VF Corporation reported that the company’s Vans brand saw fiscal third quarter overall revenue down 8 percent year-over-year on a constant-currency (cc) basis to $607.6 million, or a 9 percent year-over-year decline on a reported basis. The company said this trend exhibits a further sequential improvement for the brand compared to the fiscal second quarter, which was down 11 percent year-over-year.
The company also reported that the trend in Q3 was a clear improvement against the nine-month year-to-date (YTD) period through December that saw reported sales down 14 percent on a reported basis and down 13 percent cc versus the prior-year comparative YTD period.
The fiscal Q3 period represents the three-month period ended December 31, 2024.
On a regional basis, the Americas outperformed the global trend for the brand in the third quarter, declining 5 percent in reported terms and down 4 percent cc versus the prior-year Q3 period. The EMEA region was down 8 percent in reported terms or down 9 percent cc compared to the year-ago period.
APAC fell 31 percent in both reported and constant-currency terms for the third quarter.
“If you look at our Vans business in APAC, I think at its peak, it was $600 million,” offered Bracken Darrell, CEO of VF Corp., the parent of the Vans brand. “So think about how much potential there is there.”
Darrell continued to say that VF Corp. is not chasing anything short-term in Vans right now. “I just block everything that I hear that sounds like we’re trying to do something really short-term because the potential is so big here; I don’t know what our run rate would be right now in that Q3, but albeit it’s $250 [million] or something,” Darrell said.
“So we’re down that much in APAC and China, in particular, and part of that is resetting our store footprint there,” Darrell suggested. “A lot of it is partner stores, so they’re not our stores. So there’s a lot of work going on there and a lot of work on the team, etc. So I would say just like the rest of the world. But you’re right, Vans in APAC is a little bit of a special case that I’m excited about the whole business.”
Darrell said he thought APAC was an interesting case where they discussed how long it would take to get back to $600 million. “I do think China, and once you get things right, the growth comes fast. So we don’t have things right there yet, obviously, but we will,” he finished on the APAC discussion.
“I feel very good about the steps we’re taking, but sustained turnarounds take time,” said Darrell. “Underneath the numbers, I want to call out a few things, primarily in our key focus areas of product and marketing.
“New products continue to outperform big established franchises. Knu Skool remained the No.1 growth driver and the No. 2 franchise globally and is in line with the strategy to win with youth and women.
“We won’t rely on just one style to build our business in the future, and we have momentum in our newest styles, both Hylane and Upland,” Darrell emphasized. “In many ways, the Vans brand continues to have enormous potential. It was recently named the number three most authentic brand from the Authenticity 500 Index, as the ranking of the world’s most authentic brands. The message here is that we have a lot of growth potential as we keep improving our execution.”
Darrell also said brand elevation is fertile ground for Vans as he called out the “exceptionally strong” sell-through for the brand’s OTW holiday collaborations including the Satoshi Nakamoto and the HommeGirls collaborations targeted at women. Darrell said the new Americas regional platform is also starting to deliver.
For the holiday period, the U.S. non-value footwear channel reportedly generated strong positive sell-through year-over-year for the first time since February of 2022, led by the brand’s largest accounts.
“We are making progress and are more confident than ever of the brand’s growth potential. We have a lot of pistons to fire on advance, product, marketing, distribution, brand elevation, and more, and we’re putting each one in place,” he shared.
When asked about the importance of the value channel to Vans’ business, Darrell said the brand will always have a value channel component.
“I don’t want you to step off this call thinking that value channel is 10 percent,” he remarked. “It’s only for selling off product that didn’t sell in our non-value channels,” suggesting that it’s probably one-third of the overall Vans business. “It will stay about there,” he continued. “And the health of the inventory looks really good now that we brought that down. It was probably up to over half of the business at one point.”
Expanding on inventory, company CFO Paul Vogel said, “The actions taken last year to clean up our inventory are continuing to deliver benefits, especially on profitability, as we right-size the brand’s cost structure.”
During the Q&A session, Darrell said there are a lot of moving parts underneath Vans in the marketplace. He went on to share that the company has closed 14 percent of its owned stores and about 9 percent of wholesale stores in the U.S.
“We’ve also added stores. So that’s a net number,” Darrell continued. “There’s a lot of moving parts underneath that to really reset our business from a commercial perspective to be in a great place as new products flow through there.”
When asked about the product pipeline under the new Vans team, Darrell said he was going to keep the expectations low for Vans as long as possible because “I want to give the product team and new Vans President Sun Choe plenty of room to operate,” said Darrell.
“She [Choe] is a real operator,” said the CEO. “She is deep in the middle of stuff. You’ll probably see a few things [at Investor Day ]; she’s touched back-to-school, even more in holiday, and as you go into next year, even more and more, but it’s going to take time.”
Images courtesy Vans EU/VF Corporation
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