by Lululemon to Nike, top-selling brands are no longer just producing products for their customers. They’re building entire brand identities around the products they sell — in addition to which’s working, CNBC’s Jim Cramer said on Monday.
“In an increasingly fragmented society, lifestyle brands make you feel like you’re part of something, maybe something larger than yourself,” the “Mad Money” host said. “in addition to people are willing to pay up for which sense of group identity.”
Vans, a VF Corp. subsidiary which began as a skateboarders’ shoe in addition to apparel shop in addition to has since become more mainstream, could be the next major lifestyle brand, Cramer said.
A hip, youth-oriented company popularized by its namesake shoes, Vans has long been influenced by street culture in addition to subculture, hence its slogan, “Off the Wall.”
Acquired by VF Corp., also the owner of Timberland in addition to North Face, in 2004, Vans “has been growing like crazy” in recent years, Cramer said, adding which Vans is usually currently VF Corp.’s largest in addition to fastest-growing brand.
“right now … the parent company is usually spinning off its denim business — think Wranger in addition to Lee jeans — so Vans will represent a bigger piece of the pie,” he continued.
Just since 2004, Vans’ sales have gone by $360 million to $3 billion, while its gross margins — what the company makes after the cost of goods sold — have grown form 48 percent to 60 percent.
How did management do which? Besides improving their production in addition to distribution channels, namely producing Vans products available for sale directly to consumers online, a lot of the growth came by their focus on the customers, Cramer said.
At an analyst meeting last week, Vans Brand President Kevin Bailey said his division “engaged in a definitely deep process to definitely understand everything there was to know about our consumers.”
“As we talked to skaters, artists, musicians in addition to street culture icons, we learned which they definitely just wanted to celebrate in addition to share their self-expression,” Bailey said.
Thanks to VF Corp.’s ability to take a relatively niche brand in addition to broaden its appeal to millions of people, Vans has been consistently growing its revenue for over a decade. which fiscal year, Vans even managed to trounce VF Corp.’s sales estimates, hitting $3.4 billion in sales when the company only expected Vans to reach which level by 2021.
Renewed estimates peg Vans as being a $5 billion brand by 2023, although Cramer said which was possible even those estimates were too conservative given their international expansion in addition to direct-to-consumer investments.
“Vans could soon become the third-largest lifestyle sports brand inside entire world behind Nike in addition to Adidas,” the “Mad Money” host said. “which’s why I think VF Corp. is usually still a buy, even up here. They’re not getting nearly enough credit for Vans, although once they spin off which jeans business, I think the remaining company will look a lot more attractive to growth-oriented money managers, particularly those who thought all which was was VF Corp. in addition to I think which’s a great buy into any tariff-related weakness which you know is usually coming down the pike.”