Although VF Corporation’s Q3 figures were far from supreme, they were “largely ahead of expectations,” according to CEO Steve Rendle.
On January 27, the parent company of Vans and The North Face reported that both sales and profits declined during the three-month period ending on December 28. Revenue fell 6 percent to $2.97 billion from $3.16 billion in 2019, while net profits plunged 25 percent to $347.2 million from $465 million. Despite the disappointing drops, this marks an improvement from earlier in 2020, when the first waves of COVID-19 shuttered stores worldwide.
Like other companies, the American apparel maker saw promising growth in China and e-commerce — two trends accelerated by the pandemic. With almost all of its Asia Pacific outlets open during the quarter, the region saw a 6-percent growth, driven largely by the Mainland market’s 22 percent increase in revenue. Meanwhile, VF’s direct-to-consumer online sales jumped 53 percent.
However, this digital boost was not enough to offset the slump in brick-and-mortar sales, particularly as 60 percent of its stores remain shuttered in Europe, the Middle East, and Africa. In North America, roughly 15 percent of outposts were closed by the end of the quarter, with the majority being Vans stores.
As such, some brands fared better than others. While sales for active brands like Vans and Timberland tumbled 6 percent and 14 percent, respectively, Dickies, known for its workwear, increased by 9 percent. The North Face, which recently released a 70s-inspired collection with luxury giant Gucci, saw flat revenue.
Looking forward, VF is eyeing one brand in particular for growth. Supreme, acquired for $2 billion in November, is expected to add $125 million in the fourth quarter. With the streetwear darling under its belt, the company expects fiscal 2021 revenue to range from $9.1 billion to $9.2 billion, representing a 12 percent to 13 percent drop on an adjusted basis. But given that streetwear has proven to be a high-margin business, VF can certainly expect more than a boost in street cred in the year ahead.