Why VF Corp Stock Is Surging Tuesday

V.F. Corp VFC shares are trading higher Tuesday after an activist investor announced it built a stake in the company and is pushing for changes.

What To Know: According to a Wall Street Journal report, Engaged Capital has built a "big stake" in VF Corp and plans to push for changes at the company including a series of cost cutting initiatives. Following the news, shares jumped. Engaged later highlighted a series of changes it would like to see in an investment presentation.

The activist investor wants VF Corp to consider a strategic review to improve operations including cost eliminations that could be worth more than $300 million annually, a review of noncore assets and real estate and a potential refresh of the company's board.

People familiar with the matter reportedly said Engaged Capital is now believed to be among the top 10 shareholders of VF Corp. Despite Tuesday's gains, shares of the company are down nearly 35% year-to-date. 

The activist investor said it believes the company's share price could rise to the mid-$40s within three years by focusing on gross margin improvement and cost reductions. Engaged believes VF Corp can use cost savings to focus on product innovation in its Vans business. VF Corp owns a slew of popular retail brands including Vans, The North Face and Timberland.

See Also: Nasdaq Down Over 1%; US Retail Sales Top Expectations

VFC Price Action: VF Corp shares were up 11.7% at $18.09 at the time of publication, according to Benzinga Pro.

Photo: Pexels from Pixabay.