American Consumer Is ‘Pretty Healthy,’ CEO of Vans Parent Says
American Consumer Is ‘Pretty Healthy,’ CEO of Vans Parent Says
(Bloomberg) -- The back-to-school shopping season is here, and the company behind the North Face and Vans brands is waxing optimistic.
A much slimmed-down VF Corp., following the May spinoff of its jeans unit Kontoor Brands, on Wednesday raised its forecast for full-year profit and said sales would be at the top end of its previous outlook.
The American consumer is “pretty healthy,” Chief Executive Officer Steven Rendle said in a phone interview. “While it’s early in the year, we have a lot of confidence” in the higher fiscal-year targets, he said.
VF has been investing in a new breathable-waterproof outerwear technology for North Face called Futurelight, which it plans to debut in the fall. The company is betting it will add to the brand’s 9% growth it posted last quarter. Its Vans unit saw revenue gains of 20% last quarter amid strength in its Heritage collection and Old Skool footwear as well as from its apparel lines, Rendle said.
Efforts in recent years to switch away from department stores and mid-tier distribution channels and into specialty retailers and VF’s own direct-to-consumer business is paying off, he said.
VF will “double down on this vision of being more retail-centric,” he said, with plans to bring more relevant products, more often, not just to its own stores and online sites, but also to wholesale partners.
Spinning off Kontoor, whose jeans brands include Wrangler and Lee, was intended to help VF focus on faster-growing trends such as athleisure and outdoor apparel. VF’s footprint in North America was essentially cut in half by the move, Chief Financial Officer Scott Roe said in the interview.
So far, investors have approved, with shares gaining 32% this year. The stock has outperformed the S&P Consumer Discretionary Index, which has climbed 25%.
“This is a simplified, focused business,” Roe said.
To contact the reporter on this story: Janet Freund in New York at jfreund11@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Lisa Wolfson, Tatiana Darie
©2019 Bloomberg L.P.