As sneaker companies weather a bout of subdued demand, at least one brand, Wedbush analysts say, seems to have suffered more than others: Vans.
After looking at price-cutting activity across department stores, shoe stores, athletic-goods chains and other retailers, the analysts found that more than half of all Vans items were being sold at a discount, amid competition from more casual shoe offerings from Adidas AG and broader struggles from retailers like Foot Locker Inc.
“The markdown activity for Vans is also elevated when compared to other footwear names in our coverage,” the analysts said in a research note on Monday.
The only other brand they followed that had more of its shoes on sale was Steve Madden Ltd.
which they noted sells in many department stores, where discounts are more common.
The analysts published their assessment as Vans’ parent company, VF Corp.
prepares to report fiscal fourth-quarter results on Tuesday. Those results, the analysts noted, will arrive as the retail landscape remains weak, with higher grocery prices pulling consumer spending away from clothing and accessories. Retailers over the past year have had to slash prices on anything that isn’t food or a household necessity in order to stir up demand.
Wedbush said that Vans, VF’s biggest brand by sales, was the biggest source of pressure for the company, which also owns boot maker Timberland and outdoor-wear brand North Face. The analysts lowered their earnings-per-share estimates for VF’s fiscal 2023 and 2024 and lowered their price target on the stock to $19 from $29.
“Vans has been the biggest pressure point for [VF], and in recent weeks there’s been some hope that the brand was on the verge of a turnaround (given some success with a new style called “Knu School”),” the Wedbush analysts said. “However, our checks continue to show elevated promotional/markdown activity for the brand and lukewarm demand overall.”
The Wedbush analysts said Foot Locker’s
first-quarter results on Friday — which tanked the shoe retailer’s stock — also represented bad news for Vans. On the chain’s earnings call, Foot Locker management noted weaker spring-season demand for “canvas and skate-inspired” offerings and said they have launched “aggressive” discounts to attract shoppers. Vans, the Wedbush analysts said, was Foot Locker’s largest canvas-and-skate brand.
Franklin Bracken, Foot Locker’s chief commercial officer, said that New Balance was still the chain’s best-performing shoe. He also called out the success of some of Nike Inc.’s signature basketball shoes — including those named after stars like Ja Morant, LeBron James and Luka Doncic.
Bracken also said soccer-inspired shoes by Adidas AG
— like the Samba and Gazelle — “will be a key story for us at back-to-school and holiday this year.” That momentum, the analysts said, “could continue to squeeze demand for Vans.”
The greater difficulty for Vans and VF comes as Adidas deals with its own bloated inventory issues. Adidas plans to sell off $1.2 billion worth of Yeezy shoes — the brand designed by rapper Kanye West, who goes by Ye — to raise money for charity, after West’s anti-Semitic remarks led Adidas to terminate the partnership.
Shares of VF Corp. were up 1.8% on Monday. The stock has fallen 58.2% over the past 12 months. By comparison, the S&P 500
is up 5.6% over that period.