With many of its stores in California and Europe shuttered due to the coronavirus, Vans revenues declined 8% in the third quarter. But there are two notable bright spots for the VF Corp.-owned label: its digital and China businesses are booming.
“Although the headline number for Vans reflects the challenging brick-and-mortar operating environment in the U.S. and Europe, we remain confident in the underlying trajectory of the business, said chairman, president and CEO Steve Rendle in a conference call. “Continued momentum in China and across the digital platform, normalized inventory levels [in] all regions and strong consumer growth and engagement [will] support the brand’s return to growth beginning in the fourth quarter.”
Digital sales skyrocketed 48% during the period as Vans continued to build its loyalty program. The “Vans Family” member base now counts 14 million consumers, the company said.
Online gains are also driving Vans’ heat in China, where it grew 21 percent during the third quarter. VF’s overall China sales increased 15 percent, and this month the company said it was doubling down on the mainland and moving its center of brand operations from Hong Kong to Shanghai, where the company employs 900 office and retail associates.
The Asia Pacific region as a whole offers “greater stability” than any other market right now, Rendle noted in the call.
For Vans specifically, Alibaba’s platforms in China are generating a lot of buzz around the brand. During Singles Day, the brand attracted 700,000 new consumers on the Tmall platform. Also in November, “Vans Customs” debuted on Tmall.
“The demand signals we see going into [our next fiscal] year give us great confidence. Vans and their connection to consumers is one of their greatest strengths,” Rendle said in the call. “We’re well positioned to gain momentum. Our optimism continues to be strong.”
Scott Roe, executive VP and CFO, noted that the while the company expects brick-and-mortar to rebound — not just at Vans, but overall — it will likely “lag a little bit in its recovery.”
VF Corp. raised its guidance for the full year as it looks to bounce back from the impact of COVID-19 disruptions on its business and capitalize on its acquisition of streetwear brand Supreme.
For the quarter ended Dec. 26, the apparel and footwear company posted adjusted earnings per share of 93 cents, compared with analysts’ forecasts of 90 cents per share. Revenues decreased 6% to $3 billion, meeting Wall Street’s expectations.
Still, the market was tepid on the results, and VF shares declined 7 percent as stocks ended the day down 633 points.