Dive Brief:
- VF Corporation on Tuesday reported ongoing wholesale challenges and “a longer than anticipated turnaround for Vans” on Tuesday during its Q1 earnings call and reported a revenue decrease of 8% to $2.1 billion for the three months ended June 1.
- Vans revenue was down 22%, impacted by a 40% wholesale decline in the Americas. Dickies and Timberland also took hits for the quarter, falling 19% and 6% respectively. Wholesale for VF was down 12%, including an 18% wholesale decline in the Americas, and DTC was up 6% excluding Vans, but down 3% overall.
- The North Face was a bright spot, with12% growth for its 10th consecutive quarter, bolstered in part by the popularity of gorpcore and the brand’s continuing collaboration with retro-hippie label Online Ceramics.
Dive Insight:
VF’s new president and CEO Bracken Darrell, who has been with the company only 12 days, said his role on the analyst call would be “a little more limited than what I'm used to,” given his limited time at the firm.
However, he added, “Our brands are as strong as I expected. Our team is loaded with talent. Our business is simply not performing at the level equal to those, but it's because of things in our control. I feel a strong sense of urgency with respect to the challenge we face and will collectively work with the team to get VF back on track through disciplined and thoughtful actions.”
VF, which also owns Supreme but did not report revenue for the brand, said overall company revenue for the year ahead is expected to be modestly down or flat, due mostly to the wholesale struggles and challenges with the Vans line.
In the Americas, growth was down 15% for the quarter, which Matthew Puckett, VF’s CFO and EVP attributed on the call to wholesale channel pressures, particularly at Vans and Dickies, plus “the rightsizing of inventories across the channel and the implications of our poor customer service from last fall.”
Growth in the APAC region was up 18%, Puckett said, with DTC aided by brick-and-mortar traffic growth. China in particular saw a robust increase of 31%, which is partly due to lockdowns during the period last year, and partly due to the popularity of North Face, which was up more than 50%.
However, growth in China and the success of North Face have not been enough to help boost VF’s bottom line, which has been dragged down by Vans.
“The brand continues to lose relevancy, falling behind trends by not adapting to the new aesthetics of the trainers market, leaving its offering feeling stale and outdated,” Louise Deglise-Favre, apparel analyst at GlobalData, said in emailed comments, adding that the Q2 sales drop had followed “an already disappointing FY2022/23, where sales decreased 11.5%.”
Deglise-Favre said that VF’s revenue for the rest of the year would be held back by Vans’ struggles.
“Despite initiatives to regain its relevance, such as the launch of its ‘Off the Wall’ campaign featuring streetwear ambassadors such as rapper Little Simz in April 2023, these have yet to translate into improved sales,” she said. “Vans needs to urgently modernize its image and reinvent itself outside of the skateboarding niche if it wants to recover the widespread appeal it once had.
