VF Interim CEO: Vans Expected to Return to Growth in Second Half of Fiscal 2024
A turnaround at Vans is one of parent company VF Corp.’s main priorities as it exits the fourth quarter of fiscal 2023.
According to Benno Dorer, the former Clorox Co. chief who’s been steering VF as interim CEO since Steve Rendle left abruptly in December, Vans is expected to return to growth during the second half of the company’s new fiscal year.
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On the company’s Q4 earnings call on Tuesday, Dorer told analysts that Vans will begin to see profit gains before revenue growth, aided by cost savings and SKU simplification. “The Vans team is operating with a great sense of urgency, and projects are on track,” Dorer said. “We continue to strengthen our team.”
That team is led by Vans global brand president Kevin Bailey, who is already at work on the footwear brand’s turnaround.
“The brand is not broken,” Bailey confidently told FN in an interview in March. “Everybody trips up once in a while. Skateboarders fall and cut their knees up. It is what it is. Have we hit a bump in the road? Yes. How much of this was our causing? Nearly all of it.”
The list of what Vans needs to fix in order to right the ship, however, is long. Bailey identified several critical mistakes, including the brand becoming too dependent on certain styles (“Our consumer said we want more style and versatility, but we kept pumping out Classics”), not innovating enough (“When I wasn’t involved with Vans, I saw how much we spent on product development dwindle to places where no one spends that little”). Also, the exec said Vans has struggled in the marketplace by allowing itself to become ubiquitous, where in the past it was clearly segmented and had distinct ways of showing up across its different channels of distribution.
The new strategy at Vans comes after multiple quarters of sales and profit declines. In VF’s most recent quarter ended April 1, Vans saw revenues slide 14 percent to $857 million in the fourth quarter, compared with $991.2 million in the same time last year. Vans also dropped 13 percent to $926.9 million in sales in the third quarter.
But on Tuesday’s call, Dorer noted that Vans is focused on two emerging product lines right now: the UltraRange and MTE, growing 51 percent and 34 percent, respectively. The executive also mentioned a “highly successful” start to its retro-inspired Knu Skool sneaker range. “This [Knu] shoe shows the potential to grow into a meaningful growth driver for Vans over time,” Dorer said. “We also demonstrated that we can energize Vans’ fanbase when we have meaningful product news.”
More product innovation is in the works, Dorer added. “We will increase our product development investment in fiscal year ’24, highlight our new Pinnacle premium line at Paris Fashion Week next month and aggressively drive UltraRange, MTE and Knu Skool,” he said. “We also began seeding a new women’s sandal last week called Style 93, which will fully launch this fall.”
“We’re very bullish about this new sandal and the ability to turn it into a meaningful platform,” Dorer added. “This is a change in how we treat new products. Fewer stories, bigger stories backed with more money over a longer period of time in order to make them stickier.”
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