The good times keep rolling for Vans: The cherished action sports brand owned by US-based VF Corporation grew revenues by 8% (9% currency-neutral) during the second quarter of 2017 and continues to be the standout performer in the Outdoor & Action Sports coalition.
For the quarter ended April 1, 2017, revenues in the Outdoor & Action Sports coalition where Vans is the largest brand increased by 4% (up 5% currency neutral) to a total of $1.46 billion.
Overall revenues for the VF Corp were reported at $2.4 billion, a 2% increase on last year’s period and a course correction on last quarter’s 2-percent dip in revenues.
“VF’s second quarter results were solid and consistent with our expectations, driven by strong results from our largest global brands, the company’s international and direct-to-consumer platforms, and our growing workwear businesses,” said Steve Rendle, President and Chief Executive Officer.
A close look at VANS
Since last year, Vans is officially bigger than The North Face and ranges as the VF Corporation’s largest brand. Looking at the winning performance from a global perspective, Vans revenues are up 9% globally, up 7% in the Americas, up 1% in Europe (reversing the negative trend), and up 26% in Asia Pacific (continuing double-digit growth in that region).
Speaking about Vans in more detail, Steve Rendle said in today’s earnings call: “From a channel perspective, D2C increased more than 25% with 45% growth in our digital business.”
Going into detail on the Vans product collection, Rendle said: “While the Old Skool has recently become the number one classic style, the iconic slip on and checkerboard styles and designs are seeing tremendous growth, up more than 65% in the quarter, targeting the core skate community, the new athlete inspired UltraRange Pro was recently launched and at a $90 price point, saw real strength in the market with more than 70% sell-through in skate and board sport accounts.”
Speaking on Europe, Rendle offered: “In Europe, the Vans business is performing better than expected, as demand continues to accelerate. Our D2C performance was exceptional with more than 20% growth driven by more than 40% increase in digital and 20% comp growth.”
Today’s results prove two things: First, Vans remains a top choice for young customers across the globe and second, the brand knows how to keep these customers engaged via multiple channels. This is proven by the uptick in VF Corp’s direct-to-consumer revenue (increased 13% in Q2 2017) as well as the ongoing double-digit growth trend in digital revenue (current growth at a whopping 34%).
Logically, direct-to-consumer and digital platforms will continue to range as top priorities, especially after today’s positive results. “Based on the strength of the first half of 2017 and our expectations for the second half of the year, we are making growth-focused investments in our largest brands and platforms to generate additional value for our shareholders both in the near and long term,” said Rendle.
Expressed in numbers, the VF Corp adjusted its outlook for the entire year as follows: Revenue is now expected to approximate $11.65 billion, up 2 percent on a reported basis (up 3 percent currency neutral). By coalition, revenue for Outdoor & Action Sports is now expected to increase approximately 5 percent (up 6 to 7 percent currency neutral) versus the previous expectation of a mid-single-digit percentage rate increase. Meanwhile, direct-to-consumer business is expected to grow by 10% and digital revenues by 25%.
Expanding on the role of strong brands for continued success, the President and Chief Executive Officer added: “Earlier this year, I said that VF is a value creation company and some wondered what that meant. This quarter’s results begin to provide evidence of our commitment to value creation. We’re in the business of creating catalysts through our strong portfolio of diverse global brands.”
Quotes taken from VF’s official press release with supplemental quotes from earnings call transcript at Seeking Alpha www.SeekingAlpha.com.