V.F. Q1 Earnings Call Highlights

Key Points

• V.F. raised its fiscal 2027 revenue-growth outlook to 2% or more after first-quarter revenue of about $1.7 billion exceeded expectations. The company maintained its targets for an approximately 8% operating margin, flat-to-higher free cash flow and year-end leverage of 2.6–2.9 times.
• Brand performance was mixed: The North Face revenue rose 4% and Timberland increased 3%, while Vans declined 9%. V.F. expects Vans to remain weak in the first half but improve to a roughly 2% or better decline in the second half as product launches and direct-to-consumer trends gain traction.
• CFO Paul Vogel will step down, with COO Abhishek Dalmia assuming a combined CFO and COO role. V.F. also reported a 20% year-over-year reduction in net debt and reiterated its longer-term goals of a 10% or better operating margin and leverage of 2.5 times or less.

V.F. NYSE: VFC raised its fiscal 2027 revenue outlook after reporting first-quarter sales and operating performance that exceeded its prior expectations, while also announcing a finance leadership transition.

The company said first-quarter revenue was approximately $1.7 billion, flat from a year earlier and ahead of its guidance for a low-single-digit decline. Adjusted operating loss was $95 million, which V.F. said was slightly better than expected due to stronger-than-anticipated revenue. Adjusted diluted loss per share was $0.27, compared with a loss of $0.25 a year earlier.

V.F. now expects fiscal 2027 revenue to increase by 2% or more, up from its prior outlook for 1% to 2% growth. The company maintained its expectation for an approximately 8% operating margin for the full year, free cash flow that is flat to higher than last year, and a year-end leverage ratio between 2.6 times and 2.9 times.

Finance leadership transition

Chief Financial Officer Paul Vogel will step down, with Chief Operating Officer Abhishek Dalmia taking on a newly combined CFO and COO role. Vogel said he would work with Dalmia during the next quarter to support a smooth transition.

Vogel said the decision followed discussions about the time demands of the role, as his family has remained on the East Coast. He pointed to progress over the past two years, including lower debt, cost reductions, improved financial discipline and a return to full-year growth in fiscal 2026.

“I remain confident in the company, the strategy, the progress we are making,” Vogel said. “In fact, I leave this role with great confidence in where VF is headed.”

Dalmia said his focus in the expanded position would include capital discipline, portfolio returns and balancing growth, profitability and cash generation. CEO Bracken Darrell said the combined finance and operations role would support the company’s ongoing transformation and focus on total shareholder value.

Brand performance and outlook

The North Face posted 4% revenue growth in the first quarter, exceeding V.F.’s expectation for a flat quarter. Darrell said growth was led by transitional outerwear, shells and equipment, while the Ultima Version Two footwear launch had a strong debut across regions.

The company expects The North Face to be flat to slightly higher in the second quarter, primarily due to wholesale timing, and expects full-year growth to be roughly in line with the brand’s growth rate in fiscal 2026. V.F. also cited upcoming initiatives including its U.S. Ski & Snowboard Team apparel partnership and a planned update to its Nuptse product line.

Timberland revenue increased 3% in the quarter, with both direct-to-consumer and wholesale channels growing globally. The Americas rose 10%. The six-inch premium boot remained the principal growth driver, while boat shoes also performed strongly across regions, according to Darrell.

Vogel said Timberland’s quarterly growth was reduced by roughly three percentage points due to the conflict in the Middle East and work involving one of the company’s distributors. Dalmia said V.F. expects those pressures to be less significant in the second quarter. The company expects Timberland’s full-year growth to be broadly in line with last year’s growth rate.

Vans revenue declined 9% globally in the first quarter, and V.F. expects a similar decline in the second quarter. However, Darrell said the company is seeing improvement in direct-to-consumer operations, particularly in the U.S., where nearly 60% of comparable stores were flat to growing in the quarter. E-commerce has shown accelerated growth, he said.

Wholesale remains weaker than direct-to-consumer performance at Vans, although Darrell said discussions with wholesale partners support expectations for an improvement in the second half. V.F. expects Vans revenue to decline about 9% in the first half but to be down 2% or better in the second half, resulting in a mid-single-digit decline for the full year.

The company said several Vans product launches and collections have generated strong consumer response, including growth in Authentic and Slip-On styles and strong sell-through for Old Skool releases. Darrell said V.F. intends to bring more differentiated and refreshed product into wholesale channels as it works to translate product momentum into broader sales.

Outside its three largest brands, V.F. cited Altra as a growth opportunity. Darrell said road running has become larger than trail running for Altra in recent quarters, despite the brand historically being stronger in trail running. He reiterated the company’s view that Altra can become a billion-dollar-plus brand over time.

Margins, cash flow and regional trends

Adjusted gross margin was 54.9%, slightly above the prior year. Vogel said unfavorable foreign exchange reduced the quarter’s margin by 140 basis points. He also said there was no incremental tariff advantage or disadvantage in the first quarter compared with the prior-year period.

SG&A expense increased year over year as V.F. invested in marketing, direct-to-consumer operations and other brand-building activity. Vogel said the company’s $225 million in structural SG&A savings since fiscal 2024 remain embedded in the business, with the company choosing to reinvest from a lower fixed-cost base.

By region, Americas revenue rose 4%, while Europe, Middle East and Africa revenue fell 7% and Asia-Pacific revenue declined 1%. Darrell said the company expects Asia-Pacific performance to remain comparatively muted in the near term, noting strong competition and a need for more innovation in the region.

Direct-to-consumer revenue increased 5% during the quarter, while wholesale revenue declined 4%. Inventories, excluding Dickies and foreign exchange effects, fell 4%. Net debt declined $1.1 billion, or 20%, from a year earlier, and free cash flow improved by approximately $75 million, including about $50 million of tariff refunds.

V.F. reiterated its medium-term targets of an operating-margin exit run rate of at least 10% in fiscal 2028, which it clarified would mean 10% or better for the full fiscal 2029 year, and a leverage ratio of 2.5 times or better by fiscal 2028.

About V.F. (NYSE:VFC)

VF Corporation, commonly branded as VF, is a global apparel and footwear company that develops, markets and distributes a diverse portfolio of consumer brands. Its offerings span outdoor and action sports apparel, footwear and accessories under marquee names such as The North Face, Vans, Timberland, Dickies, JanSport and Smartwool. Through a “house of brands” strategy, VF leverages the unique heritage and design expertise of each label to serve distinct lifestyle and performance segments.

Founded in 1899 in Pennsylvania as the Reading Glove and Mitten Manufacturing Company, VF evolved through a series of acquisitions and strategic expansions to become a leading player in the global apparel industry.

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