VF Corp. is doubling down on its plan to rightsize business at Vans after another rough quarter for the skate brand. But the company doesn’t expect to see any positive changes this year.
Vans revenue was down 23 percent in the second quarter of fiscal 2024, in part due to slow sell-through rates that pressured the wholesale channel across all regions. Direct-to-consumer sales were also challenged due to slow traffic. Broadly, VF Corp. revenues in the second quarter were down 2 percent to $3 billion. Loss per share was $1.16 versus the prior year’s $0.31. Adjusted earnings per share were $0.63.
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In tandem with these results, VF CEO and president Bracken Darrell, who was appointed to the company in June, laid out a strategic business transformation plan, part of which involves revitalizing the struggling Vans brand with a new president as Vans global brand president Kevin Bailey steps down from his role.
“Trends today for Vans aren’t getting any better, and in fact, could even be viewed as getting worse,” Darrell said in a call with investors on Monday. “We will not see a turnaround this year. The good news is that the brand continues to be loved by so many consumers. There are many good steps that we’ve made, but we now have to make some changes and move faster.”
CFO Matthew Puckett said Vans silhouette like the Knu Skool, Lowland, UltraRange and MTE all saw strong growth in Q2, but were unable to offset declines in classic products.
Other than the search for a new brand president, Darrell did not formally outline specific turnaround measures for Vans, though he noted that fixing the brand’s presence in its biggest region, North America, is a top priority. In looking for a new Vans leader, Darrell said he wants to find someone with strong leadership skills who can deliver innovations and build brand heat in the marketplace.
“There’s a lot of work to do on Vans, but I’m really excited about it,” Darrell said.
In terms of immediate changes, Darrel said VF is currently closing some Vans stores and re-evaluating its distribution strategy as a whole. Across all brands, Darrell said he views the wholesale channel as “super important” and noted that a lot of brands appear to be turning back to this channel after swinging too far in favor of direct-to-consumer channels.
VF pulled its guidance for fiscal year 2024, which Puckett said was partly related to the Vans turnaround taking longer than anticipated.
In an interview in March, Bailey identified several critical mistakes within Vans, including not innovating enough, becoming dependent on classics and becoming less strategic about where the brand shows up in the marketplace. However, he affirmed at the time that “the brand is not broken.” In August, VF said that rightsizing Vans was a top priority for the company.
“The timing of the Vans turnaround is taking longer than we thought. And specifically, we are now no longer expecting any discernible improvement in half two results relative to half one,” Puckett said. “Through today’s announced actions, we are addressing with urgency the work needed to stabilize the business. Bracken and I plan to share our expectations with the market on the timing of the turnaround when we see a tangible impact from the initiatives underway.”
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