Winning the competition with trend-driven culture, VANS has become the growth engine of VF Group

Focused primarily on subculture concepts, Vans has now evolved into a young trend culture brand and remains the revenue growth engine of its parent company, VF Corporation.  

According to the latest financial report released by VF Corporation, in the third quarter ended September 30, the group’s sales rose 5.4% year-on-year to $3.51 billion, surpassing Wall Street analysts’ expectation of $3.39 billion, while net profit plummeted 22.5% year-on-year to $386 million. The core brand Vans continued to shine, with sales surging 28% year-on-year, achieving double-digit growth across all global regions.  

In the third quarter, VF Corporation’s gross margin increased to 50.1%, international sales recorded a 13% increase, retail channel sales jumped 18%, and e-commerce sales saw a significant 38% rise driven by effective digital transformation measures.  

Over the first nine months of this year, VF Corporation’s sales rose 2% year-on-year to $8.45 billion, while net profit dropped 13% year-on-year to $705 million.

Image shows the main performance data of each department of VF Corporation in the third quarter

Image shows the performance of VF Corporation’s five core brands in the third quarter

By department:

• The outdoor sports division, which includes brands such as Vans, Timberland, Wrangler, and The North Face, saw sales rise 8% year-on-year to $2.503 billion;  
• The denim division’s sales fell 1% to $697 million due to the drag from the Lee brand; the uniforms division’s sales rose 9% year-on-year to $138 million;  
• The sportswear division’s sales remained flat year-on-year at $140 million;  
• Sales in other divisions declined 6% to $29.37 million.  

By region:  

• VF Corporation’s home market in the United States remained sluggish, with no growth in sales;  
• In the EMEA region, which includes Eastern Europe, the Middle East, and Africa, the group’s sales increased by 5%;  
• The group’s sales in the Asia region rose 5% year-on-year, with China recording a 9% increase;  
• The rest of the world saw the most significant growth, with sales up 13%.  

Steve Rendle, CEO of VF Corporation, said during a post-earnings conference call that the company is in the early stages of its transformation and restructuring strategy, and the recovery in this quarter’s performance was mainlydue to its brand diversification strategy, the expansion of direct retail channel business, and the stable performance of Vans.

China has now become Vans’ second-largest market after the United States. Analysts have pointed out that Vans has won the competition against the dual pressures of Nike and Converse by leveraging trend-driven culture. Senior footwear industry analyst Sam Poser previously noted when discussing Vans’ strong overall momentum that Vans has now become a young trend culture brand infused with emotion. Different consumers love different styles, and Vans’ positioning is clearly aimed at making customers feel younger, cooler, and more individual.

Notably, Karl Heinz Salzburger, VF Corporation’s head of global operations, emphasized in an interview with U.S. media: “We don’t want to be a fashion brand. Fashion tastes change rapidly, coming fast and going just as quickly.”  

However, Steve Rendle admitted that after nearly six years of rapid growth, Vans will face new challenges, with the brand’s full-year sales growth expected to slow to 15%. Regarding outdoor brands such as The North Face and Timberland, Steve Rendle stated that there is still a long way to go before their performance returns to previous levels.

Image shows the Supreme x TNF series jacket priced at nearly ten thousand yuan

It is reported that The North Face has chosen to actively collaborate with streetwear brands such as Sacai and Mastermind to increase its exposure among younger consumers. Its partnership with Supreme has lasted for ten years, and the Supreme x TNF 10th Anniversary Collection was officially launched this month. Timberland is focusing on expanding its product lines and will introduce products suitable for various weather conditions.  

Steve Rendle stated that the aforementioned transformation measures will have a certain impact on the future performance of both brands, and the group's performance is expected to see The North Face and Timberland return to growth as early as the fall of 2019.

For the upcoming holiday season and the fourth quarter, Steve Rendle pointed out that consumer demand for outerwear products remains strong, and the main challenge for the brands is to ensure sufficient inventory of best-selling items.

In addition to strategically adjusting its brands, acquisitions and mergers are also an important step in VF Corporation’s restructuring strategy.According to Morgan Stanley analyst Matthew R. Boss, VF Corporation currently holds $1.5 billion in cash. Steve Rendle also admitted during the earnings call after the report’s release that as the group’s transformation and restructuring strategy progresses, they are still seeking suitable acquisition opportunities.

In August this year, VF Corporation announced the acquisition of apparel company Williamson-Dickie for $820 million. The company’s brands include Dickies.

Steve Rendle emphasized that when selecting brands for acquisition, VF Corporation prioritizes whether the brand can strengthen and solidify the relationship between the group and consumers, rather than simply adding another brand. The second priority is the digital development potential of the acquisition target, and whether the brand can become an engine of growth for VF Corporation.

Some analysts have pointed out that VF Corporation has acquired and strictly managed established brands with certain historical heritage and market foundations—such as The North Face, Vans, and Timberland—through mergers and acquisitions. These brands are then empowered with more scalable apparel production technologies and lower manufacturing costs to generate greater profits.

Meanwhile, VF Corporation Chief Financial Officer Scott Roe stated that the group will increase investment in creative marketing, advertising, and data analytics in the future to better meet consumers’ demand for personalization. Vans has previously launched a personalized customization service on its official brand website.