Vans’ quarterly numbers were off, again. At this point, the market’s used to it and parent VF Corp. is clinging to the stance that all is good and on track.
“We don’t like the numbers on Vans any more than you,” VF President and CEO Bracken Darrell told analysts during a Wednesday earnings update.
Still, timing on a turn remains elusive and puzzling now is a reliance on luxury to help raise the brand profile as the Costa Mesa skate shoe brand also looks to hold tight to its action sports roots. The question now is can it work?
As with anything related to brand, only time will tell whether the market is seeing the roots of a new foundation take hold for Vans.
The “premiumization” of the brand was the theme as executives wheeled out the numbers for analysts.
“This team’s freedom to innovate will be less and less constrained by the practicalities of the old production creation process as each quarter passes, so you’ll see more ahead,” Darrell said of an overall expansion of Vans’ product mix. “But there are already positive signals in the Pinnacle side of the business.”
Pinnacle is the company’s more fashion-forward styles.
When the company held appointments during Paris Fashion Week in June, it saw bookings up 50 percent as the runways featured more skate shoe inspiration. Those bookings included new retailers and some returning to the brand.
“These are the style centers and the tastemakers,” Darrell said. “Trends start in the luxury market, as we saw in Fashion Week for Timberland with Louis Vuitton last June. I’m not suggesting that Vans will be growing 9 percent a year from now, but I am excited to see the tide turning on skate style shoes and luxury where trends start.”
Timberland, which is seeing growth, saw its brand reinvigorated with a Louis Vuitton collaboration last year that helped boost sales. Vans may be hoping for a similar outcome when its collaboration with Valentino hits the market in the fall.
“Premium today is a small part of Vans, but this shows how sensitive this business is to new products,” Darrell said. “We don’t have enough new products in the premium or the mainline yet, but [Vans Global Brand President] Sun [Choe] and the team she is assembling our new product machines. New products are coming.”
Retail ‘Rationalization’
Even with the hype surrounding elevated product, Vans’ revenue for the fiscal first quarter ended June 28 was $498 million. That’s down 15 percent excluding the impact of exchange rates. It was the only one of the brands VF reports financial specifics for to see a quarterly decline.
About 40 percent of that drop was blamed on the reductions in distribution.
VF shuttered 140 company-owned Vans stores over the past two years, which is about 20 percent of the total fleet.
It’s also reduced the number of discounters the brand is sold in, while raising the number of full-price accounts it holds.
“As we exit the year, our channels should be at our future state,” Darrell said, while adding, “While it’s tough medicine affecting revenue, it’s improved our profitability.”
Even when taking out the impact of what the company calls channel “rationalization,” Vans was still down in the high single digits.
“We’ll get Vans back to flat and then to healthy growth as fast as we can,” Darrell said. “There are some out there who think this will never happen. I sort of love having that point of view out there. I get it. And it’s our job to show you how wrong that second point of view is.”
The Vans Brand
When it comes to what more Vans must do to clean up the business, Darrell pointed to marketing being off its game.
“On marketing, our approach simply hasn’t driven enough traffic,” he said. “While the whole industry is affected by slower traffic right now, we don’t accept that and we’re changing our marketing approach.”
Darrell declined to get into specifics.
It’s clear there’s a renewed interest in the Vans Warped Tour, which recently wrapped the second of three dates for the music festival. The recently ended Long Beach iteration of the Warped Tour, which was last held in 2018, drew almost 170,000 people to see some 80 bands perform.
The festival is expected to return for a second year, although it’s unclear if more dates will be added and how much of a lift it will have for the brand.
“It’s a super, super powerful event for us. It’s a fan fest,” Darrell said. “It’s a flat out, all out, huge fan fest.”
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