Following yesterday’s release of VF Corp’s figures for the three months ending 30 September 2023; Alice Price, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “VF Corp continues to report disappointing sales, with Q2 FY2023/24 revenue down 1.5% to $3.0bn, and its four biggest brands, The North Face, Vans, Timberland, and Dickies, collectively down 2.9% on the year. However, the group did witness an improvement on the previous quarter, after experiencing a decline of 7.8% in Q1, leading H1 overall to fall by 4.1%. Given this less than promising start to its financial year, the group anticipates a continued downward trajectory in the latter half of FY2023/24, and has withdrawn its previous full year revenue outlook, which had anticipated sales to be “modestly down to flat”.
“The group’s total revenue was particularly dragged down by Vans, which saw its sales fall by 21.4%, while Timberland and Dickies also continued to lose relevance, with sales decreasing by 6.8% and 8.0% respectively. VF Corp can attribute these declines to its failure to align with new trends and aesthetics, with Vans in particular remaining out of touch with consumers’ latest trainer preferences, leading it to appear outdated and unfashionable in the eyes of discerning young shoppers. The North Face remains the group’s most successful player, with revenue up 18.7% to $1.1bn, now surpassing Vans as the group’s biggest brand. It has been aided by sustained demand for outdoor sportswear, with its superior reputation for high quality products making it the go-to destination for technical items, while also scoring highly among streetwear shoppers.
“VF Corp continued to struggle in the Americas, where constant currency revenue was down 11%, largely as a result of ongoing inflationary challenges in North America wearing down consumer confidence. EMEA and APAC reported slightly more favourable results, both up 6%, as EMEA faces less intense macroeconomic issues than in the Americas, and Asia and the Middle East is supported by strong consumer appetite thanks to increased urbanisation and its growing middle class population. VF Corp’s direct-to-consumer (DTC) channel saw reported revenue decline by 3.0%, though this was particularly impacted by Vans, recording an uplift of 10% excluding this brand. Wholesale proved marginally more resilient, with a slight decline of 0.6%, dragged down by reduced wholesale demand in the Americas, where it declined by 11%.
“In order to steer its brands back to relevance, the group has announced the launch of Project Reinvent, which aims to drive the turnaround of Vans and improve performance in North America, as well as reduce costs and strengthen its balance sheet. To aid growth in the Americas, the group is set to introduce a new online platform specific to the region, having taken note from its successful implementation in EMEA and APAC, while it also announced that it will be appointing a new brand president to oversee the turnaround of Vans. Though this is a good starting point for reviving the brand, the person to fill this role will have a big task on their hands and will need to take significant action in order to improve perceptions.”
