strong. The business is in trouble, but consumers don't seem to realize that. Well, why is the business in trouble? The brand's good, I just don't see anything I want to buy right now. That's a good sign if you like to create products, because it means we can come back. The marketing side of it is just trying to find your way into the cultural excitement that's happening in the moment. I'm not a big believer that you can create big broad trends usually as a company. Sometimes people maybe pull that off, but you can usually find them and then align your brand with them and then do things that consumers see as really fitting in the moment. That's really what we're up to now, and it's super exciting and fun.
That's great. Thanks for commenting on that cleanup. I want to talk a little bit about growth. The focus seems to be on creating new products and returning the brand to its roots. In many ways, it reminds us a little bit of what New Balance pulled off in recent years, maybe Converse to a lesser extent. After 15 years of sales declines, New Balance reinvented themselves by leaning into streetwear culture, influential partnerships, and high-profile collaborations. In terms of returning Vans to its roots, it doesn't get much clearer than bringing back the Vans Warped Tour. You sold out three events in a matter of hours and drew nearly 170,000 attendees in Long Beach — more than double the previous peak. You've also introduced new core franchises like the Skate Old Skool, now your number two global franchise and top growth driver, along with sellouts like Super Low Pro. And continue to successfully lean into the premium product space. On top of that, you've rolled out several high-profile collaborations, including the Lil Uzi partnership, and continue to elevate the marketing approach. As we head into back-to-school and holiday seasons, what should investors expect to see from Vans as this brand work starts to materialize? Are there any early signs of traction you can point to? And how should we think about the early influence of Sun Choe as she begins shaping the brand's direction going forward?
First of all, Tom, you've made the same mistake I did — it's Sun Choe. When I introduced Sun, she corrected me. I introduced her to whatever thousands of employees at Vans and she said, 'Bracken, I hope you realize it's Sun Choe,' and I said, 'Oh no, I appreciate that, my name is actually Bracken Darrell, not Darrell Bracken.' We still laugh about it. Look, I think the New Balance example is fascinating — one of the most successful growth stories I've ever heard of. I grew up with New Balance. I'm old enough to remember when New Balance was just a running shoe. They stayed that way for a very long time. I knew the prior CEO quite well, and when the new CEO took over, it seemed like just miraculously it took off. So I studied that one with my team because we found it just a fascinating example. There are a lot of cool things about this industry — there are good examples of brands either getting their mojo back, like New Balance, or creating mojo after quite a long time, like Hoka. It's a cool industry where when you start to get things right, things really can take off. I can't comment directly on back-to-school, but you asked for early signs. We mentioned this in our earnings call. We started really trying to move things at the top of the curve, just like we did at Timberland. At Timberland, when I first got here, we started doing collaborations with some of the best, hot designers — not people you necessarily had heard of, they're really known in the design and fashion community. We did eight of those in a row, month after month. It was our birthday, it was hip-hop's birthday, it was the boot's birthday. We did a little movie that very few people saw, but it's one of the coolest movies on the planet. That was really intended to seed the very top of the industry. And then, thank God for Pharrell and Louis Vuitton — they reached out to us and said they'd really like to do something with us. That created the next wave in Paris. And then Maisie Willoughby, our brilliant CMO, working with Nina Flood, our brilliant president — Nina had this idea: what if we bought out all the billboards and put 'J'aime' instead of 'Jim'? If you don't speak French, 'J'aime' is 'I love you.' 'J'aime Tims' is 'I love Tims.' So we bought out all the billboards in Paris, all at the attempt to try to get our mojo back. And it worked. Timberland started to come up again. We're doing the same thing in Vans, where we started with a subbrand called OTW — Off The Wall. We brought cool collaborations, they all sell out immediately. We've been doing that now for a year and a half. The cool thing is now in Paris this year at fashion week, where a lot of the industry comes together, we had the tier zero, the top-of-the-industry people who want to carry our OTW product — we were up 50% in bookings and meetings there, and we had people that had not carried us in years who came back and want to carry it now. It's a good sign. It's a sliver of our business — it's not going to have any meaningful impact in absolute dollars, volume, or profit on the Vans brand if we sell three times more of those. But the fact that they're interested — trends start at the top, they don't usually start at the bottom, so it's going to flow down, we believe. We'll see.
That's great. Thank you for that color. Now I want to go into the reinvention. Looking back, when you first joined VF, you threw in the kitchen sink quarter and took all your medicine at once — resetting expectations, cutting the dividend. You launched Project Reinvent, which focused on four priorities: delivering $300 million of fixed cost savings, strengthening the balance sheet, creating an Americas regional platform modeled after the successful EMEA and APAC operating models, and driving sustainable growth through the Vans turnaround. Now nearly two years in, you've delivered more than $300 million in cost savings earlier than originally expected, deleveraged the balance sheet by selling Supreme for $1.5 billion and reducing debt by over $2 billion, and are on track to reach 2.5 times leverage by fiscal 2028. You've successfully implemented the Americas regional model and two of your four largest brands have now returned to growth. You've emphasized having a high say-do ratio since day one. Could you speak to your experience leading this turnaround over the past two years and walk us through the key stages, starting with cleaning up and resetting the table, and now what investors should expect as the focus shifts to returning VF back into a growth company? I'm going to call you now Growth Darrell.
Good. I think one of the key things that happens to companies when they get in trouble is they get really good at growing topline for a long time, and as a result they also get good at growing their SG&A for a long time. And then when they stop growing or start to decline, they continue to be good at growing the SG&A. So it gets out of whack. Nobody is as flexible as they want to be in adjusting SG&A to the top line. So taking out $300 million of SG&A was just a must. It was the same thing at Old Spice long ago — my first turnaround to growth. That was like job one. But then you get back to things I already talked about — once you get your cost in line, the most important number in any P&L in my opinion is the gross margin. Everything's captured there. It's like looking at DNA — if your DNA is healthy, it suggests you're going to have strong, long, high-level performance and health and longevity. That's a very good sign, and I think gross margin is the DNA of a company. It shows you how strong your brand is, how strong your products are, how strong your pricing power is. So I am very fixated on gross margins. We worked hard to figure out how to get our gross margins back to where they need to be. We have specific targets — we've been pretty public about those. When we hit those targets, we'll be at 55% gross margin, 45% SG&A, and 10% operating income. That was with no growth from where we were then. I believe we're really well on track to doing that, and that's connected to that 2.5 times leverage we're planning for '28 or below. All of this is on a very logical path to get to the point where the real starting line is, which is it's all about growth. It's always all about growth once you get the fundamentals right. So today we are all about growth.
I love it. And you did lay that out in Project Reinvent — two medium-term fiscal year 2028 targets: reaching 55% gross margins and more than doubling operating margins to 10%. What stood out to us in these targets is that they're entirely based on cost savings and assume zero revenue growth. If our math is right, even under that highly conservative scenario, this business would earn close to two bucks a share from the margin expansion and cost savings alone, which in our view would support a stock price more than double current levels. Obviously, don't comment on that. You've also noted that each additional billion dollars of revenue, or 10% growth, could drive an extra 1.5 to 2% of operating margin improvement. That becomes especially relevant given the 3 to 5% growth outlook for the broader apparel and footwear market over the next few years, alongside VF's own category expansion — whether it's North Face aiming to 2x apparel and equipment and 3x footwear, or just taking market share with stronger product and brand execution. Between a growing market, category expansion, and share gains, it's hard to see a scenario where VF doesn't participate in the growth. My question is twofold: first, is that a fair way to think about the earnings power and upside from your medium-term targets? And two, are those fiscal year 2028 targets still firmly on track? How are you thinking about progress so far? And given that the targets are primarily driven by cost savings, how are you approaching tariffs and potential mitigation strategies, especially considering 85% of the US volume is sourced from Southeast Asia and Central and South America?
Of course. Yes, we're still on track to those goals as we tracked for those goals, as we said here in the earnings call. The tariffs are obviously not something anybody planned for. We certainly didn't contemplate them when we came to those targets, but we continue to feel like we could manage within our current game plan to deliver those targets even with the tariffs. I wouldn't be able to say that with any confidence if the tariffs affected us disproportionately to others in the industry, but based on all that we can see, everybody's kind of affected equally. So this is kind of a big macroeconomic reality that we're all dealing with. People are going to manage it just like we are — as much cost as you can, get price increases on top of that, and in the end it will all adjust. We'll have a short-term impact that'll last a year, 18 months or something, until it's all offset. That's what we believe, and we said that during the earnings call. We're all in to go make sure that happens. In terms of the responsiveness of this business to growth — one of the coolest things about this business is it has so much leverage. It's incredibly painful on the downside when you lose revenue, and incredibly wonderful on the upside when you add revenue. That's why you could add a billion dollars of growth to this business and get a point and a half to two points of operating income expansion. It's a cool business from that regard, but that does make it, plus the fact that we have debt at the level we do, quite a volatile play going down and up. It'll be interesting to see what happens as we start to grow at some point.
