Steve Rendle has the power of a portfolio of brands on his side at VF Corp.
And given the consumer landscape — mixed up by inflation, supply chain troubles, pandemic and war — he might well need them all, from Vans and Supreme to The North Face and Timberland, Dickies and beyond.
“It’s not just one brand inside the VF story,” Rendle, chairman, president and chief executive officer, told WWD after the company posted fourth-quarter results that showed off big gains at The North Face and weakness at Vans, which is now in reset mode.
“The North Face has inflected, it’s growing double digits,” the CEO said. “Timberland is inflecting. Dickies is approaching a billion [dollars in sales], having significantly increased.”
Just a few years ago it was Vans shooting out the lights while The North Face ramped up and Timberland stumbled.
Meanwhile, VF’s latest acquisition, Supreme, saw performance that was softer than planned with supply chain disruptions biting the brand particularly hard. The full-price brick-and-mortar business, however, rose by 35 percent, partially reflecting two new stores in Europe, showing the brand’s continued resonance.
Wall Street has a way of demanding — or trying to demand — perfection with across-the-board growth, which is hard to come by.
Nonetheless, investors were supportive after VF’s latest quarterly report, sending shares of the company up 6.1 percent to $47.32 on Friday.
Having a group of brands, each with their own strengths, has given VF a kind of hedge in an uncertain world.
“We can navigate some ups and downs,” Rendle said. “The apparel and footwear business has ebbs and flows. We’ve thoughtfully positioned this portfolio in the outdoor, active and work spaces.”
That puts VF in enough of the growth categories to keep growing.
The group’s revenues increased 27 percent to $11.8 billion last year, representing high single-digit organic growth since before the pandemic.
While investors were spooked by signs of consumer weakness from retail giants Walmart and Target, Rendle stressed that VF played higher up in the market, where shoppers are impacted less by inflation.
And he said the company is operating in new ways that were picked up during the crucible of the pandemic and leave VF better positioned to navigate today’s troubles.
“We’ve learned so much these last two years,” Rendle said, rattling off a list of areas that received new focus. “Marketplace management, choosing your partners carefully, segmenting your offer, putting the right product with the right partner. What’s the value of our own stores, our own web environment.
“We’ve taken the opportunity to pull back on [stock keeping units], to tighten up those skus in each of those environments across the different categories,” he said, noting the changes can be seen particularly at Timberland and Dickies.
And that, he said, is going to help VF keep out of price promotion troubles.
“With inventories as clear as they are for us, we can manage our way through the environment that we’re in today and work to avoid those heavy discounts,” he said. “We don’t operate a promotional model. Our outlets are there to move season-ending inventory. We’ve reshaped this portfolio to have the best brands in those tailwind spaces.”
(The company — which has proven to be a steady buyer of brands, but also ready to sell when the time is right — spun off Lee and Wrangler into Kontoor Brands Inc., just before the pandemic started).
That leaves the focus on Vans, which saw 28 percent growth in the first three quarters of the year only to stall with a flat performance in the fourth quarter.
Rendle said the brand, which logged revenue of $4.2 billion for the year, was hit by COVID-19 lockdowns, lower “brand heat,” and a weaker performance in its Classics business.
Vans has long been a key collaborator with other brands but now finds itself in a competitive space that’s stuffed with collaborations, while its efforts to lean forward with its top tier “vault” styles have fallen short.
“Vault maybe just got a little tired,” Rendle acknowledged.
Now the trick will be to refocus on classic styles and keep the brand moving forward.
Vans had been adopting a page from the Supreme playbook and pushing out weekly drops of product but that flow is being re-examined, Rendle said.
Clearly not every brand can be Supreme — and its supply chain troubles, which hit Vietnam hard and disrupted a key sourcing market for the brand, meant that Supreme was a little less Supreme-like than usual last fall.
Rendle said the luxe skate brand “got off balance.”
“Every week they’ve got a new style, a new assortment,” he said. “Every week they’re putting a new story into that store and that merchandising strategy is set about three, four months ahead of time.”
That requires a lot of supply chain precision, which was hard to come by last year with troubles from factories to ports to trucks.
The CEO said the larger VF machine can help Supreme keep in sync and use air freight more efficiently and think about their vendor base.
While much of Wall Street’s focus now is on the Vans revamp, Rendle told analysts on a conference call that Supreme is a brand to watch.
“We’re able to now impact stores,” he said of Supreme. “We’re going to be able to remodel, relocate some stores this year. We’ve got some new Asia store opportunities coming available as we begin to look at that international expansion, which was part of the acquisition thesis.
“And tourism is coming back,” he said. “And this brand has a lot of consumers that don’t live in those markets where the stores reside and the tourism impact and opening up of markets where consumers now can come back into the stores, engage with the brand, line up for the product, again, gives us another point of, I think, confidence of what this brand is capable of.”
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