annual report type systmes pdf

2019 annual report Original Since ‘66

WHO WE ARE 05 06 Editor’s Letter 10 Introduction Business OUR PROPERTIES 16 20 Financial 21 General Overview Fiscal Overview OUR MISSION 28 30 Organization Green Solo Operations

VANS 2019 ANNUAL REPORT Eric C. Wiseman Chairman & Chief Executive Officer Through the first nine months of the year we tracked ahead of our targets with currency neu- tral top-line growth of 9 percent, or 3 percent on a reported basis, per share up 15 percent, or 1 percent reported. Then the business environ- ment changed and we took a more cautious approach to the balance of the year. Concerns around consumer shopping patterns accelerated during the fourth quarter, as we faced the warmest weather ever recorded during the period. We took immediate action to minimize the impact by managing inventories and reducing costs, while continuing to invest in our brands and innovation initiatives. Thanks to our team’s grit, responsiveness and operational agility, we finished the year with results that we are proud of. Currency neutral revenue was up 6 percent, or 1 per- cent on a reported basis. Adjusted earnings per share on a cur- rency neutral basis was up 12 percent, and was flat compared with adjusted earn- ings per share in 2014. Earnings per share on a reported basis was up 20 percent. Our full-year 2015 also faced compari- sons against 2014’s 53-week year. After the experience of 2015, i have a renewed sense of confidence and respect for our ability to drive future growth and shareholder returns. 05

VANS 2019 ANNUAL REPORT Introduction Photos taken for Vans LookBook 2015 The Vans brand embraces and promotes the acionsports lifestyle and youth culture throught its support of athletes on 07 boards and bukes all over the globe. Embracing creative self-expression. Athenticity and progression. Choosing your own line on your nrand and your life. As it approches 50 years of connection with your culture, the vans brand continues to advance its roots in action sports while recognizing the global “OFF THE WALL” conncectivity between the brand and art, music and street culture enthusiasts. 06

VANS 2019 ANNUAL REPORT “It was never About waving the brand like A flag, it was always about the people” —Paul Van Doren 2017 collection VANS x Urban Outfitters 08 09

VANS 2019 ANNUAL REPORT Left photo: Taken for Journeys catalogue; second and third collection VANS x Urban Outfitters History Vans is a leading global sports and lifestyle We have implemented a unique marketing Internationally we vary our marketing and For most of our first 30 years, we were a company that merchandises, designs, plan to reach our customers through multi- distribution approach on a country-by-coun- Southern California shoe manufacturer and sources and distributes VANS-branded ple points of contact which include Core try basis, taking into account the particular based our products on one trademark gum active-casual and performance footwear, Sports entertainment events and venues, cultural, economic and business conditions rubber outsole. apparel and accessories for Core Sports. such as the VANS Triple Crown Series, the present in each international market. VANS Warped Tour, VANS skateparks and In 1995, we initiated a fundamental Core Sports, including skateboarding, the VANS High Cascade Snowboard Camp, We have direct sales operations in key restructuring of the business which included snowboarding, surfing, wakeboarding, sponsoring over 600 professional and ama- European markets, including, most recently, assembling a new management team, BMX riding and motocross, are generally teur athletes, as well as advertising in targeted France, a licensing arrangement for Japan, focusing the business on reestablishing recognized for the fun, creativity and indi- print and television media. Hong Kong, Taiwan and South Korea and the heritage of the VANS brand and shift- vidual achievement experienced while distribution agreements for approximately 30 ing product sourcing overseas to third attempting various tricks or maneuvers We distribute our products through over other countries. party manufacturers, which allowed us to within these sports. 2,000 U.S. domestic wholesale accounts and begin to be more innovative in terms of 170 Vans retail stores and skateparks, interna- Vans was founded in 1966 in Southern outsoles and overall design. Over the past Our focus has been proprietary branding tionally to approximately 50 countries, as well California as a domestic manufacturer of three years, we have targeted significant with the goal of creating a leadership posi- as on the Internet. vulcanized canvas shoes, many of which resources to further build the VANS brand tion for our brand and a strong emotional appealed to skateboard enthusiasts and the worldwide, promote the Core Sports life- connection with our customers. Key accounts in the U.S. include Journeys, Southern California skate and surf culture. style and enhance our product merchandising, Pacific Sunwear, Footlocker, Famous Footwear, Our 36-year heritage has been the basis for design, sourcing and development. Our VANS brand targets 10 to 24 year Kohl’s, Mervyn’s, JC Penney, Gart’s and our branding and marketing strategy over old participants, enthusiasts and emulators Nordstrom. As of August 27, 2002, we had 97 the past six years and helps provide us with of the Core Sports culture. Vans full-price retail stores, 54 outlet stores and the authenticity and credibility to be the 12 skateparks in the United States, and also leading brand with Core Sports enthusiasts, operated in Europe. participants and emulators. 10 11

Business All of our retail stores and skateparks are Until 1994, all of our retail stores were located Wage and Hour Litigation. During the third In this action, we have alleged that the defen- quarter of fiscal 2002, we settled the wage dants, one of whom is a former officer of Vans, leased. Leases for our outlet stores typically in California. Since then we have added retail and hour litigation we discussed in our and another of whom is a former consultant of Annual Report on Form 10-K for Fiscal 2001. Vans, engaged in a conspiracy to obtain provide for an initial lease term of three to stores throughout the U.S. and Europe. unauthorized payments or “commissions” We agreed to stipulate to the certifica- from certain of our factories in China. five years with at least one renewal option Currently, more than half of our retail tion of the class and pay claims of class members, attorneys’ fees and other admin- We also filed a separate arbitration for an additional three or five years. stores are in California with no more than three istrative fees in an amount not to exceed $1.1 proceeding against Messrs. Brabson and million. The settlement was preliminarily Rosendahl in which we made the same Leases for full-price, mall-based stores full-price retail stores or four outlet stores in approved by the Court on January 30, 2002 allegations. We believe the amount of and claim notices were mailed to class money wrongfully obtained by the defen- typically provide for a term of 10 years with no any state or country outside California. members in March and June. dants exceeds $3.0 million. renewal option. Skatepark leases typically Our corporate headquarters are located The final settlement was approved by In the Superior Court action, we sought, the Court on August 8, 2002. We believe and obtained, first a temporary restraining have an initial term of ten years with at least in Santa Fe Springs, California and consist the aggregate amount we will have to pay order, and then a preliminary injunction, prohib- in this matter will be approximately $875,000. iting the defendants from transferring certain one ten-year renewal option. We currently have of an aggregate of 36,000 square feet. The assets owned by them and from transferring Litigation involving former Officer and monies held in certain bank accounts. plans to only open one new skatepark in lease for our headquarters expires in 2007 Consultant and Their Affiliates. Any recovery in this case will not be reflected the near future. with an option to extend for 10 years. On March 20, 2002, we filed a com- in our financial statements until realized. plaint in the Superior Court for the County The park is located in Sacramento, The current aggregate annual rent for of Los Angeles entitled Vans, Inc. vs. Scott Brabson, Gordana Brabson, Jay Rosendahl, California, and we expect to open it during our headquarters is approximately $904,000 Heidi Rosendahl, Catch Air Technology, et al, Case No. BC 27031. calendar year 2003. and is subject to adjustment during the term In most cases, we pay rent on a monthly of the lease. We also lease space for our basis, which is subject to periodic rent esca- distribution center which is attached to our lation provisions plus additional rent based corporate headquarters. on a percentage of sales in excess of certain The rent for this facility is included in the breakpoints. In fiscal year 2002, our annual total rent payments for our headquarters. The rent for our retail stores and skateparks was distribution center is approximately 144,000 approximately $15.1 million without contin- square feet and is believed to be adequate gent payments. at this time. 12 Photo: Joel Omar

VANS 2019 ANNUAL REPORT Additionally, on March 1, 2002, we were Vans started in a small shop in Anaheim selling Vans comes in second, posting $2 billion in Quiksilver, based in Huntington Beach and sued in Superior Court for the County of Los shoes with a resilient rubber sole that skaters revenue, up 17 percent from the year before. long hailed as the biggest of the action- Angeles by Cross-Fire Technology and its adopted and turned into must-have footwear In the fourth quarter, revenues were up 20 sports brands, showed a revenue drop to related entities (Cross-Fire Technology, et al for doing kick flips and ollies. percent in the Americas region and up more $1.57 billion last year from $1.81 billion in vs. Vans, Inc. and Arthur I. Carver, Case No. than 50 percent in the Asia Pacific region. 2013, mostly from its three main brands: BC 269228). The plaintiffs are controlled by The Orange County-born brand, now Quiksilver, Roxy and DC. All three brands certain of the individual defendants in the headquartered in Cypress, has come a Part of the success since VF bought Vans saw a decrease in performance. above lawsuit. long way since it was founded in the mid- has been the ability to take the brand world- 1960s, and financial reports released this wide. “We have an incredible fan base, and Australia-based Billabong, which has its The plaintiffs allege that an officer of Vans week show just how far. that fan base has really become global,” North American headquarters in Irvine and made unlawful threats against certain facto- Palladini said. “That’s a fundamental shift went through a bidding war in recent years, ries that make footwear for us and the plaintiffs In just 10 years, the action-sports brand since they acquired us. We were a California reported about $1 billion in revenue in 2014. and slanderous statements against an affili- has gone from about $320 million in revenue brand, and now we’re a global brand.” ate of the plaintiffs. We intend to vigorously to $2 billion, a growth rare in an industry that Action sports industry analyst Jeff defend this matter and currently believe we has seen its share of downfalls in recent While Vans has been able to see growth Harbaugh, who has written a column called have meritorious defenses in this matter. years. The latest figures put Vans on top of year after year for the past decade, other big Market Watch since 1995, said much of the food chain for the action-sports industry, action-sports brands have struggled. Vans’ success has to do with the brand On July 30, 2002, the Court consolidated surpassing surfwear giants like Quiksilver staying relevant. both of the court cases into one action and and Billabong. “You look at it, you know it, Surfwear brands Quiksilver and Billabong “The thing they’ve done really, really well is consolidated both of the arbitration cases but it’s still hard to get your head around it,” are still on a rebound, with both companies that they have somehow kept the brand cool, into a separate proceeding. The Court set a Doug Palladini, vice present and general in recent years undergoing leadership not only to old customers, but to new custom- trial date of February 24, 2003, for the Superior manager of Vans North America, said of the changes, decreased revenue and divest- ers as well,” he said. “That’s part of the secret Court action and ordered that the arbitra- latest revenue figure. “It’s surreal sometimes ment of smaller brands to refocus. sauce. Not many businesses have been able tion proceeding be concluded by January. to imagine us at this scale. to do that in this industry, and they have been able to pull that off.” We’re by no means done. We see a ton of work ahead of us.” VF, based in North Carolina, is a $12 billion apparel and footwear company that has more than 30 brands under its portfolio. Its four larg- est brands are The North Face, Vans, Timberland and Wrangler. The North Face brings in the most revenue, at $2.3 billion in 2014, an 11 percent increase from the previous year. “it’s surreal sometimes to imagine us at this scale. We’re by no means done. We see a ton of work ahead of us.” 14 Photos for Vans LookBook 2017 15

28 VANS 2019 ANNUAL REPORT 29 16 17 Photo: Vini Dutches

Financial Data Vans is a leading global sports and lifestyle company that Our VANS brand targets 10 to 24 year old participants, merchandises, designs, sources and distributes VANS- enthusiasts and emulators of the Core Sports culture. branded active-casual and performance footwear, apparel and accessories for Core Sports. We have implemented a unique marketing plan to reach our customers through multiple points of contact Core Sports, including skateboarding, snowboarding, which include owning and operating Core Sports entertain- surfing, wakeboarding, BMX riding and motocross, are gen- ment events and venues, such as the VANS Triple Crown erally recognized for the fun, creativity and individual Series, VANS skateparks and the vans High Cascade achievement experienced while attempting various tricks or Snowboard Camp, sponsoring over 600 professional and maneuvers within these sports. amateur athletes and the VANS Warped Tour, as well as advertising in targeted print and television media. Our focus has been proprietary branding with the goal of creating a leadership position for our brand and a strong emotional connection with our customers. fiscal year is january-december. all values cad millions. 2014 2015 2016 2017 2018 sales/revenue cost of goods sold (cogs) incl. d&a - - -- - cogs excluding d&a depreciation & amortization expense 1.1m 5,492 1,776 1,066 5,838 depreciation gross income 1.05m - -- - percentage gross income growth of sales 49,257 5,492 1,776 1,066 5,838 51% apparel 49,257 5,492 1,776 1,066 5,838 31% skate 8% snow (1.1m) (5,492) (1,776) (1,066) (5,838) 10% other - 99.50% 67.66% 39.98% -447.65% 18 19 Photo: Lucie Vaugh

VANS 2019 ANNUAL REPORT Financial Highlights 41% $ 3.5b 48.9% 18.2% 23% 9.1 in revenue gross margin operating margin 9% 10.2 8% 5% 3% 10.2 10.4 10.6 2018 2017 2016 2015 2014 2013 10.9 growth by year 2013 2014 2015 2016 2017 2018 revenue by year usd, value in billions Photo for Vans 20 21 LookBook 2015

VANS 2019 ANNUAL REPORT Our international business plataform exemplies how we’re transforming vans to provide a clear path to growth in a changing global marketplace From mature markets such as western This makes us smarter every step of the Europe and Japan, to emerging markets way, from which markets we should enter such as Eastern Europe an South America, next to which brands we introduce on our we reach consumers on global scale with owned retail plataforms. our amazing portfolio of scalable brands-listening to and inspiring existing It enables us to make well-informed and future brand loyalists. choices about how we adapt our products, communications and retail stores to meet One of the most important factors in the needs of a specif markets consumer, our global success has enabled us to make while at the same time maintaining the sound investment decisions grounded in brand’s global DNA. deep insights. 27% Photo: Joel Garcia asia, australia & pacif island 19% europe, africa & middle east 9% north america & south america 22 23

Consumers VANS 2019 ANNUAL REPORT Off the Wall is synonymous with the Vans In 2014, we proudly opened our second perma- 415 brand for nearly half century. This skatboard- nent House of Vans location, this time in ing phrase pays homage to what was once London. Occupying the Old Vic Tunnels owened retail stores wordwide one of the hardest moves in the sport—rising beneath the London Waterloo railwaty station, up above the rim of empty backyard pools in the house of Vans is open to all and includes a 14 M 1960s Southern California. Redefining and music venue, art gallery, cinema, cafe, bar and inspiring new styles, innovating products, London’s only indoor skate park. brands loyalists reached throught various online channels and empowering creative self-expression are hallmarks of the Vans brand’s rise to became At no other point in the Vans brand’s the world’s largest youth culture brand. In history have our products and connections 2014, for the first time, Vans brand achieved with consumers been stronger and more $2 billion in revenues. Both Footwear News exciting—whether throught various media and Footwear Plus recognized Vans as platforms and events or in our owned and “Brand of the Year.” partner stores. We work hard to continually evolve In the year ahead, we’ll stay sharply our Vans brand product and marketing focused on developing aspirational and func- strategies, while staying true to our roots, tional products that respond to the need of ensuring that our brand resonates with the consumer as we expand geographically, each new generation of consumers. while empowering Vans brand loyalists to creatively express themselves. At the intersection of action sports, art, music and street culture, the Vans brand connects with consumers across the globe by transcending definitions, genre and media. Every day, around the world, we connect with consumers... one-on-one. Photo for Vans 24 LookBook 2015

VANS 2019 ANNUAL REPORT Photo: Diana Guill Organization Vans is a state of mind. Thinking differently. Vans goes to market through its network of From weatherizing the head-to-toe collec- Vans owns and sponsors world-class events Embracing creative self-expression. deeply rooted wholesale partners and its tions to enhancing the durability of the in skateboarding, surfing, snowboarding Authenticity and progression. Choosing your direct-to-consumer platform with more than performance based footwear, Vans is ele- and BMX including the Vans Triple Crown of own line on your board and in your life. 500 owned retail stores worldwide. vating the level of quality and technology Surfing®, the Vans Pool Party, the Van Doren and enabling active consumers everywhere Invitational and surfing’s most prestigious Vans holds over 50 years of youth cul- Given this amazing platform to connect to enjoy Vans through all four seasons. contest the Vans US Open of Surfing. ture connectivity and continues to advance with consumers, we’re constantly looking for its roots in action sports while recognizing better and more creative ways to amplify the We also believe it’s important to deliver Vans supports original and creative the global “Off the Wall” connection brand’s in-store presence. And equally strong more than just great products. Vans sup- music acts ranging from Band of Horses to between the brand and art, action sports, is the Vans’ extraordinary e-commerce and ports the action sports lifestyle, youth Public Enemy to Turbonegro by bringing music and street culture enthusiasts. social media presence, inclusive of its digital culture and creative self-expression by pro- memorable shows to global audiences at the video platform, OffTheWall.tv. moting the sports, music, art and culture House of Vans roving music venue that Today, the Vans brand evolution contin- that matter most. echoes Vans’ Brooklyn-based cultural hub ues- from its foundation as an original Through its various online channels, Vans and to more than half a million fans each skateboarding company since ‘66, to a has access to over 14 million brand loyalists The Vans team includes many top names summer at the Vans Warped Tour, America’s leading action sports brand, to defining its at any given time. in action sports including skateboarding longest-running music tour. anthem of living ‘Off the Wall’ as youth cul- legends Steve Caballero and Christian Hosoi, ture. From its birthplace on the West Coast, At Vans, providing consumer-focused skate pros Geoff Rowley, Anthony Van Vans has grown beyond a shoe. It’s a global product is essential and among perhaps one Engelen, Gilbert Crockett and Tony Trujillo, movement- reaching from Barcelona to of the staunchest critics there is—the world’s BMX riders Dakota Roche and Scotty Beijing, Sao Paulo to Sydney, Orange youth the continued relevance and authen- Cranmer, surfers Dane Reynolds, Nathan County to New York. ticity of Vans’ product, whether performance-based Fletcher, Joel Tudor and Leila Hurst and or fashion-forward, must be in the right snowboarders Louri Podladtchikov, Andreas balance at all times. Wiig, and Hana Beaman. 26

Vans is a leading branded sports and On July 21, 1998, we acquired all of the VANS 2019 ANNUAL REPORT lifestyle company which targets 10-24 outstanding capital stock of Switch year-old consumers through the spon- Manufacturing, a California corpora- Photo for Vans sorship of Core Sports™, such as tion (“Switch”), through a merger (the LookBook 2017 skateboarding, snowboarding and “Merger”) with and into a wholly-owned BMX bicycling. subsidiary. The Merger was accounted for under the purchase method of On May 9, 1996, we established a accounting and, accordingly, the pur- wholly-owned Hong Kong subsidiary, chase price was allocated to the net Vans Far East Limited (“VFEL”), and assets acquired based on their fair granted a worldwide license (exclud- values. Switch is the manufacturer of ing the United States) to VFEL to use the Autolock® step-in boot binding our trademark on and in connection system, one of the leading snowboard with the manufacture and distribution boot binding systems in the world. of footwear. VFEL, in turn, contracts with distributors for foreign countries. The Merger consideration paid by us consisted of: (i) 133,292 shares of On November 20, 1996, we acquired our Common Stock; (ii) $2,000,000 51% of the outstanding Common Shares principal amount of unsecured, non of Global Accessories Limited, our exclu- interest bearing promissory notes sive distributor for the United Kingdom, due that were paid on July 20, 2001; now known as Vans Inc. Limited (“VIL”), and (iii) contingent consideration up in a stock-for-stock transaction. to $12,000,000 based on certain per- formance criteria of Switch during the In November 1998, 1999 and 2000 Fiscal year ending May 31, 2001, that we acquired, in total, an additional was not met. As a result, no contingent 29% of the common shares of VIL, to consideration was due or payable. bring the total investment to 80%. In October 2000, the remaining 20% of On July 29, 1999, we acquired all the VIL common shares were acquired of the outstanding capital stock of by us. The results of operations of VIL High Cascade Snowboard Camp, have been included in our consoli- Inc., an Oregon corporation (“High dated statements of operations since Cascade”), and its sister company, the date of acquisition. Snozone Boarding and Video, Inc., an Oregon corporation, through mergers of the two companies with and into a wholly-owned subsidiary of the Company. The consideration exchanged by us primarily consisted of 236,066 shares of our Common Stock. The results of the two companies have been consolidated in our financial statements starting with the period beginning on June 1, 1999. The merger was accounted for as a pooling of interests. High Cascade, located at the base of Mount Hood in Oregon, is the leading summer snow- boarding camp in the world. 29

VANS 2019 ANNUAL REPORT Green Solo Organization Our purpose is to enable creative expression State of the art fixtures and equipment, mak- Photos: Ted Rizen and inspire youth culture —by celebrating and ing the new Vans headquarters 40% more encouraging the Off the Wall attitude that water efficient than building code 31 comes from expressing your true self. requirements Landscaping with plants native to Southern Our sustainability program furthers our California that require less water mission by supporting art, music and action More than 50% of the wood used in con- sports programs through monetary and struction is Forest Stewardship Certified in-kind donations and volunteering. As part of Comprehensive recycling and composting our commitment to inspire youth culture, we program with the goal to become a zero- recognize that we must protect the planet waste facility and its resources for future generations. Our Our offices in Canada and Europe are also sustainability program does this by reducing LEED certified and incorporate renewable the environmental footprint of our operations energy, water efficient technologies and and products. sustainable materials. We operate offices, distribution centers and retail stores around the world. Our operations DISTRIBUTION CENTER have an impact on the environment- they Vans’ Santa Fe Springs, California create waste, use water, and contribute to Distribution Center is over half a million climate change by using energy from fossil square feet and ships out more than 30 mil- fuels. Our commitment to youth means we lion products a year. must change. Here is how Green Sole Operations makes change. Its size is both a challenge and an opportu- nity to make positive change. Here’s what OFFICES we’ve done so far: In 2017, Vans moved into a brand new cor- By implementing LED lighting, this facility is porate Headquarters in Costa Mesa, in the top 25% of distribution centers world- California. We knew this was an opportunity wide for energy efficiency as rated by the to truly make a positive impact on the envi- Energy Star rating system ronment and committed to certifying the In 2013, it became a zero waste to landfill project as LEED Platinum, which we expect facility. to receive in 2018. Features of our new This means over 95% of waste from our home include: distribution center is recycled. The remain- ing waste is diverted to a waste-to-energy A 1 Megawatt carport solar array. Over facility. In 2017, we recycled over 97% of 4,000 solar panels will provide more than 50% waste at this facility the employee led sus- of the building’s energy needs, preventing 440 tainability steering committee manages all metric tons of CO2 emissions per year aspects of the zero-waste program and con- 38 electric vehicle charging stations, free for tinually looks for ideas and projects to Vans employees to use. The EV charging sta- reduce waste. tions are powered by the solar array and encourage employees to reduce their carbon We recycle more than 11,000 lbs. of card- footprint and contribution to air pollution. board each day, saving enough energy to Cutting edge lighting, heating and cooling power the average American home for more technologies that make the building 48% more a year efficient than building code requirements We reuse as many inbound shipping boxes as possible for outbound shipping, saving more than 120,000 lbs. of cardboard a year 30

VANS 2018 ANNUAL REPORT VANS 20189 AANNNNUUAALLRREEPPOORRTT WHAT’S NEXT? BETTER COTTON SHAPING SUPPLIERS Left Photo: Lucie Denvaley In addition to using better materials in our Right Photo: Rick Yun There’s always more we can do. Our Green Cotton is the highest volume of raw material products and packaging, we work with our supply chain partners to reduce the impact of Did you know that cotton Sole Operations program keeps us focused that Vans uses in its products. It also has a their operations. Here’s how: makes up to 13% of the weight of a pair of Vans on making strides in minimizing our environ- disproportionately high impact on the envi- In 2012, VF partnered with the Natural Authentics, but contributes Resources Defense Council (NRDC), the 43% of its carbon footprint? mental footprint. We’re implementing best ronment. Did you know that cotton makes Renewable Energy and Energy Efficiency Partnership (REEEP), and International practices and technologies to reduce the up 13% of the weight of a pair of Vans Finance Corporation, a member of The World Bank Group, to engage 24 large Chinese amount of energy we use and the waste we Authentics, but contributes 43% of its car- apparel and footwear suppliers in an in-depth energy efficiency program. create in our operations. bon footprint? The program identified opportunities to What we’re doing in 2018 to further The Better Cotton Initiative (BCI) works reduce energy use across all supplier facilities by an average of 20 percent. We’ve since reduce our environmental footprint: to reduce the environmental impact of cot- extended this program to Vietnam and Cambodia through CHEM-IQ, VF is more Focusing on source reduction at our Costa ton production and improve livelihoods and proactive in our chemical management efforts, and the program simplifies chemical manage- Mesa HQ, with the aim to make our home economic development in cotton producing ment for our contract suppliers so they can make better choices regarding the use of zero waste implement learnings from our areas. Vans has been sourcing BCI cotton chemicals in their own facilities. Through this program, we’ve removed 510 tons of non-pre- Charleston LEED Platinum certified store into since 2014. Our goal is to source 100% sus- ferred chemicals from our supply chain. our processes so that new Vans stores are tainable cotton by 2025. Our materials policies and standards ensure that our supply chain partners even more sustainable than our current fleet Some of the ways we are working to reflect our values. continue to improve our sustainability perfor- incorporate BCI cotton into our supply chain: 33 mance at the US Open and Vans Triple In 2014, Vans worked with our supply chain Crown of Surfing. partners to begin sourcing BCI cotton for GREEN SOLE PRODUCTS our footwear canvas. BCI accounted for less than 5% of the cotton we sourced for our Even though our offices, distribution cen- canvas in 2014. In 2017, we sourced 48% BCI ters, retail stores and event spaces occupy cotton... We are committed to increasing this millions of square feet and draw millions of percentage significantly in 2018 and beyond people year, our operational footprint rep- In 2015, we started sourcing BCI Cotton to resents less than 10% of our total environmental make 30 apparel products including a selec- impact. The products we create account for tion of Men’s tanks and Boy’s shirts. more than 90% of our impact. To truly fulfill our commitment to protecting the planet and its resources for future generations, we must change the way we create products. 32

VANS 2019 ANNUAL REPORT MEASUREMENT PACKAGING WORKER WELLBEING LEATHER Created by the Sustainable Apparel Using the Higg index, we analyze our packaging Vans commitment to high ethical standards Vans uses leather certified by the Leather Coalition, the Higg Index measures the envi- materials and find ways to make them more sus- applies no matter where our products are Working Group (LWG). LWG certifies that ronmental performance of apparel and tainable. We’ve taken the following actions: made. Suppliers must meet strict social, envi- the facilities that process leather are mea- footwear products. Through our parent ronmental and ethical standards established suring and actively reducing their footprint company VF Corporation, we are a member We eliminated branded hangtags on by VF Corporation. As a part of the VF sourc- on the environment. of the Sustainable Apparel Coalition, an several key apparel product categories, sav- ing and supply chain organization, we benefit industry-wide group of over 100 leading ing over 400 trees annually. Hangtags that from the company’s expertise in conducting This includes water use, energy con- apparel and footwear brands, retailers, sup- we use on our Men’s apparel products are audits and demanding compliance with strict sumption, air pollution, and waste. 82% of pliers, nonprofits, and NGOs working to now made with 100% post-consumer recy- standards across the vast supply chains of all the leather used in Vans footwear is LWG reduce the environmental and social cled paper, printed using soy-based inks and its brands. For more information, read the VF certified. Our goal is to reach 100% LWG impacts of apparel and footwear products use a jute cord. Sustainability and Responsibility report. certified leather in 2018. around the world. Here’s how Vans uses the Higg Index: Our shoeboxes are made with 80% We’re going beyond social compliance post-consumer recycled paper, printed at our factories. Through our Sustainable We use the factory environmental mod- using soy based inks and use less ink than Living Environments program, we collabo- ule to measure the sustainability practices our previous footwear box. rate with the supplier and local third-party of our supply chain the product module organizations to address the needs of work- enables our teams to assess key apparel Eliminated hangers and hang tags on surf ers outside the factory walls. and footwear products. Through this pro- footwear, saving hundreds of thousands of cess, we identify where improvement can be pounds of material per year as well as the fuel Examples of projects funded through this made and develop strategies for increasing and emissions needed to ship these hangers program include a mobile medical clinic in the environmental performance of our entire around the globe. Cambodia and women’s health and finance product line. programs in Vietnam. We complete the brand module annually and use the results in our strategic planning. 34 Photo for Vans LookBook 2017