What does the skate brand Vans have in common with Bulwark, a flame resistant clothing brand? Not much, except that both are owned by VF Corp.

Today, the apparel brand and retailer announced a strategic review of its workwear brands and workwear solutions business, including Bulwark. After previously spinning off its denim-based Lee and Wrangler brands from the company portfolio, this review could end in VF splitting again. And for good reason.

In fiscal year 2019, VF’s international business grew organically 5% and the direct-to-consumer (DTC) business was up 11%. Vans, The North Face, Timberland and VF’s other “consumer-focused” brands have room to grow both of these businesses. Fundamentally, the “for sale” portions of the work business—whose revenues accounted for approximately 7% of VF’s 2019 revenue—operate on a significantly different business model that distracts from the ambitions and possibilities of the core business.

VF makes the case well in their investor presentation: The work business has less opportunity for growth, a lower gross margin and a minuscule DTC and international business. More importantly, the brand’s customers are businesses, not consumers, and the sales model is significantly different. The apparel in the work business can be everything from uniforms to safety apparel, such as high-visibility jackets or flame resistant base layers. Businesses may purchase the apparel directly to outfit their employees or provide the employees credits to do so. A key secret to success in the business is customer service to the corporation—tracking which employees have what products, how much money they have spent on uniforms, and potentially picking-up, cleaning, and dropping the garments back-off at work sites. That business model is much more in-line with Cintas or Aramark’s then it is a retailer’s. Investing in a work services program creates resources that are non-transferrable to VF’s core business and is a waste of VF’s time. Read More