The Vans and Supreme parent stood by its annual earnings outlook, but adjusted its sales projection down slightly.
Traffic is also lower on key online outlets and the company is changing tack to compensate.
China has loomed large in fashion for decades, first as a vast source of low-cost production and then as an all-important consumer base. But lately, Beijing has been asserting itself more in the corporate sphere, particularly stepping into the tech sector and at consumer giant Alibaba. The government has also been pursuing a strict approach to COVID-19 lockdowns to avoid the spread of the virus, although that could be a harder approach to maintain as the virus lingers.
“But from a brand standpoint within our portfolio…we monitor week-by-week consumer sentiment linked to brand origin and we’ve not seen any impact there,” the CEO said. “This is an important part of our go-forward strategy…really speaking to the Chinese consumer as a Chinese consumer and elevating our local-for-local product creation, demand creation and really tailoring events that are relevant to them and their needs,” Rendle said.
BMO analyst Simeon Siegel said: “We recognize the strength of the brands, but it is hard to ignore that despite the inventory scarcity across the industry, GM [gross margin] continues to disappoint, and we continue to worry that current valuation leaves little margin of error and sits well above multibranded peers.”
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