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Here’s What VF, Capri and Revolve Are Doing to Build Cash Reserves

Fashion is girding its loins and getting its financial affairs in orders.

VF, Revolve and Jimmy Choo owner Capri are among the latest fashion giants to review and bolster their cash positions to survive a pandemic that’s provoking unprecedented uncertainty and rendering brick-and-mortar fashion stores virtually irrelevant for the near term.

VF Corp.

On Monday, the maker behind Timberland, The North Face and Vans said it elected to draw down $1 billion from its $2.25 billion senior unsecured revolving credit facility that expires in December 2023. VF said it took the proactive, precautionary measure to preserve its financial liquidity and flexibility. While it solidifies its cash position, the $1 billion draw down also “effectively funds the company’s expected working capital requirements through the first half of fiscal 2021. Following the draw down, VF will have about $1.5 billion of cash on hand and roughly $1 billion remaining under the revolving credit facility.

VF said it also retains access to a commercial paper program that allows it to borrow up to $2.25 billion for short-term, seasonal working capital requirements in addition to general corporate purposes.

The Denver-based firm reported third-quarter earnings results on Jan. 23for the period ended Dec. 31, offering a full-year fiscal 2020 outlook that VF withdrew Monday in light of the ongoing economic uncertainty.

There’s no telling when VF will be able to share a reasonable outlook. “More information will be provided during the company’s fourth quarter Fiscal 2020 conference call in May 2020,” the company said.

Revolve Group

Revolve, beloved for its millennial-first fashion and gaggle of famous followers, drew down $30 million from its line of credit Thursday. That amount compounds the $85 million in net cash and equivalents Revolve had as of Feb. 29. The company already had $65 million in net cash and equivalents on Dec. 31, 2019, with the $20 million increase during January and February primarily driven by operating cash flows.

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“Amidst all the uncertainty, we are staying laser focused on ensuring the safety of our employees while continuing to support our valued customers. Our balance sheet strength, capital efficiency and online business model position us to withstand a period of economic uncertainty and, we believe, come out stronger on the other end,” co-CEO and co-founder Mike Karanikolas said.

“We are confident in our ability to navigate the rapidly changing consumer landscape and as such, Mike and I recently personally invested more than $2.5 million–on a combined basis–to purchase Revolve shares, adding to our majority ownership stake in the business,” Karanikolas’ co-CEO and co-founder Michael Mente added.

Revolve also clawed back the financial guidance it issued on Feb. 25. The fashion seller’s first quarter started strong with net sales increasing more than 20 percent year-over-year for January and February combined, it said, but business slowed noticeably in early March in tandem with the pandemic’s pernicious effects across the U.S.

“Revolve also anticipates that overall consumer demand in the coming months will be impacted by recently enacted COVID-19 requirements for social distancing, which have resulted in the postponement or cancellation of several Revolve brand marketing events including the Revolve Festival,” the company said, adding that it continues to monitor the situation.

Revolve’s e-commerce websites remain fully operational, supported by its fulfillment center in Cerritos, Calif., which is “operating with enhanced workflow and processes to safeguard the health of its warehouse employees.”

Capri Holdings

Capri, which owns Michael Kors, Versace and Jimmy Choo, said Friday it expects to end the fiscal fourth quarter ending March 28 with about $800 million of liquidity, comprised of $500 million in cash and cash equivalents, and about $300 million of availability on its revolving credit facility.

The luxury holdings firm also amended its revolving and term loan credit agreement by extending its Tranche A-1 term loans due December 2020 to December 2023 for $267 million of the outstanding balance of $315 million. The balance of $48 million is the Capri’s only debt maturity prior to December 2023. Its Tranche A-2 term loan–$700 million is the current balance–and the revolving credit facility continues to have maturity dates of December and November 2023, respectively.