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Vans sneaker sales are still blowing everyone away: CEO

Brian Sozzi
Editor-at-Large

You have got to love how Wall Street thinks sometimes, or not.

V.F. Corp. (VFC) — the steward of well-known apparel brands The North Face, Vans and Timberland — saw its stock dinged by 8% on Friday amid a rare quarterly earnings miss. The company’s second fiscal quarter earnings came in at $1.26 a share versus analyst forecasts of $1.31 a share. Traders quickly zeroed in on a sales slowdown at juggernaut skater brand Vans as a cause for concern. Vans — a consistent 20% sales grower for more than two years and now over a $4 billion a year sales brand — notched only a 14% sales increase in the quarter. A year ago, Van’s sales grew about 26%.

Only a 14% sales increase?

Insert images in the minds of traders of excess discounted Vans sneakers at Macy’s this holiday season due to some unforeseen fashion shift.

But V.F. Corp’s CEO Steven Rendle has a message for those folks: relax. Better still, relax — Vans remains a very healthy business, inventory isn’t piling up and style trends among kids continue to be in its favor. It’s just the law of large sales numbers — you can’t grow at a 20%-plus clip every quarter — finally arriving to Vans. It’s something Rendle and his executive team have warned Wall Street about for more than a year.

“The [Vans] brand is moderating because it’s just not possible to drive at those higher rates [for so long],” Rendle tells Yahoo Finance. In 2020, Rendle says the Vans brand will continue to push into higher priced sneakers that offer added comfort and more apparel offerings.

Photo of vans shoes. Jeans maker VF Corp. agreed to buy youth sportswear maker Vans Inc for about 96 million. Photos taken at the Vans store at 400 block of Broadway in Santa Monica, April 25, 2004. (LOS ANGELES TIMES PHOTO BY ^^^) (Photo by Ken Hively/Los Angeles Times via Getty Images)

Lost in the sauce of the Vans sales slowdown, V.F. Corp. did quite well in the quarter. Several items that stood out to Yahoo Finance:

  • The North Face brand sales is up 10%, excluding the negative impact of currency translation.

  • Sales in China rose 20% - despite the country’s economic slowdown — excluding the negative impact of currency translation.

  • Gross profit margins rose 90 basis points from the prior year.

  • The company raised its sales outlooks for its workwear and international businesses.

  • Inventory growth is in line with sales growth — usually viewed as a positive for a retailer.

  • Full-year earnings guidance is maintained.

Good luck finding these types of growth rates — and guidance — elsewhere in retail. Food for thought for the Friday bears on VFC.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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