Business

Vans' parent company is trying to turn itself around. His bottom line has only gotten worse.

By Bill Peters

VF Corp. also announced that Paul Vogel would become its new CFO

Shares of VF Corp. fell in post-session Wednesday after North Face gear and sneaker maker Vans reported a surprise adjusted quarterly loss, as retailers remained reluctant to stock up on new shoes and clothing amid weaker consumer demand.

The company (VFC) also named Paul Vogel as its new chief financial officer on Wednesday. Vogel, a veteran of streaming platform Spotify Technology (SPOT), will start on July 8.

VF Corp. announced in February that Matt Puckett would step down as CFO as the company attempted to turn around its fortunes and cut costs.

For its fourth fiscal quarter, VF Corp. reported a net loss of $418.3 million, or $1.08 per share. That's bigger than a loss of $214.9 million, or 55 cents per share, in the same quarter last year.

After adjusting for costs related to its turnaround plans and impairment charges, VF lost 32 cents per share. Sales fell 13% year-over-year to $2.37 billion.

Analysts polled by FactSet expected adjusted earnings of 2 cents per share, on revenue of $2.42 billion.

Sales at Vans fell 26% year over year. On the North Face, they fell by 5%.

Shares fell 10.9% after hours. The stock is down 35% over the past 12 months.

As inflation forces more shoppers to prioritize the things they need to pay for, like groceries, gas and rent, demand for sneakers and clothing has been lower, forcing retailers to lower prices to sell the least demanded items. This context, combined with stiffer competition, has forced major sneaker manufacturers like VF Corp. and Nike Inc. (NKE) to recalibrate.

In February, VF Corp. executives said new Vans sneakers, like the Knu Skool line, have become popular with young girls. And it said it plans to offer more newer products and change its marketing in the coming months.

Nonetheless, the company said that after Vans' global popularity took off between 2015 and 2020, it stopped marketing its products to the young people who made up its core customer base.

“More and more celebrities started wearing them,” chief executive Bracken Darrell said at the time. “Moms were buying them for their kids, and we actually turned our sights to the youth audience that was the lifeblood of Vans. The brand needed to evolve, but rather than continuing to respect and serve the youth audience who had built the brand, we only fueled the trend that made it grow rapidly.

“We've largely taken away the marketing aimed at grassroots youth and instead focused on everyone,” he continued. “We expanded our range at lower prices in the discount stores and offered more and more color waves of the same old things to pour more fuel into a fire built on a trend. Trend fuel died out 18 months ago. The trend continued.

-Bill Peters

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(END) Dow Jones Newswires

05/22/24 1826ET

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