Altra’s Surge Offsets Vans’ Decline, Boosting VF Corp. Growth
Altra’s 40% revenue surge offsets Vans’ 10% decline, boosting VF Corp.’s growth in Q2 despite market challenges.
VF Corp. reported a 1% revenue increase to $2.7 billion in Q2, driven by growth at The North Face, Timberland, and Altra, despite ongoing struggles at Vans. This growth comes as the company handles a challenging market, with direct-to-consumer (DTC) sales inching up 1% to $915 million, while wholesale sales declined 6% to $1.8 billion.
Altra’s surge offsets Vans’ decline
The Altra footwear brand saw a 40% revenue jump in Q2, putting it on track to counterbalance the 10% drop at Vans. The North Face and Timberland each grew by 4%, reaching $1.2 billion and $526 million, respectively. Altra’s rapid growth is particularly notable, as it continues to expand despite a challenging marketplace, positioning itself as a key driver of VF Corp.’s overall performance.
Without the Dickies brand, which was sold last year, “other brands” at VF Corp. rose 6% to over $414 million. Vans global direct-to-consumer sales grew, but wholesale sales are expected to improve next year, reflecting the brand’s ongoing efforts to balance its sales channels and recover from inventory challenges.
Vans’ slow turnaround frustrates analysts
Needham analyst Tom Nikic called the Vans turnaround “excruciatingly long” after the brand’s second straight quarter of disappointing results. VF Corp. CEO Bracken Darrell noted that retailers are working through Vans inventory, with orders for the next two quarters picking up. Darrell emphasized that new styles and innovations are in the pipeline, with opportunities in apparel and women’s footwear expected to drive future growth.
Financial highlights and future prospects
VF Corp.’s overall net inventories rose 7% year-over-year to support second-half demand, reflecting the company’s strategic preparation for increased consumer activity. The company’s gross margin expanded 290 basis points to 55.4%, excluding Dickies, driven by lower product costs and favorable currency exchanges. Net debt decreased by over $1 billion, a 20% drop from last year, showcasing improved financial health and operational efficiency.
The Altra brand’s rapid growth is expected to fully offset Vans footwear declines this year. Last year, Altra generated $300 million in revenue, showcasing robust growth despite market challenges. As VF Corp. continues to work through the slow recovery of Vans, the strong performance of Altra and other brands provides a critical counterbalance, positioning the company for sustained growth and resilience in a dynamic market environment.
