Vans Rolls On

How seriously does shoe company Vans (Nasdaq: VANS  ) take its skater roots? Seriously enough that it doesn't give its corporate side much of a presence on its homepage. Surfers (and other extreme athletes) need to scan the page carefully to find a small link that opens a new browser window and reveals Vans.biz.

The skateboard phenomenon has taken Vans over more ups and downs than a halfpipe and, ultimately, has lead the company to under-perform the S&P 500 over the last decade. (The company's shares are, however, still up significantly over the period.)

In 2003, Vans has been strong, rising steadily since mid-March. Last night the company further encouraged investors by raising its EPS guidance for the key fiscal first quarter ended August. Most of the increase is attributed to taxes and not operating performance, but some can be attributed to a back-to-school season that has seen strong wholesale and retail sales and a 13.7% same-store sales increase in Vans stores.

This is exactly what Vans investors wanted to hear after the company turned in a net loss and slightly lower sales for its last fiscal year ended May 31. The company is taking itself out of the skatepark business and concentrating on its footwear, apparel, and other core businesses. Two consecutive quarters of improved same-store sales (after a year and a half of decreases) are encouraging signs of progress.

But while management hasn't been shy about using the word "turnaround," it's also looking to grow where possible. It plans to open its first full-priced store in Europe on London's famed Carnaby Street -- a logical extension for a company that already operates several outlets in the UK, Spain and Austria. Sport-casual shoes have a strong foothold in Europe and Vans hopes an increased retail presence will help boost sales and strengthen the brand.

Smaller companies in the fashion business will always have a rough going, competing as they do with more powerful competitors with better access to branding and distribution resources. But Vans has shown signs that it can compete. More consistent net-income growth is just one key to becoming a solid cash producer. Fortunately, a strong balance sheet powered by a 2001 stock offering gives Vans time to really catch its groove.

You can reach Dave Marino-Nachison at DMarnach@Fool.com .