Vans might need a stronger prescription after stumbling its way through a tough quarter in which sales tanked.
Still, Bracken Darrell who is CEO of Vans parent VF Corp. said the figures don’t tell the “whole story” of the company’s U-turn on a path to recovery.
The Costa Mesa-based company’s sales in the fiscal fourth quarter ended March 30, dropped 20 percent in constant currency to $492.6 million. For the full fiscal year, sales were off 15 percent to $2.3 billion.
Vans and sister company Dickies were the only brands in the VF portfolio with sales declines as The North Face and Timberland notched gains.
“This quarter’s [Vans] setback doesn’t tell the whole story,” Darrell offered to analysts during the company’s quarterly earnings call Wednesday.
The CEO said the decline is part of the company’s turnaround process, driven by four main tactics that largely close the valve on several distribution points. That includes closing retail accounts in China, shuttering company-owned Vans stores, phasing out several discount doors and reducing sales. The impacts of those moves will be felt in the coming quarters but will largely dissipate by the end of the current fiscal year.
“To answer the question… how do I feel about Vans and its outlook? Good,” Darrell said. “As confident as ever.”
Investors didn’t seem enthused by the bold words around Vans’ progress.
VF shares dropped nearly 16 percent Wednesday, when the quarterly results were released. They’re trading down 2 percent to just under $12 in midday trading Thursday and a recent market cap of $4.7 billion.
Timberland Template
Much of Darrell’s confidence rests with Vans Global Brand President Sun Choe, who was appointed about a year ago. Another part of Darrell’s confidence in getting a turnaround done is what VF has done in breathing new life into Timberland.
It’s a much smaller brand than Vans that closed the fiscal year with sales up 4 percent to $1.6 billion.
Timberland sales in the recently ended quarter jumped 13 percent, driven by wholesale and direct-to-consumer growth. The company also continued to ramp full-price selling, helping push margins higher.
Like Vans, Timberland in the past stumbled in search of an improved business, that included setbacks. However, getting the brand on several celebrities, in addition to collaborations with companies such as Louis Vuitton, helped drive sales.
“We’ve done it in Timberland,” Darrell said. “We know how to do this. We just got to execute.”
Newness
Getting the right “it” shoes to revive Vans sales has been the focus even before Choe stepped into the top spot.
In fact, getting the right mix began with former Global Brand President Doug Palladini, the long-time Vans marketer who ran the business between 2016 to 2022. Palladini is credited with growing revenue from $2 billion to over $4 billion.
A reliance on the company’s Classics styles, which rose to popularity in the mainstream, ended up harming the brand when fashion trends shifted.
Kevin Bailey stepped back in after Palladini to be Vans global president between 2022 and 2023, also chatting up product and new designs.
Bailey’s return back into the top seat (he was president between 2009 and 2016) was short lived after he was recruited to oversee VF’s overall turnaround.
Now, under Choe, the conversation has turned to the Super Low Pro, a recently launched style aimed at women and youth that will see increased distribution. More product rollouts are planned.
“She’s a product person through and through,” Darrell said of Choe. “And product is the most important thing we can do on the Vans brand.”
The company’s store and online traffic are not meeting expectations, which Darrell blamed on a lack of “fundamental brand heat.” He said the company is testing and learning “to see what we need to do to trigger that,” although declined to get into details.
“The key for us is to take the medicine that we’ve talked about and then get the traffic up,” Darrell said. “And so that’s a function of two things. You got to have things people want to come by and they got to know about it.”
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