65.3 F
Laguna Hills
Monday, Jul 15, 2024

Vans Looks Local to Revamp Sales

VF Corp. upping investment in new products

A new, slimmed-down product offering strategy tested out at a Vans store at the Irvine Spectrum Center mall is expected to serve as a blueprint for the Costa Mesa-based footwear and apparel company, as it aims to turn around a poor run of financial results of late.

Vans, one of Orange County’s largest apparel firms with an estimated 650 local workers as of last year, in early February reported third-quarter revenue of $926.9 million, a 13% decrease from a year ago.

The decline continues a rough patch for Vans; for the nine-month period ending in December its sales of $2.8 billion were off about 12%.

As of a few years ago, officials with Vans and its Denver-based parent company VF Corp. (NYSE: VFC) expressed confidence the shoemaker could hit $5 billion in global sales annually by 2023. Now, officials first want to bring back sales to the $4 billion mark, with an emphasis on improving domestic sales.

“On Vans, we clearly have been challenged for some time now. This is predominantly a challenge in the Americas, and it is mostly executional in nature,” VF Interim Chief Executive Benno Dorer told analysts on Feb. 7­.

The Americas division of Vans, which is primarily North America, currently accounts for 90% of the global Vans revenue, officials said. Last quarter, that division’s sales were down 13%.

Execution Plans

When addressing areas to improve at VF, Dorer told analysts that its two near-term key priorities were “turning around our Vans performance through improved consumer execution; and second, returning to supply chain excellence across the company.”

VF bought the Costa Mesa business for $396 million in 2004. The parent company, which also counts The North Face, Timberland and Dickies brands, counted a market cap of about $10.7 billion as of last week. Shares are off more than 50% the past year.

Vans “continues to be a fundamentally strong brand,” Dorer said. “The number of consumers buying Vans during the last 12 months was up, as was brand advocacy. But many people buy the brand less often.

“So, what we do need to do is to fuel the brand more consistently and give people more reasons to buy more Vans,” he said. “That is on us, and that’s what we will do.”

Dorer took over at VF from CEO Steve Rendle, who retired from the top role last December after almost 25 years with VF.

Change has taken place at the upper ranks of Vans as well as its parent company of late.

Kevin Bailey took over the top role at Vans last April, and in December a new chief product and merchandising officer, Marissa Pardini, started at the company.

Spectrum Success
Vans said it plans to offer new styles and build an improved pipeline, while eliminating

“unnecessary SKUs,” or stock keeping units, to clear the way.

An example of a new Vans strategy has been seen of late at its Spectrum Center store, which is about 12 miles down the San Diego (405) Freeway from its headquarters.

“A small test at our Irvine, California store led to a footwear revenue improvement of +12 percentage points with 30% fewer SKUs,” Dorer said.

Until now, Vans “product development investment as a percentage of revenue lags well behind the company average,” he told analysts.” “We will change that starting with fiscal year 2024. This will help us aggressively pursue new styles and make our innovation pipeline more consistently strong.

“We will also eliminate unnecessary SKU complexity to simplify and importantly, amplify the shopping experience.”

Surfing Switch

Dorer also told analysts that “we must do better with Vans in its home markets,” but that doesn’t mean a continuation of all its local sponsorships.

Vans this month said it would not renew its sponsorship of Huntington Beach’s US Open of Surfing for 2023. The company has been affiliated with the event since 2013.

“The decision to not renew our title sponsorship of the US Open of Surf comes as we look to prioritize several of our owned events, activations and contests, including the House of Vans brand platform, as well as the Vans Showdown and Block Party in skate and the Vans Pipe Masters and the Duct Tape Festival in surf, and more,” company officials said in a statement.

Want more from the best local business newspaper in the country?

Sign-up for our FREE Daily eNews update to get the latest Orange County news delivered right to your inbox!


Featured Articles


Related Articles