Some investors may be getting antsy over Vans’ lengthy turnaround.
As parent VF Corp. continued to offer a rosy summation of what CEO and President Bracken Darrell said marked a “little better” performance for Vans in the quarter ended Sept. 27, some analysts have been left wanting more.
“Product newness across footwear is drawing in new consumers, particularly women, but also youth and kids,” Darrell suggested to during VF’s Tuesday earnings update.
The company has repeatedly touted product newness as the main unlock to getting Vans back to growth, in addition to Global Brand President Sun Choe’s mark on the business emerging for back-to-school.
Still, Vans had an 11 percent decline in revenue compared to the prior-year period to generate $606.9 million in the September quarter. After a turnaround strategy under Darrell, called “Reinvent,” was introduced in 2023, investors are wondering when the needle on growth starts moving.
That was a question pointedly asked by an analyst to executives Tuesday to which Darrell offered there was nothing new to share.
“Our expectation is, it’s pretty much the same story we’ve been giving, which is we’re going to increase the amount of newness,” he said. “You started to see that coming.”
He offered that women’s styles grew more than 20 percent and the Super Lowpro “did really well” in the recently ended quarter.
“So our expectation is, as we keep rolling in newer and newer product into the stores, we’re going to see more and more performance,” Darrell said. “And, yes, we’re obviously upgrading our marketing.”
Investments have been made into improving Instagram and TikTok posts. Darrell also confirmed the move away from skate-only marketing, long seen as the core that kept the Vans brand intact over the year given its heritage.
“You’ll see surfers. You’ll see a lot more product…. So, we’re just going to keep pouring it on,” Darrell said.
On Marketing
The diversified marketing approach is not new.
In fact, the push more recently has been to elevate product and make the brand aspirational by placing it on the runways and, most recently, entering ComplexCon.
The annual streetwear event for sneakerheads and collectors held last week in Las Vegas offered a chance to tout more elevated product, including the pearlized Old Skool, which Darrell said drew “one of the longest” lines at the consumer festival.
Strategies appear to be very much in flux.
While Darrell touted more surfers in social media marketing, Vans exited its sponsorship of the U.S. Open of Surfing in 2023. At the time, the company said it would instead focus on its own in-house events rather than continue being a title sponsor.
Vans brought back its Warped Tour for the long-running music festival’s 30th anniversary, despite Darrell originally saying he didn’t think it likely to bring the event back when he first joined VF. The event had long been a flagship for Vans since 1995 and ended in 2019.
What Drove the Decline?
With a number of levers still being pulled, the most recent revenue decline in the Vans business was attributed to the off-price channel. In fact, the company chalked up 20 percent of the quarterly decline to that retail segment.
VF CFO Paul Vogel said the company expects that trend to continue into the current quarter at a similar cadence, but that would be the last of the impact as the picture begins to brighten in the fiscal fourth quarter.
Darrell added that online traffic for back-to-school was up, which he said offered a glimpse at what is going right.
On the promotional front, discounting is expected to moderate and lessen as management approaches prices in what Darrell called a “surgical” way.
Additional Vans store closures are expected, but the greatest reductions are now behind the company, according to Darrell. The brand currently counts around 580 doors worldwide, with 480 of those in the U.S.
Overall, VF companywide revenue was $2.8 billion in the quarter, which was down 1 percent in constant currency. Net income grew from $52.2 million a year ago to $189.8 million in the September quarter.
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