Apparel and footwear company VF Corporation (NYSE:VFC), or VFC, parent of brands such as Vans, Eagle Creek, JanSport, The North Face, and Timberland, said today it's drawing down the entire $1 billion left untapped until now on its revolving credit facility. The company plans to use the cash to keep operating during the COVID-19 coronavirus shutdown, and pursue growth once a recovery starts.
The shoes, clothing, and accessories company saw its shares drop 17% earlier this year, even before COVID-19 had spread outside China. Outdoor and hiking wear brand The Timberland Company was a particularly weak spot, though some of its sectors were growing before the coronavirus hit.
VFC was guiding for 5% year-over-year revenue growth for fiscal 2020, but withdrew its guidance on March 24. While both its stores and corporate offices are currently slated to remain closed through May 3, the company continues to provide full wages and benefits to all of its regular employees, one of the operational costs its $1 billion credit drawdown should help cover.
To reduce unnecessary costs, the company's executives are taking a compensation cut for the next four months, to last at least through the end of July. CEO Steve Rendle is giving up 50% of his pay, while all other executives are taking a 25% reduction during the period. Members of VFC's board will not receive their cash retainers.
"These new actions position us to continue supporting our people while also taking prudent measures to protect the financial integrity of our company," Rendle said.