I'm here to talk about a speculative bet on $VFC the parent company of Vans, The North Face, Timberlands, Dickies etc.
Some of you might have remembered my Turnaround DD i've posted 6 months ago. 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 forming a Inverted Heads and Shoulders pattern and i've got a trade set-up prior to earnings which is on Monday after close. There will also be an Investor Day coming Wednesday.
# The Thesis
I anticipate CEO Bracken Darrell to resinstate revenue and earnings guidance which he withdrew exactly one year ago. I'm confident this will for reasons as follows. A whole year went by where there weren't any concrete forward-looking statements (e.g. Supreme sale wasn't announced until it was confirmed, revamp of management wasn't announced until it happened etc). He has been particularly secretive about the positive developments of the company. With that, he has implicitly built hype around VFC's Investor Day event as evidenced in the excerpts below from his last earnings call.
>...and consistent with that, when we talk about our guidance or lack of guidance when we get to October, we'll come up with a formula for how we're going to do this. I don't want to spoil the fun now. We kind of have a game plan. But we will give you more than we've given you in the past, and we'll certainly give you something more in the intermediate term, something that you can look to and see where we're really trying to head to. So without saying any more, because Allegra will elbow me right in the neck because she's that close. I'll stop there.
>...we spent the last four months really scoping additional cost savings. We're not ready to surface with anything yet. But we will talk about that in October. We're actually working with an external consultant on that, and we feel really good about our program.
>...in terms of the turn – the Vans turn and the turn in general on the business, when do I forecast it happening? I'm not going to give you a number today, but I will tell you in October, we'll be ready to talk about that. So I feel very good about the progress we're making. It feels very similar to where I was when I was in my last company, and I feel like I can see it, and I feel good about it.
If he reinstates revenue/earnings guidance to the upside we could bounce +30% over a month as this stock has been a known underweight. If you asssess them by their financial numbers (of which are horrendous, declining revenues, high debt/EBITDA ratios, lower gross margins compared to peers). Not many have time to 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 :
* Vans has spent the past year cleaning its inventory channels and pulling out of discount stores— a process they completed as of June '24. According to the CEO, they now have eight months of predictable sales and demand. This means no more bloated inventory issues and a significant reduction in low-margin fire sales.
* 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, CEO 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."
* 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 !
* 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.
* 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 will always love the brand and what it stands for - always being authentic to yourself.
# 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.