The VF Corp., the group that owns active and fashion wear giants Vans and Supreme, has announced its new strategy for the next five years.
The company is shifting its focus to initiate Supreme’s ‘period of growth’. Supreme’s trademark and goodwill will be charged up to USD 450 million against VF Corp.’s profits in 2023.
Supreme has historically been VF’s biggest and most profitable business, however it is predicted to grow more slowly this year. Despite this, at the company’s investor day in Denver, VF claimed that Supreme’s slowing was only “a temporary setback”. It also presented a five-year plan for VF to continue to gain market share with its scale and savvy. An additional expansion plan for Supreme, which promised to not compromise the brand’s appeal to young customers, was announced at the meeting.
The meeting also covered VF’s active portfolio management. With its acquisition of Supreme in 2020 for USD 2.1 billion and by keeping up with the market, VF Corp. has demonstrated its willingness to stay relevant (an area on which Vans is actively trying to improve).
“While we have one of our key brands that is not achieving its potential, every other one of our brands, the 11 other brands, are achieving at or greater than their commitments. We are deeply committed to growth.” stated Steve Rendle, VF Corp.’s Chairman, President and CEO.
Overall, the company’s strategy has been updated more than changed – it focuses on deepening its relationship with customers and using its business platforms to drive growth.
Timberland’s Global Brand President, Susie Mulder, pointed out that the brand is “100 percent direct-to-consumer” and available in 40 countries through 14 flagships and three owned websites.
She continued, “unlike many businesses, Supreme is global, each season we produce one product assortment globally, it’s identical in every market and it creates a shared experience across the worldwide community.”
The worldwide community will see more Supreme, as VF begins to invest more on building its brand. The fashion brand plans to double its footprint over the next five years with its “grow wide” strategy. VF’s other brands will also be striving for increased growth in the coming years, but the road ahead is tough.
A revised outlook for this year has been provided by VF, which said its second-quarter results are lower than expected. In constant currencies, total revenue is expected to increase 5 to 6 percent, instead of at least 7 percent. As compared to the mid-single digits projected earlier, Vans’ revenues are now expected to decline to mid-single digits.
Adjusted earnings per share are expected to be USD 2.60 to USD 2.70 this year, down from USD 3.18 last year and USD 3.05 to USD 3.15 previously.
Despite this, Van’s brand image has been “refreshed, refocused and accelerated,” according to Kevin Bailey, Global Brand President at Vans. “We are rooted in youth and skateboarding. We are refreshing our strategy now to grow and expand beyond those perceptions.” he added.
Despite growing from USD 2 billion in sales in 2017 to USD 4 billion in 2019, Bailey said the brand was too dependent on its classic designs and had failed to meet the changing needs of young people.