Kontoor Brands(KTB) may be on its own now, but it has its parent’s jeans. VF Corp(VFC) completed the spinoff of its jeans business on Wednesday, May 22, after the close. Kontoor, which includes brands such as Wrangler, Lee and Rock & Republic, will be added to the S&P SmallCap 600 today. VF shareholders received one share of Kontoor stock for every seven shares of VFC stock owned.
As usual, each company issued a press release marking the momentous occasion. VF’s was remarkably bare-bones.
VF Corporation, a global leader in branded lifestyle apparel, footwear and accessories, announced today that it has completed the previously announced separation of VF’s Jeanswear organization into an independent, publicly traded company. The new company, named Kontoor Brands, Inc., will include the Wrangler®, Lee® and Rock & Republic® brands, and the VF OutletTM business. The separation was achieved through the distribution to VF’s shareholders of one share of Kontoor Brands common stock for every seven shares of VF stock held at the close of business on the record date of May 10, 2019.
Kontoor Brands common stock will begin regular-way trading today on the New York Stock Exchange under the ticker symbol “KTB.”
No quote from the CEO lauding the prospects. No discussion about “The VF Way” or some such. Just the facts, ma’am. Kontoor’s press release was far more typical.
“This is a historic day for everyone connected with Kontoor as we now accelerate to the next stage of our journey as a public company,” said Scott Baxter, President & CEO of Kontoor Brands. “Since the separation from VF was first announced last August, we have planned for this moment and we are fully prepared to succeed. We are grateful to the VF and Kontoor teams that worked collaboratively to stand-up this terrific organization. We have a historic opportunity ahead of us. We are confident that Kontoor and its brands are positioned for value-creating performance.”
A Global Leader in Lifestyle Apparel
Kontoor is a global lifestyle apparel company, founded with an iconic brand portfolio including two of the world’s most beloved denim brands: Wrangler® and Lee ®. Combined, the Wrangler® andLee®brands have been denim must-haves for loyal consumers for more than 200 years. Today, the brands have significant global scale and strong relationships with winning retailers and e-commerce platforms.
Strategic Priorities
Kontoor is focused on pursuing five strategic priorities: 1) scaling its advantage in the core denim business; 2) accelerating its positions in high-value segments, channels and geographies; 3) building advantaged positions to reach new consumers; 4) driving an unwavering focus on margin expansion and improving capital efficiency; and 5) creating a highly engaged and performance-driven team.
Kontoor is determined to deliver consistent and reliable shareholder returns through solid execution and an efficient long-term Total Shareholder Return (TSR) operating model, underpinned by strong margins and cash flow generation. The long-term TSR model assumes an approximate 5 percent dividend yield, 2 percent to3 percent margin expansion and 1 percent to 2 percent revenue growth, equating to 8 percent to10 percent annualized returns. This TSR algorithm does not incorporate share repurchases, M&A or multiple expansion.
Share Distribution
The separation was achieved through the distribution of 100 percent of the shares of Kontoor Brands to holders of VF common stock. VF shareholders entitled to receive the distribution received a book-entry account statement or a credit to their brokerage account reflecting their ownership of Kontoor Brands common stock.
The distribution of Kontoor Brands’ shares was completed after the market close on May 22, 2019, with VF shareholders receiving one share of Kontoor Brands common stock for every seven shares of VF common stock held at the close of business on the record date of May 10, 2019. Fractional shares of Kontoor Brands common stock were not distributed. Any fractional share of Kontoor Brands common stock otherwise issuable to a VF shareholder will be sold in the open market on such shareholder’s behalf, and such shareholder will receive a cash payment for the fractional share based on its pro rata portion of the net cash proceeds from all sales of fractional shares.
As of the completion of the separation, the Kontoor Brands Board of Directors and Executive Leadership Team comprise the following members:
Board of Directors
- Robert Shearer: Serves as Chairman of the Board and has extensive familiarly with Kontoor’s business and the apparel industry, having served as Senior Vice President and Chief Financial Officer of VF from 2005 to 2015.
- Kathleen Barclay: Has extensive experience in human resource and retail management, including previously serving as Senior Vice President, Human Resources of The Kroger Co. and Vice President, Global Human Resources of General Motors Company.
- Scott Baxter: Serves as President & CEO of Kontoor Brands. Served in various leadership positions with VF, including most recently as Vice President and Group President of Americas West, where he was responsible for overseeing brands such as The North Face® and Vans®, and previously as Group President of VF’s Jeanswear Americas business.
- Richard Carucci: Is a seasoned leader with experience managing a large global multi-brand company with retail consumers and is a member of VF’s Board of Directors, serving since 2009. Carucci also previously served as President of Yum! Brands, Inc.
- Juliana Chugg: Has experience leading major functions and divisions of large, publicly traded companies and is a member of VF’s Board of Directors, serving since 2009. She previously served as EVP, Chief Brands Officer, Mattel, Inc. and Senior Vice President of General Mills, Inc.
- Shelley Stewart, Jr.: Has held previous senior-level supply chain and operations positions with leading industrial companies. This includes serving as Chief Procurement Officer at E. I. du Pont de Nemours & Co. and Tyco International plc. and as a board member for Cleco Corporation.
Executive Leadership Team
- Scott Baxter – President & CEO – As the leader of Kontoor Brands, Baxter oversees the company’s business globally, including its strategies and business objectives, and is responsible for delivering sustainable, long-term value creation and total shareholder return.
- Rustin Welton – Vice President & Chief Financial Officer – In this role, Welton has primary responsibility for financial planning, analysis and management, accounting, tax, treasury, internal audit and information technology.
- Tom Waldron – Vice President & Global Brand President, Wrangler®– Waldron is responsible for the brand’s global business, including marketing, sales and distribution.
- Chris Waldeck – Vice President & Global Brand President, Lee® – Waldeck is responsible for the brand’s global business, including marketing, sales and distribution.
- Laurel Krueger – Vice President, General Counsel and Corporate Secretary – Krueger oversees Kontoor’s legal department, with oversight of corporate governance, intellectual property, securities, compliance and other corporate activities.
- Sara Bland – Vice President, Chief Strategy Officer – Bland is responsible for leading the company’s strategy, innovation, consumer insights and sustainability functions.
- Scott Deitz – Vice President, Investor & Corporate Relations – Deitz leads government relations, investor relations, corporate communications and philanthropic activities for the company.
- Randy Fortenberry – Vice President, Global Supply Chain – Fortenberry’s responsibilities include management of Kontoor’s global manufacturing, sourcing and supply chain activities.
- Scott Shoener – Vice President, Chief Human Resources Officer – In this role, Shoener leads global human resources activities across Kontoor’s organization.
“Our Board of Directors and Executive Leadership Team feature a unique range of management experience, both from within VF and from other leading multi-national companies and global brands. Our team’s depth and breadth of experience and extensive sector knowledge will help to drive the success of our company,” Baxter said. “I look forward to working with this talented group to establish Kontoor as a respected, thriving, independent, publicly traded company.”
That’s more like it. Rousing quotes. Listing of leadership team. Talk of value creating performance. TSR operating model. Welcome to the world, Kontoor! It’s tough out there.
Disclosure: The author holds no position in any stock mentioned