At an investor meeting last week, Vans’ management and its parent, VF Corp., outlined an aggressive plan to add $1 billion in sales over the next five years. But the big surprise was the introduction of an athletic-inspired line, LXVI, designed to help the brand target the core athletic channel largely for the first time.

Named after 1966, the year the brand was born, LXVI will be launched in two weeks in 350 Foot Locker and 50 Footaction locations, as well as select sporting goods accounts in the U.S., lifestyle retailers overseas, as well as select Vans stores and through its e-commerce site.
 
At the meeting held at the House of Vans in Williamsburg in Brooklyn, Vans’ President Kevin Bailey said the brand’s team began developing the collection around two years ago after noticing a mainstreaming among action sports consumers.

“Youth culture is evolving,” said Bailey. “It's time for action sports not be viewed as a rebellious activity in a small subset of culture anymore. What you see today are kids who grew up playing traditional sports that are adopting various aspects of action sports as part of their everyday lives.”

He adds, “‘I take piano lessons, I play soccer and I snowboard.’ They don't say, ‘I'm an action sports athlete.’ They don't think about it as an alternative subculture item. It's part of their lives now. It's grown up in some ways.”
At the same time, he noted that this emerging, more mainstream action-sports consumer grew up wearing traditional athletic shoes with expectations around lightweight, comfort and performance-characteristics.
“The consumer who wore traditional athletic is now starting to pick up various aspects of action sports,” Bailey told Sports Executive Weekly. “And so the walls around action sports that were sort of more counter culture have come down and that kid has adopted things like skateboarding or riding BMX bikes, because that’s how he feels he connects to these activities.”

As such, LXVI brings in six performance aspects into the footwear model that Bailey promises “have never been seen before” in the action sports space. These include a slightly-raised heel lift that feels more like a traditional running shoe along with no-sew, seamless construction. Vans’ trademark waffle sole pattern was also reinvented to add flexibility to the sole and create a more dynamic fit. Said Bailey, “These shoes are lightweight, they're flexible, and they are incredibly comfortable.”
Spanning five-designs with a starting price point of $70, The line will extend Vans beyond its traditional distribution partners, including selling to mall sports specialty for the first time. Bailey told SEW that the company felt Foot Locker was the ideal spot to reach this athletic/action sports consumer. Said Bailey, “We really focus on our most important partners so for instance in Classics, it’s Journeys; in Core, its Zumiez; and so with LXVI we felt that the right place for this consumer was the sport lifestyle retailers and in this case we felt the best one to chose for us was Foot Locker.”
On the sporting goods side, the primary launch partner will be Sports Chalet, the California-based chain that has long sold Vans product. Said Bailey, ”Over time we’ll look at which places effectively make sense but we felt for the launch of something this specific, we wanted to be very targeted and not broadly stretched.“

But he still sees the sports lifestyle opportunity as “a major growth driver” on a global scale for the brand, including potentially just expanding across the full Foot Locker chain.
“We really believe there’s a massive demand potential here,” said Bailey. “As some of our athletes have gotten to see it, they’ve gotten very, very excited. And I can tell you the employees in the office and the sales guys who have seen the product are very excited.”
The bulk of meeting provided deeper details on its plan to add $1 billion in revenues over the next five years to hit $2.2 billion in revenues by 2016.  The compound annual growth rate (CAGR) over the five-year period is 13 percent.

In May 2011, VF Corp projected that overall revenues in its Outdoor & Action Sports coalition would grow by $3 billion by 2015, led by 13 percent CAGR growth at Vans and as well as 16 percent CAGR growth from North Face. With the acquisition of Timberland and SmartWool, VF now expects its Outdoor & Action Sports group to account for 60 percent of revenues by the end of 2015, up from 42 percent in 2010.
By region, growth for Vans in the Americas, representing about 70 percent of total revenues in 2011, will account for nearly half of the anticipated $1 billion in revenue growth by 2016 with a 10 percent compound annual growth rate. With balanced growth across both wholesale and direct-to-consumer channels, a key focus will be expansion outside Vans’ core West Coast market. Major metropolitan areas such as New York City and Mexico City, where Vans has demonstrated strong success, will be utilized as epicenters to drive brand awareness.

In EMEA (Europe/Middle East/Africa), Vans expects to add $350 million in revenues by 2016 on an 18 percent CAGR rate. This follows 55 percent constant dollar growth in the region in 2011, driven by particularly explosive growth in the U.K. Three years ago, Germany was a larger market for Vans than the U.K. Today, despite double-digit compound annual growth in Germany, U.K. is now three times its size.

Sporting a 22 percent CAGR, Asia Pacific (APAC) is expected to be Vans’ fastest growth region with its largest opportunity concentrated in China. Accounting for 8 percent of the brand’s revenues in 2011, APAC revenues are expected to nearly triple by the end of 2016, adding $170 million in growth.

By channel, Vans’ growth over the next five years is expected to be balanced across both wholesale and direct-to-consumer channels. Expected wholesale revenue growth of $565 million over the period will be driven at a 12 percent CAGR with healthy growth in both footwear and apparel in conjunction with rapid wholesale door expansion in the APAC region. The overall number of doors operated by its wholesale partners is expected to grow from 460 doors to 1,200, reflecting 700 locations projected to open in China alone.

Vans’ direct-to-consumer business, encompassing owned retail stores and e-commerce, should add $435 million in revenues by 2016 and grow at a 12 percent CAGR. More than 200 stores are expected to be added to its existing base of 310 stores. E-commerce is expected be Vans’ highest percentage growth channel, increasing nearly 40 percent annually and adding $100 million to revenues over the next five years – expanding at a 40 percent CAGR.

By product, footwear will contribute nearly 3/4 of the $1 billion and grow at  a 12 percent CAGR. Apparel grows faster at 18 percent, partly being helped by expansion its own stores as well as wholesale partner doors that both carry larger Vans apparel assortments.