I'm here to talk about a speculative bet on $VFC the parent company of Vans, The North Face, Timberlands etc.
Some of you might have remembered my Turnaround Story DD i've posted 6 months ago [Link to DD](https://www.reddit.com/r/ValueInvesting/comments/1c4y9lg/turnaround_story_the_north_face_vans_timberlands/). The stock has since then came off the low of $12.00 and has hit 52 week highs of $21.50 essentially doubling in price. As of today, the stock price has retraced back to $16.50 and i've got a speculative bet set-up prior to earnings which is on Monday after close. There will also be an Investor Day coming Wednesday.
So here's the thesis :
1) I anticipate CEO Bracken Darrell to bring back revenue and earnings guidance which he withdrew exactly one year ago. I'm confident this will happen because a whole year for multiple reasons. A whole year went by without providing any forward-looking statements (e.g. Supreme sale wasn't announced until it was confirmed, revamp of management wasn't announced until it happened etc). Besides, he has also implicitly built a lot of hype around the Investor Day event as evidenced in the screenshots below.
Here are three excerpts from his last earnings that hints what will be unveiled during Investor Day.
[Bracken on not wanting to break the fun of Investor Day](https://preview.redd.it/94mkzem8f7xd1.png?width=2462&format=png&auto=webp&s=fc98f842d0c8f81b37b9108635dda1031ba3d80d)
[Potential additional cost savings unannounced](https://preview.redd.it/q2h6e6bcf7xd1.png?width=2416&format=png&auto=webp&s=4af533811e898883b2707dd389d5bf8e459374a2)
If he brings back guidance to the upside we could bounce +30% overnight as this stock is a known short since many hedge funds only look at their financial numbers (which is horrendous, declining revenues, high debt/ EBITDA ratios). Not many look into the details and read between the lines like I do.
Other than the implicit hint above, I also have acquired sufficient evidence there is enough catalysts ahead for him to bring back guidance to the upside. Below is a compilation of it :
1) Vans spent a whole year cleaning their inventory channels and withdrew from discount stores. This has completed as of June '24. CEO also said they've 8 months of predictable sales/demand. This means no more bloated inventories, no more low margin sales.
2) Vans has an extensive product line : UltraRange, MTE, Classics, KNU skool, Skate and BMX, Lowlands, Uplands, Mary Jane, Premium, OTW Of which KNU SKOOL and one of their biggest mistakes before was overdoing the Vans classics e.g. old skools, sk8-his, slip-ons etc. That will change. For example, Vans has been pushing their MTE (Made for The Elements) range as weather gets colder, which is literally your Classics but multi-terrain.
On franchise management of each product line , Bracken said this :
\> "You're going to see us take the gas out of some of the older styles for a while and then re-goose starting from the top of the culture chain with key influencers and then flow them down. This is franchise management 101 plus innovation, which I think is really the model for growing a footwear brand."
3) Vans brings back the Warped Tour for 2025. THIS IS HUGE as everyone would be banging their heads with chequered slip-ons. This is a huge refresh cycle for the punk rockers. That is exactly when Vans re-goose the Classics !
4) New Brand President of Vans is ex-CPO from Lululemon (2017-2024). She played a monumental in Lululemon's success, Lulu's first footwear product was lead by her, and have no doubt she will be releasing new products in early '26.
5) KNU Skool has become their #2 product line. On Footlocker's Earnings Call Update, they've said this :
"We're seeing encouraging trends out of the Vans brand, especially through their KNU school franchise. Next to that, we are excited for a strong boot season with Timberland this fall and holiday (another brand of $VFC)"
I'll save the positive developments of Timberlands and Dickies for next time. Besides Vans, I also anticipate Bracken to announce one or two more brand sales other than Supreme to reach their target optimal balance of debt/ equity.
The current implied move after Investor Day is 12%, which is on par with the likes of $COIN $SOFI $RDDT. That's pretty wild for an apparel company. My price target remains at $30.00 by end of year
Regardless of where this moves, I'll be forever grateful for all the joy Vans have given me growing up. I love the brand more than I love the stock <3.
Positions :
Shares: $200K shares basis of $13.00.
Calls: Jan25 17.5/25c spread ($25K), Jun25 15/30c spread ($30K) and Jan 26 15c ($10K)
Price Target:
$30.00 by year end.