At the end of October, VF Corporation, the parent company of trendy sports brand Vans and outdoor sports brand The North Face, announced its second quarter financial report for the fiscal year 2025.
According to the financial report, Weifu Group's second quarter revenue reached 2.8 billion US dollars (approximately 19.94 billion yuan), a year-on-year decrease of 6%, which is an improvement from the 10% year-on-year decrease in the first quarter; The gross profit margin was 52.2%, an increase of 120 basis points compared to the same period last year.
Bracken Darrell, President and CEO of Weifu, expressed satisfaction with the group's performance in the second quarter: "This quarter's performance met expectations, reflecting a continuous and broad-based improvement in year-on-year trends. At the same time, we have made further progress on four reshaping priorities, and we are expected to achieve the previously announced $300 million savings target by the end of fiscal year 2025
This quarter, the four major brands of Weifu still have weak growth. The North Face had the largest proportion of sales, reaching 1.09 billion US dollars, a decrease of 3% compared to the same period last year; Vans brand sales decreased by 11% year-on-year to $667.4 million; Timberland's revenue decreased by 3% year-on-year to $475.3 million, while Dickies brand revenue decreased by 11% year-on-year to $152.4 million.
Looking at the three major markets by region, the revenue of the Americas and EMEA (Europe, Middle East, and Africa) markets decreased by 10% and 3% respectively, while only the Asia Pacific market, where the Chinese market is located, recorded growth: the Asia Pacific market had a revenue of 393 million US dollars in the second quarter, a year-on-year increase of 6%. This is also one of the few highlights of Weifu in this financial report.
Undoubtedly, the main task of Weifu in the fiscal year 2025 is transition. After taking office in June 2023, Bracken Darell, the current CEO of Weifu, launched a plan called "Reinvent" to prioritize four things. They are improving performance in North America, achieving Vans brand transformation, reducing costs, and strengthening the balance sheet. Valuing the North American market is a clich é. North America is the headquarters of Weifu, and Weifu hopes to have stable sales support in the local market while expanding into other international markets.
Vans' transformation is now a major challenge for Weifu. The sports trend market has cooled significantly both domestically and internationally in the past two years. Both the overseas trend oriented platform StockX and the well-known domestic trend trading platform Dewu have undergone multiple rounds of layoffs since 2020. A research report by well-known market research firm NPD shows that compared to the significant increase in sales in previous years, the global trend shoe market has slowed down significantly, which is undoubtedly a fatal blow to Vans, which started with trend skateboarding shoes.
At the end of May this year, Weifu Group announced that Sun Choe, former Chief Product Officer of lululemon, would become Vans Global Brand President. This position had been vacant for over six months, indicating that finding a suitable candidate is not easy.
The two tasks of reducing costs and strengthening the balance sheet are both aimed at "reducing costs and increasing efficiency". As of the end of 2023, Weifu Group holds a net debt of up to 5.2 billion US dollars. As a result, Weifu has laid off over a thousand employees within two years, and even sold its trendy brand Supreme to eyewear manufacturer EssilorLuxottica Group for a discount of $1.5 billion in July this year.
From the relatively small decline and single quarter revenue of over 1 billion US dollars, North is still the key brand among the four major brands with the ability to lead Weifu back to growth. And this quarter, Weifu's regional growth "only seedling" in the Asia Pacific market will also be the focus.
As early as 2021, Weifu relocated its brand operation center in the Asia Pacific region from Hong Kong to Shanghai. In 2023, Weifu announced that it will increase investment by approximately 30 million RMB to upgrade the automation capabilities of its China operations center, and increase its expected cargo storage capacity by 15%. It is worth mentioning that this center is an important support from the north in the rear: it is responsible for about 80% of the order sorting, distribution, and cargo processing tasks in the north.
For the third quarter of fiscal year 2025, Weifu's forecast remains cautious. The company expects its third quarter revenue to be between $2.7 billion and $2.75 billion, a year-on-year decrease of 1% to 3%.