The annual revenue has declined, with a loss of 969 million US dollars... Weifu Group is facing significant performance pressure. According to the latest 2024 fiscal year and fourth quarter reports released by Weifu Group, among the four major brands, Vans, Timberland, and Dickies experienced varying degrees of revenue decline, respectively, The North Face has achieved growth, but the growth rate has slowed down. When the performance of the main brands is weak and the performance has been declining for seven consecutive quarters, it has become particularly urgent for Weifu Group to seek new growth points.
The revenue of the three major brands has declined
According to financial report data, in the fiscal year 2024, Weifu Group's revenue was 10.5 billion US dollars, a decrease of 10% (a decrease of 11% in fixed US dollars); The gross profit margin decreased by 0.5 percentage points year-on-year to 52%; The net profit increased from 119 million yuan in the previous year to a loss of 969 million US dollars (approximately 7 billion yuan).
In the fourth quarter of fiscal year 2024, Weifu Group's revenue was 2.4 billion US dollars, a year-on-year decrease of 13%; The adjusted gross profit margin decreased by 1.2 percentage points year-on-year to 48.4%; The net profit loss expanded to 418 million US dollars (approximately RMB 3 billion), compared to a loss of 215 million US dollars in the same period last year. It is worth noting that this has been the seventh consecutive quarter of performance decline for Weifu Group.
Vans, one of the four major brands under Weifu Group The North Face The development of Timberland and Dickies is difficult to be optimistic.
In the fiscal year 2024, Vans, Timberland, and Dickies saw revenue declines of 24%, 13%, and 15%, respectively. The North Face has become the only brand still growing, achieving a 2% revenue growth. However, compared to the previous two years, The revenue growth of The North Face has significantly slowed down. According to financial report data, the revenue of The North Face increased by 17% and 33% respectively in the fiscal years 2023 and 2022. In addition, Supreme, which was previously acquired by Weifu Group with a huge investment, is also being sold for a price due to less than expected development.
It seems that the current situation of Weifu Group is that it no longer has a well-known brand under its umbrella.
Jiang Han, a senior researcher at Pangu Think Tank, said that with fierce competition in the fashion and trend markets, the rise of emerging and fast fashion brands poses a challenge to traditional trend brands. In addition, with the changing consumer preferences, especially the younger generation of consumers pursuing more personalized, environmentally friendly and sustainable products, this requires brands to constantly innovate and adapt to market changes.
It is worth mentioning that in the overall sluggish performance of Weifu Group, the Asia Pacific market dominated by the Chinese market has become one of the few highlights. According to financial data for the fiscal year 2024, Weifu Group achieved a 3% revenue growth in the Asia Pacific region. In the fourth quarter, Weifu Group stated that driven by the Greater China region, revenue in the Asia Pacific region increased by 2%, with The North Face (North) revenue increasing by 15%. Although the Asia Pacific region is still growing, a share of revenue that accounts for less than 20% is still difficult to determine the contribution of Weifu Group's performance growth.
Regarding issues related to declining employment performance and future development, a reporter from Beijing Business Daily interviewed Weifu Group, but as of the time of publication, no response has been received.
Selling assets to improve performance
Perhaps realizing its own development and performance issues, Weifu Group proposed a self rescue plan in the second quarter of the 2024 fiscal year - launching a "Reinvent" plan. It is understood that the "Reinvent" plan includes improving performance in North America, achieving Vans brand transformation, reducing costs, and strengthening the balance sheet.
"In the fourth quarter, progress has been made in advancing the Reinvent transformation plan. As of fiscal year 2024, the 'Reinvent' plan has helped the Weifu Group achieve $1 billion in operating cash flow and over $800 million in free cash flow. As we enter fiscal year 2025, the plan will continue to implement a broader turnover plan, and we are positioning Weifu to restore sustainable and profitable growth."
According to financial report data, the total inventory of Weifu Group in the fiscal year 2024 decreased by 23% year-on-year, higher than expected; The net cash flow from operating activities decreased from -660 million US dollars in the previous year to 1.01 billion US dollars, and the net debt decreased by 540 million US dollars.
While implementing the "Reinvent" plan, Weifu Group also makes frequent adjustments to its management. According to public information, in December 2023, Weifu Group announced the appointment of NinaFlood as the Global Brand President of Timberland. In October 2023, Weifu Group announced that Kevin Bailey would step down from his position as President of Vans Global Brand, and he only took office in March 2022, less than two years ago. At the time of this financial report release, Weifu Group also announced that the new Chief Financial Officer Paul Vogel will replace Matt Puckett, who has been working at Weifu Group for 23 years. In addition, Weifu Group also announced that it will soon announce a new President of Vans.
In addition, selling poorly developed assets to reduce operating costs is also becoming a means for Weifu Group to boost performance. It is reported that Weifu Group has received urging from radical investors to re-examine all brands in its brand portfolio except Vans and The North Face, and consider selling brands such as Supreme and Timberland. Meanwhile, Weifu Group recently revealed that it is seeking to sell jets and a hangar located in Colorado, USA, with the aim of reducing costs and raising cash. Bracken Darrell said, "The company plans to exit the expensive aircraft project, which is an expense that Weifu Group should not have while seeking to turn losses into profits."
At the same time, Weifu Group is focusing more attention on the Chinese market. In October 2023, Weifu announced that it would increase its investment in the Chinese market by 30 million yuan and launch an automation capability upgrade project. At the end of 2022, Supreme, a subsidiary of Weifu Group, officially entered the Chinese market and settled in the Dover Street Market in Beijing, marking the first time it has been sold in the Chinese market through official channels. In January 2021, Weifu Group launched a business transformation in the Asia Pacific region, relocating its brand operations center from Hong Kong to Shanghai. "The Chinese market has great appeal to any brand," said Ma Wen, President of Weifu Group's Asia Pacific region, in an interview
In the view of Zhou Ting, the director of the Yaoke Research Institute, the domestic sports and leisure track has developed rapidly in recent years, and competition has become increasingly fierce. Although several brands under the Weifu Group have had the advantage in the past, they are also the sports brands with the least changes in recent years. The conservative and unchanging brand operation model will gradually lose its advantage in market competition.