Vans is ramping up with an aggressive sales target, and it is banking on innovative new product to drive sales.
The VF Corp.-owned brand, which posted more than $1.2 billion in sales last year, aims to hit $2.2 billion by 2016, implying a compound annual growth rate of 13 percent, the firm said last Thursday at an investor conference held at the House of Vans in Brooklyn, N.Y.
Footwear, which makes up 80 percent of revenue, or about $960 million, is expected to add $735 million in sales in the five-year projection. The apparel and accessories segment, which did about $240 million last year, is slated to more than double by 2016, adding $265 million in global sales and pushing it above the $500 million mark.
By channel, e-commerce alone is expected be Vans’ highest percentage growth channel, increasing nearly 40 percent annually and adding $100 million to revenues over the next five years.
In an interview with FN after the conference, Vans President Kevin Bailey said, “Our biggest chance in e-commerce is in activating new markets when we go online in Europe, and we’ve just dipped our toe into Asia. Vans has a very rich interactive social media presence, but what we haven’t done as effectively is marry culture and commerce to funnel the consumer more directly into our business. [That’s] the approach we’ll be taking.”
By region, the company expects Asia-Pacific to grow the fastest, at 22 percent year-over-year for the next five years, and contribute $170 million. The plan calls for Europe and the Middle East to grow 18 percent to become a $350 million piece of the pie. The Americas are set to hit $480 million, with 10 percent annual growth.
Bailey said product innovation continues to be a big business driver. Vans’ new line, LXVI —the Roman numerals for 66, representing the year the brand was founded — features several construction advances that result in a lightweight, flexible architecture meant to maximize comfort and fit for the action-sports enthusiast.
Bailey told FN the men’s only product, which targets the 15-to-19-year-old consumer, should pull in both existing consumers of Vans skate product as well as new shoppers who wouldn’t necessarily wear the brand’s classic looks.
“For the guy who’s skating in our product, this is something for when he’s not on his board, that’s more lightweight and flexible. The other part is for the guy who’s more traditionally athletic and is reluctant to put on lifestyle canvas shoes because he’s grown up on traditional athletic styles,” Bailey said.
“[LXVI] is not performance driven, although there are performance sneakers. This lets the consumer stay connected to the action sports that he [likes],” he added.
The collection will be Vans’ first in Foot Locker as well. The mall-based retailer will be the largest launch partner in the U.S. — although select regional sporting goods chains, including California’s Sports Chalet, and Vans’ own retail and e-commerce accounts will also carry the product — and Foot Locker stores in Australia and Europe will also carry the shoes, which will retailfrom $70.
“We know Foot Locker Chairman and CEO Ken Hicks very well, largely through his time at JC Penney’s, but when we thought about where this consumer shops – he’s into the sports lifestyle, he likes to collect athletic shoes – Foot Locker was the biggest opportunity, and they responded very well,” Bailey said.
Meanwhile, Vans’ direct-to-consumer business, consisting of the retail stores and e-commerce, should contribute $435 million in revenues by 2016. To get there, the company plans to bow about 200 more owned stores by 2016. Domestically, doors will be concentrated in the central and eastern parts of the U.S.
“[Vans is a] very dominant West Coast brand, heavily saturated in Southern California. We’ve extended retail … now to Atlanta recently [and] Florida. That leaves us really focusing on the middle of the country,” said Bailey, adding that Canada and Mexico are also opportunities in the Americas.