Engaged Capital gains support of VF heir to shake up North Face owner

(This Feb. 11 story has been corrected throughout to show Kelly Barbey does not speak for his family)

By Svea Herbst-Bayliss

(Reuters) - A member of the founding family behind VF Corp is backing activist investor Engaged Capital's push for board seats and faster change at the struggling owner of the North Face, Vans and Timberland brands.

Kelly Barbey, the great-grandson of John Barbey, who founded VF in 1899, told Reuters he wants two directors on VF's 12-member board replaced and that he is backing Engaged Capital in its efforts to achieve this.

Barbey said he wants Clarence Otis and Juliana Chugg, directors since 2004 and 2009, respectively, replaced for failing to respond to VF's challenges over the last few years.

VF shares have lost 35% of their value in the last 12 months, deeply underperforming a 16% drop in the S&P 500 Apparel, Accessories & Luxury Goods index, as the company struggles to strengthen the appeal of its brands to consumers as they cut discretionary spending.

Engaged Capital, run by hedge fund veteran Glenn Welling, has already successfully pressed VF to cut costs and explore strategic alternatives, including selling its non core brands. The company recently announced some changes.

It is unclear whether Barbey's support of Engaged Capital, which has a 1.3% stake in VF, is anything but symbolic. Much of the Barbey family's 15% stake in VF lies with two entities that have so far aligned with the company's board in how they vote their shares.

One is a PNC trust holding a 10% stake in VF where Otis and Chugg serve as co-trustees and can block any effort to use that stake to remove them. The second entity, holding a 5% stake, is controlled by his cousin Todd Barbey, who has so far supported the board.

Kelly Barbey declined to disclose how many VF shares he holds and what entity they sit in.

"Engaged Capital must urgently attain the Board member changes requested, with the implementation of the priorities of its assessment. Public shareholders and the Barbey trust beneficiaries depend upon them," Barbey said. He declined to name any trust beneficiaries that support his cause.

A VF representative declined to comment. Other members of the Barbey family could not be reached.

The hedge fund has identified people with retail sector and turnaround expertise to serve as director candidates, sources familiar with the matter said. The deadline to nominate directors is on Tuesday.

VF missed analysts' expectations in its third-quarter results last week and said it had begun an in-depth strategic review of its Global Packs business, including brands such as Kipling and JanSport. The company reported an adjusted profit of 57 cents per share, missing LSEG estimates of 77 cents, amid falling revenue and operating margins.

The company is in the throws of an attempted turnaround embarked on by CEO Bracken Darrell, who took the position in July 2023 and previously led computer peripherals maker Logitech International. He has laid off staff and cut costs.

Legion Partners Asset Management, another activist hedge fund, has also amassed a stake in VF.

(Reporting by Svea Herbst-Bayliss in Rhode Island; Editing by Diane Craft and Marguerita Choy)