Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

It's time for V.F. Corp.'s long, sleepy summer to come to an end. 

In a sign Wall Street is growing more impatient with the maker of North Face jackets and Timberland boots, research analysts at DA Davidson on Tuesday downgraded the company to "neutral" from "buy," following a similar downgrade Friday by Buckingham Research. Both shops cited the need for VF to make good on its deal-making promises in order to fuel growth."Absent an acquisition, upside will be difficult to come by," Davidson analysts wrote Tuesday.

Wall Street analysts have reined in their stock-price targets for V.F. Corp. in the past year.
Source: Bloomberg

Indeed, VF shares are down 16 percent in the past year, compared to a 13 percent gain in the S&P 500. That marks a stark turnaround from a 274 percent gain in VF shares over the previous five years. 

Ill Fitting
V.F. Corp.'s shares are down 15% in the past year, compared to a 13% rise in the S&P 500
Source: Bloomberg

The $25 billion brand accumulator behind Vans sneakers and Wrangler jeans has for years been telling investors it is "very active" in searching for targets to end its longest-ever deal drought. Although company executives refer to themselves as "active portfolio managers," it's been five years since VF's last publicly announced deal -- when it bought Timberland for $2 billion, at the time the most expensive acquisition for a U.S. footwear company in nearly a decade.

Spending History
V.F. Corp. has built itself largely through acquisitions, with a focus on sportswear and outdoor gear
Source: Bloomberg
HIS Sportwear valuation combines three purchases of blocks of the company from 2000 to 2003.

Rumors have swirled in recent years about VF snapping up a wide range of brands and retailers, from Hanesbrands and Puma to Lululemon and Lands End. VF has also been slimming down to bulk up: In June it sold off its contemporary fashion labels, including Splendid and 7 For All Mankind, for $120 million. And it has said it was exploring options for its licensed athletic apparel business, which makes MLB and NBA jerseys. 

As Gadfly colleague Brooke Sutherland and I have written, proceeds from those brand sales and the $680 million in cash VF had on its balance sheet as of July give the company a fair amount of buying power before even having to think about taking on debt. And there are plenty of appealing targets out there, including Hanesbrands. The maker of Hanes underwear, Wonderbras, and Champion sports gear trades at 12 times its projected 2016 earnings, or about 40 percent less than the average multiple of its peers. That compares to a forward multiple of 17 at VF.

With things likely to get worse for VF's current stable of businesses, the company needs a deal now more than ever.

Zipped Up
VF Corp.'s annual sales growth is expected to slow to just 1% in 2016
Source: Bloomberg

After three years in which VF's annual sales grew by 6.5 percent, on average, consensus and company projections peg 2016's sales growth at 1 percent from the year before. Early reads from analysts on back-to-school trends show that sales of Vans sneakers and Timberland boots are weakening, as shoppers shift to more retro styles, including Adidas' Superstar sneakers. Department stores and other retailers that sell VF goods are also expected to pull back on orders to deal with their own inventory problems, pressuring sales of North Face jackets and outdoor gear.

With Labor Day weekend over, VF should join the rest of us and head back to work already. The deal-making vacation is over.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Not including VF's $52 million purchase in 2011 of full ownership of a joint venture selling VF brands in India

To contact the author of this story:
Shelly Banjo in New York at

To contact the editor responsible for this story:
Mark Gongloff at