Vans Focuses on Execution as Turnaround Drags On

Vans may be seeing signs of an improving business, but its turnaround still has a long way to go. 

The Costa Mesa footwear company reported revenue of $737.5 million, down 22% for the quarter ended July 1 as it looks to produce new silhouettes that get it back on track with consumers.

“I think in the past our focus on Classics was so big that it distorted our opportunities and what we’re doing with things like the UltraRange and MTE, growing it double digits … that’s really where we believe there’s a lot more opportunity to broaden our product [offering],” Vans Global Brand President Kevin Bailey said during a quarterly earnings call Tuesday.  

Bailey, a veteran of Vans and VF, returned as brand president last March to improve the business. 

Since then, the company’s sought to create buzz with new styles.  

The UltraRange and MTE are two such examples. Both have been consistently called out for their better-than-expected performance. UltraRange sales were up 13 percent in the recently ended quarter, while MTE surged 39 percent. 

Vans is also looking to make a splash with a new category called Pinnacle, which was teased during Paris Men’s Fashion Week this year. Pinnacle, as the name suggests, is meant to encompass more premium products and will fully launch in 2024. 

“We still believe execution is the opportunity,” Bailey said. “And what we’re doing with SKU reduction of 20 percent to 30 percent that will be completed in August in our U.S. stores. That changes store layouts and provides the shopping experience for consumers, but still delivers on the business we want to see. Overall, I think the things we said we’re going to focus on are really working.” 

Vans’ Drag on VF

Vans’ revenue drop off in the quarter for VF was expected, but still disappointing. The results caused VF to cut its annual revenue guidance.

The company’s now projecting full-year revenue to be “modestly down” to flat. That’s revised from May guidance of flat to “up slightly.” 

“We’re not looking for a quick fix in this business,” VF Corp. CFO Matt Puckett told analysts of Vans on Tuesday. “We’re setting up the brand for long-term profitable growth and we’re not going to sacrifice that objective. That’s really important. It’s taking longer than we would have liked and certainly the results that we saw this quarter, even if it’s what we expected, it’s not good. It was poor in fact and its disappointing to see, but the team is working aggressively against the right things to turn the brand around.”

VF’s overall revenue for the quarter ended July 1 totaled $2.1 billion, a decrease of 8 percent from a year earlier. The company’s net loss widened to $57.4 million in the quarter from $56 million a year ago. 

Vans was partly to blame for VF’s performance, but a more challenging wholesale business was also cause for the decline. 

Retailers across industries have spent this year ridding their shelves of excess inventory, leading to increased promotions. Promotional activity among athletic brands not typically on sale have dampened the outlook for many this year.  

Puckett also called out overall challenges facing consumers more broadly. 

“The environment itself remains difficult and volatile,” Puckett noted during Tuesday’s call. “We recognize that many consumers are feeling impact to their disposable income and are continuing to deal with inflation, facing higher interest rates and, in the U.S., the upcoming end to the student loan pause.”