Logistics slow VF down as it waits (for Vans) for the Squid Game effect

Logistics slow VF down as it waits (for Vans) for the Squid Game effect

VF Corp is caught between the Squid Game effect (which is boosting Vans sales) and supply difficulties (which are holding back Supreme). For the US multinational, the moment is particularly paradoxical. Thanks to product placement in the South Korean television series, white Vans slip-on have upset all sales figures for the brand, whose reference group (VF, to be precise) is waiting to assess the effect on next quarter’s financial statements, supply logistics dynamics permitting. In the meantime, the latest quarterly results (closed on October 2nd) did show a strong recovery, but not as much as analysts had expected.

The Squid Game effect

The series has been streaming on Netflix since the beginning of October, and has literally hit the jackpot in terms of views and access. Its protagonists (pictured) are wearing white Vans slip-ons, a model for which, according to data reported by Sole Supplier, sales more than exploded in the weeks following the release of Squid Game: +7800%. Less incredible was the rebound on Lyst: only +145%.

Supply problems

While VF Corp has to cope with the surge in demand for Vans slip-ons, it also faces some serious logistical and organisational issues. For example: material shortages; factory closures in China, Malaysia and Vietnam; labour shortages and congestion at US ports. Highly critical factors, to the extent that they have made it difficult for Supreme to achieve a minimum inventory to be able to launch its usual weekly drops. Despite the difficulties, however, as Footwear News writes, VF is aiming to take Supreme past the 1 billion dollars mark in sales in a few years, closing the current one at around 600 million dollars in revenues.

VF’s balance sheet

In the quarter ended October 2, 2021, VF’s revenues grew by 23% to 3.2 billion dollars. Good, but not great. In other words, the US group fell short of the 3.5 billion dollars forecast of analysts surveyed by Yahoo Finance. As for the brands in the portfolio (at constant exchange rates), Timberlad sales were up 25%, The North Face up 29% and Vans up 7%. When will the latter turn around, thanks to Squid Game?

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