Sales of Vans sneakers starting to cool off
Posted October 25, 2019 11:16 a.m. EDT
CNN — Vans footwear is extremely popular with skateboarders and surfers. But sales growth for the brand's slip on shoes and sneakers is starting to cool off -- and that's wiping out the stock of Vans owner VF Corp. in the process.
Shares of VF Corp. tumbled nearly 10% Friday after the company, which also owns the North Face line of jackets and Timberland boots, reported earnings that missed forecasts. VF was one of the worst performing stocks in the S&P 500.
The slowdown in sales growth for Vans appears to be a problem. While Vans revenue was still up 14% from a year ago, that's down from an increase of 26% in the same period last year.
Vans faces tougher competition in the US from the likes of Nike, Adidas, Under Armour and Skechers. But the company may also have a problem in Asia as it looks to toe the line in mainland China in light of pro-democracy protests in Hong Kong.
VF's overall sales are growing rapidly in China, rising 20% from a year ago. But the company, much like the NBA and Nike, was thrust into the controversy regarding Hong Kong.
Vans spiked a proposed design in its Custom Culture competition that showed the flower on Hong Kong's flag, a yellow umbrella that has become synonymous with the protests and cartoon images of protesters wearing gas masks.
The decision to withdraw the design from the competition was met by a chorus of boos from supporters of the Hong Kong's protests and social media calls to #boycottVans.
During a conference call with analysts Friday morning, VF executives were asked about the situation in Hong Kong. Chief financial officer Scott Roe conceded that "the ongoing disruption" may impact results for the rest of the year.
CEO Steven Rendle added that strength in China broadly was "largely offsetting" what is happening in Hong Kong. Rendle also defended the company's stance on Hong Kong.
Rhe Vans brand remains "committed around the purpose of really enabling self-expression," Rendle said. He added that the Custom Culture competition is about supporting individual artists and designers "in a very apolitical way."
But despite Friday's disappointing numbers and concerns about future growth overseas, VF Corp. is still enjoying a strong year. The stock is up more than 20% in 2019.
VF also spun off its stake in Lee and Wrangler jeans company Kontoor Brands earlier this year. That stock has surged more than 30% in the past three months, easily outperforming both VF Corp. and newly public rival Levi Strauss.