
Why Vans Sales Are Still off the Wall for V.F. Corp.
In a sneaker market where daily headlines chronicle the raging war between giants Nike (NKE) - Get Report and Under Armour (UA) - Get Report , one much smaller brand has managed to gain a loyal following -- and billions of dollars in sales -- of its own.
And surprisingly, what the company sells has nothing to do with the basketball, running or training sneakers that shoppers globally continue to gravitate toward. The brand is Vans, which was acquired by North Face and Timberland owner V.F. Corp. (VFC) - Get Report for $396 million in 2004. Founded 50 years ago by brothers Paul and Jim Van Doren, the skater/action sports lifestyle brand has cashed in on teens and young adults placing high value on authentic brands with an edge. Also helping to make Vans, whose tagline is "Off the Wall," an all-star performer for V.F. Corp. is a legion of kids posting photos of themselves in their Vans while skating or attending a concert. The Vans Instagram account alone boasts 5.1 million followers.
Sponsorship of music concerts such as Warped Tour has been a driver of Van's bottom line, too. "You think about the young kid going through that beautifully messy point in their lives of figuring out who they are, the music and art they do through Instagram, etc. we provide platforms for them to connect with us -- such as our House of Vans platform or the Warped Tour," explained Kevin Bailey, Vans and VF Action Sports Coalition President to TheStreet when asked about the brand's secret sauce.
Global sales for Vans rose by 7% last year to $2.2 billion, or 14%, excluding the impact of the strong U.S. dollar. Considering sluggish economic growth around the world, Vans notched a pretty impressive year -- sales in the Americas rose by a midteens percentage, in Europe by midsingle digits and by more than 20% in Asia. Vans represented about 17% of V.F. Corp's total business in 2015.
Momentum at Vans cooled a touch in the first quarter, especially in Europe amid challenging economic conditions. By its own admission, it ordered too many classic-style Vans shoes and has had to discount them to clear the inventory. First-quarter global sales for Vans fell 1%, but gained 2% backing out the dollar's strength. V.F. Corp. doesn't disclose quarterly absolute dollar values for Vans. Sales in the Americas rose by high-single digits, led by a 20% increase in sales at the brand's retail stores and and a 30% increase online. Sales at wholesale accounts such as department stores dropped slightly. Sales fell by midteens in Europe amid a high-teens drop at wholesale partners, while sales at retail stores increased by midteens. In Asia, sales rose by low double digits mostly on the back of strength at its retail stores.
Vans has been accepted as a fashion brand.
Said Bailey on the strength in Asia, where skateboarding isn't exactly huge, "After studying the Asian consumer deeply, we found that music and art play a real active role in their lives -- and as the youth consumer there has become more and more aware of Western culture and more affluent, they are seeking things they can get their hands on."
"Sneaker sales are hot, and not everybody where's Nike basketball sneakers -- it's different strokes, for different folks," explained veteran footwear industry analyst Sam Poser of Sterne Agee on Vans overall momentum.
Vans success over the past year or so, despite a tepid consumer spending backdrop globally, could be boiled down into several factors.
First, the company continues to nail limited-time sneaker collaborations and printed graphic collections due to its innate sense of who Vans customers are and what they want from the brand. For instance, in early June Vans launched a collection of footwear, apparel and accessories in partnership with Nintendo, celebrating the early days of videogames. From canvas sneakers to trucker hats, the unique collection features graphic prints using 8-bit inspired artwork and characters from Nintendo's classic games Super Mario Brothers, Duck Hunt, Donkey Kong and the Legend of Zelda, as well as an assortment inspired by Nintendo's first console, the Nintendo Entertainment System.
Nintendo finds its way onto all things Vans.
Says Bailey on the early consumer response to Nintendo swag, "Sell through [sales to customers] has been really, really strong on the Nintendo product." Sneaker industry expert Clyde Edwards points out, "Vans has been spot on with their collaborations -- the Summer Bummer, Disney, and Nintendo collaborations have all been hits," adding, "Their inline design and story telling has seen growth as well -- Pool Vibes, Late Night and other all over prints have landed them major market share."
Meanwhile, Vans has managed to venture into the world of fashion and not be laughed out of a trendy high-end luxury retailer such as Nordstrom (JWN) - Get Report (where it now has a small collection of shoes) or among fashion influencers. Vans' new Mono SK8-HI Reissue Zip high-top, for example, is just as cool -- if not cooler -- than the canvas Converse sneakers being worn around town by New York City hipsters and 20-somethings to the office. Along with the foray into fashion, Vans has been able to charge more for a pair of sneakers -- the Mono SK8 goes for $80 compared to a typical $50 Vans slip-on.
"As we have gone through this great acceleration of fast-fashion, Vans' authentic history -- albeit for skateboarding -- for youth culture is a relevant thing for them to cling onto," said Bailey, adding, "We definitely see the fashion side of the business continuing to grow at an accelerated pace."
And lastly, many of Vans' sneakers are simply downright affordable. That message of affordability -- where a Vans sneaker could be bought for as low as $45 depending on style -- plays great to a mom on a back-to-school budget. Noted Edwards, "Kids keep the mall's registers ringing, and Generation Z want easy and affordable things -- and their parents have no problem spending $40-60 on a pair of shoes, let alone a few pair a year."
As for what's on Bailey's feet these days? It's more of the fashionable Vans for the long-time guitar player who concedes to having about 11 guitars in his office. "My favorite Vans shoe by far is the SK8-HI, I love that shoe and I don't know why -- but I have too many Vans shoes and definitely will pull a juicy one of the box that I haven't worn in a while."
Rock out, Kev.











