Vans sales soared 45% in the first quarter, although the minority continued to outperform

After changing its outdoor brand Nautica, the five-year strategic reorganization plan of Vans parent company, Vewe Group, is gradually on the right track.

According to Weifu Group's financial report data released in the first quarter of this year yesterday evening, in the three months ended March 31, the Group's sales rose 21.8% year-on-year to 3.05 billion euros, which exceeded analysts' expectations of 2.9 billion euros. Gross profit margin increased to 50.5%, while net profit rose by 20.9% to US$253 million.

During the period, sales of the Group's wholesale channels recorded an increase of 17%, and sales of retail channels soared by 34%.

By department:

Sales of outdoor sports including brands such as Vans, Timberland, Wrangler and The North Face increased 19% year-on-year to US$2.014 billion;

Sales of jeans, including Lees, fell 1% to $639 million;

Sales of Imagewear, including the Red Kap, Bulwark and Majestic brands, rose by 175% year-on-year to US$370 million;

Sales in other sectors fell 8% year-on-year to $20.285 million.

By brand:

The core brand Vans sales rose by 45% year-on-year, and the actual exchange rate increased by 39%;

The North Face sales increased by 11% year-on-year and by 7% in real terms;

Timberland sales rose 5%, falling 1% in real terms;

Wrangler's sales rose by 3%, an increase of 1% in real terms;

Lee's sales fell 6% year-on-year, and the decline was 11% in real terms.

By region:

Sales in the US increased by 18%, excluding 8% from the newly acquired brand Williamson-Dickie’s revenue contribution;

Sales in the EMEA region, including Europe, the Middle East, and Africa, rose by 33% in the fourth quarter, excluding the newly acquired Williamson-Dickie’s revenue contribution of 12%.

Sales in the Asia Pacific region rose by 17%. Sales in the Chinese market soared by 19%, excluding the contribution of Williamson-Dickie, the newly acquired brand, which increased by 2% and 1% respectively.

Excluding US sales in the Americas region, sales rose by 22%, excluding the contribution of Williamson-Dickie, the newly acquired brand, which was 1%.

CEO Steve Rendle said in a conference call after the financial report that the increase in the company's earnings during the period was mainly attributable to the revenue contribution of the group’s newly acquired brand, Williamson-Dickie, and revealed that the Nautica brand was sold to Authentic Brands Group in April. Completed on the 30th. Since Nautica could not provide sufficient growth momentum in terms of strategy and finance, the Weaver Group decided to divest the brand earlier this year.

On April 28, the Group completed the sale of the sports license business including the Majestic® brand, and completed the sale of assets of the JanSport® brand collegiate business in the fourth quarter of 2017. At this point, Weifu Group officially withdrew from the license business area.

At the same time, the Group is increasing its investment in enhancing brand influence, such as investment in creative marketing, advertising and data analysis, etc., to better meet consumer demand for personalization, Vans had earlier in its brand's official website. Officially launched a personalized customization service.

Steve Rendle emphasized that the continued explosive growth of Vans has, to some extent, had a positive impact on the performance of brands such as The North Face and Timberland.

Some analysts pointed out that Vans won the competition under the influence of both Nike and Converse by trend culture. Now it is a young trend cultural brand that has infused emotions. Different consumers like different styles. The positioning of Vans is obviously enabling Consumers are younger, cooler and more personality brands. However, Steve Rendle had earlier admitted that Vans will face new challenges after nearly six years of rapid growth.

For outdoor sports brands such as The North Face and Timberland, Steve Rendle said there is still a long way to go before the performance returns to its original level.

After ushering in the new creative director Tim Hamilton in October of last year, The North Face is actively promoting fashion trends and exposure among young consumers by actively launching collaboration series with street fashion brands such as Sacai and Mastermind. The partnership has been maintained for 10 years. Timberland focuses on expanding its product line and will launch products that can adapt to a variety of weather conditions.

Steve Rendle said that the above transformation measures will have an impact on the future performance of the two brands. The group's performance expects The North Face and Timberland to resume growth in the fall of 2019 as soon as possible.

In order to comply with the global trend of environmental protection in the fashion industry, Weifu Group also officially reached an agreement with the International Anti-fur Alliance at the end of last year to sign a fur-free retailer project and announced that it will no longer use fur. According to Letitia Webster, vice president of global sustainable operations, the Group will continue to work with animal protection organizations to develop products that can replace animal raw materials.

Currently, the Weifu Group is also conducting a project called "Acting Vertical", shortening product delivery time, about two-thirds of the time for design and delivery, and the other third for product manufacturing. The company is improving the conversion speed of raw materials and finished products, as well as optimizing the distribution center location.

In addition, Weifu Group also began to gradually shift its business focus to direct retail channels and digitalization, and will focus on expanding the Asian market, especially in China, which has become Vans' second largest market in addition to the United States.

Steve Rendle is expected to record growth in the 2019 fiscal year for the cowboy sector, which has been relatively unimpressive for the group. Scott Roe, chief financial officer, said that the group's transformation strategy has achieved initial results, but the recovery of the jeans sector will take some time.

Ed Yruma, managing director of KeyBanc Capital Markets, believes that Wal-Mart and Amazon giants continue to launch self-employed apparel brands as one of the reasons for the continued weakness in the performance of the Jeans division of the Viagra Group, including Erinn Elisabeth, analyst at Piper Jaffray. Murphy is concerned about the profitability of the jeans department.

For fiscal year 2019, Steve Rendle said that it will continue its consumer-centric transformation plan and expects the company's total annual revenue to be between approximately $13.45 billion and $13.55 billion.

Depressed by the downturn in the jeans business such as Lee, although the Weifu Group's performance in the quarter exceeded expectations, its stock price closed down 2.77% yesterday to 76.27 US dollars, the current market value of about 30.7 billion US dollars.