The announcement of Dickies leaving its hometown in Fort Worth for a new headquarters in California has left some in shock, with many asking why.
The answer lies in understanding the market dynamics of the fashion industry.
As previously reported by The Dallas Express, the decision was part of a broader consolidation strategy by VF Corporation, which acquired Dickies for $820 million in 2017.
“VF has decided that it will be relocating the Dickies brand’s headquarters from Fort Worth, Texas, to an existing brand campus the company maintains in Costa Mesa, California. This move allows VF to further consolidate its U.S. real estate portfolio as part of its stated business turnaround strategy,” Ashley McCormack, director of external communications for VF Corp., said in a statement, per Fort Worth Star-Telegram.
Dickies has been one of VF Corp.’s top four performing brands, and its announcement to move the headquarters to California suggests an interest in revitalizing the product, per FWST.
Some of VF Corp.’s other brands include Vans, The North Face, Jansport, and Timberland.
VF Corp. has struggled over the past several years, and in October, some Wall Street institutions, such as Wells Fargo, cut the company’s stock rating, per FWST.
Amanda O’Neill, the director and lead analyst for apparel and cosmetics at S&P Global Ratings, said the relocation is likely for cost-cutting purposes. She does not believe it will be a significant improvement for VF Corp.
“They need to really invest in their brands to be able to cater to changes and innovations that they may have missed that got them in this position,” O’Neill said, per FWST.
Baylor University associate professor Lorynn Divita said that VF is plagued by the same issues affecting all publicly traded fashion corporations, yet it is showing growth every quarter to investors.
“You have to show not even limited growth, you have to show acceptable growth every quarter to keep your shareholders satisfied,” Divita said, per FWST.