Core Viewpoint - Despite the implementation of a restructuring plan for nearly two years, the company continues to report losses, with a slight improvement in performance noted in the latest quarterly results [2][4]. Financial Performance - For the first quarter of fiscal year 2026, the company reported total revenue of $1.8 billion, remaining stable compared to the previous year [2]. - The operating loss was $56 million, which is an improvement compared to the expected loss of $110 million to $125 million [2]. - The Vans brand experienced a revenue decline of 15% year-over-year, generating $498 million in the first quarter [2][3]. Brand Performance - The Vans brand has consistently faced revenue declines, with a 16% drop to $2.35 billion in fiscal year 2025 and a 24% decline in fiscal year 2024 [3]. - In contrast, The North Face brand achieved a 5% year-over-year growth, reaching $557 million in revenue for the first quarter [2][3]. Restructuring Efforts - The company announced a restructuring plan in October 2023, with a focus on transforming the Vans brand as a key task [3]. - The global president of Vans was replaced shortly after the restructuring announcement, with a new hire from Lululemon aimed at accelerating the brand's transformation [3][4]. - The management expressed confidence in the ongoing transformation, stating that the company is entering a growth phase despite the current challenges faced by the Vans brand [4]. Strategic Focus - The company is closing underperforming Vans stores and reducing discount activities to drive growth for the brand [4]. - Emphasis on product innovation, youth-oriented and fashionable products, and enhancing digital capabilities is seen as essential for the Vans brand to regain market traction [4].

Core Viewpoint - Despite the implementation of a restructuring plan for nearly two years, the company continues to report losses, with a first-quarter revenue of $1.8 billion for fiscal year 2026, remaining flat year-over-year, and an operating loss of $56 million, which is an improvement compared to the expected loss of $110 million to $125 million [1][2]. Group 1: Financial Performance - The company's first-quarter performance exceeded expectations, with revenue trends stable compared to the previous year, but profitability showing significant improvement [1]. - The Vans brand continues to struggle, reporting a revenue decline of 15% year-over-year to $498 million in the first quarter of fiscal year 2026 [1]. - In fiscal year 2025, Vans' revenue decreased by 16% to $2.35 billion, contributing to a 4% decline in the company's total revenue to $9.5 billion [2]. Group 2: Brand Performance and Strategy - The North Face and Timberland brands have shown positive momentum, with The North Face achieving a 5% year-over-year growth to $557 million in the first quarter [1]. - The restructuring plan emphasizes the transformation of the Vans brand, which is considered a key task, and the company has appointed a new global president for Vans to accelerate this transformation [2][3]. - The management expresses confidence in future growth, stating that the transformation is progressing as planned and is expected to lead to sustainable revenue and profit growth [3]. Group 3: Market Challenges and Recommendations - The outdoor market is becoming increasingly competitive, with brands like Nike, Adidas, and various specialized outdoor brands posing significant challenges to The North Face [2]. - To regain market opportunities, the Vans brand needs to focus on product innovation, enhance digital capabilities, and improve brand image [4].

Core Insights - V.F. Corporation owns well-known outdoor and streetwear brands such as Vans, The North Face, Timberland, and Dickies, which have historically been respected by both investors and consumers [1] Company Overview - The company has experienced challenges over the past few years, impacting its reputation and performance in the market [1]

Group 1: Market Overview - The stock market has shown incredible resiliency in 2025, with the S&P 500 nearing new all-time highs despite trade wars and economic uncertainty [1] - There are solid companies trading at reasonable valuations that are worth buying as August approaches, a historically weak month for markets [1] Group 2: Alibaba (BABA) - Alibaba's shares are starting to recover after a slump, driven by an improving Chinese economy and strong demand for cloud services, with potential to double in price within five years [4] - The e-commerce marketplaces Taobao and Tmall reported a 12% year-over-year growth in customer management revenue for the March-ending quarter, primarily from fees charged to third-party merchants [5] - Alibaba's revenue growth in e-commerce is supported by initiatives like the integration of Cainiao logistics and new software service fees [6] - Alibaba Cloud is experiencing rapid growth, with AI-related product revenue increasing at a triple-digit rate for seven consecutive quarters, positioning the company for strong growth over the next decade [7] - The stock is currently trading at a P/E ratio of 13.5, which is considered a bargain compared to the average S&P 500 P/E ratio of 30, indicating potential for significant upside [8] Group 3: Lululemon (LULU) - Lululemon's stock has declined approximately 45% in 2025, but it is viewed as oversold and trading at a bargain price [9] - The company reported a 7% year-over-year sales increase in the fiscal first quarter, but comparable sales were only up 1%, with a 2% decrease in the Americas region [11] - Lululemon's P/E ratio is currently at 14, and it maintains a strong operating margin of 18.5%, despite a slight decline due to tariffs [12] - Sales in China increased by 22% year-over-year in Q1, providing a positive outlook amidst challenges in the Americas market [13] Group 4: VF Corp (VFC) - VF Corp is considered undervalued, with its stock down about 85% from its peak in 2021, making it a potential investment opportunity [14] - The company showed signs of a turnaround in fiscal Q1, with solid growth in core brands like Timberland (up 11%) and The North Face (up 6%), despite a 14% decline in Vans [16] - VF Corp trades at a price-to-sales ratio of 0.5, indicating upside potential if it can achieve a profit margin of 5%, which would equate to a P/E ratio of 10 [17] - Continued progress in the turnaround could lead to the stock doubling or tripling in value [18]

Group 1 - The company reported a revenue of $1.8 billion for Q1 of fiscal year 2026, exceeding expectations [1] - The Asia-Pacific region continued to show growth, with revenue reaching $272 million, a year-on-year increase of 4% [1] - By brand, The North Face's Asia-Pacific business grew by 16% year-on-year, while Timberland's Asia-Pacific business increased by 10% [1] Group 2 - Icebreaker is actively advancing its upgrade strategy, focusing on the high-end MerinoFine series and 100% pure Merino wool T-shirts as core product lines [1] - The company is expanding its market presence in China [1]

Core Insights - VF Corporation reported Q1 2026 results with revenue of $1.76 billion and a non-GAAP loss per share of ($0.24), both exceeding analyst expectations slightly [1][2] - The company demonstrated improvements in gross margin, which increased to 54.1% from 51.2% year-over-year, and reduced net debt to $5.3 billion, down 20% from the previous year [2][11] - Despite operational progress, overall sales remained flat year-over-year, with specific brands like Vans continuing to struggle [1][7] Financial Performance - Non-GAAP EPS was ($0.24), better than the consensus estimate of ($0.25) and improved from ($0.35) in Q1 2025 [2] - Revenue was $1.76 billion, slightly above the expected $1.75 billion, but down 0.6% from $1.77 billion in Q1 2025 [2] - Non-GAAP operating loss was ($56 million), significantly better than the internal estimate range of ($125 million) to ($110 million) [5] Brand Performance - The North Face saw a 6% revenue increase, with direct-to-consumer sales up 7% year-over-year [7] - Timberland's revenue rose 11%, particularly strong in the Americas [7] - Vans experienced a 14% revenue decline, attributed to ongoing channel rationalization and store closures [7][9] Strategic Focus - VF's strategy emphasizes cost control, supply chain efficiency, and strengthening core brands, with a focus on direct-to-consumer expansion and international growth [4] - The transformation program, "Reinvent," aims to boost profitability and cash flow, especially in response to Vans' performance [6][4] Geographic Performance - Sales in the Americas fell 4%, while Europe, the Middle East, and Africa saw a 4% revenue increase in dollar terms [10] - Asia-Pacific revenue grew 4%, with strong international results for The North Face and Timberland balancing the pressure from Vans in the U.S. [10] Future Outlook - For Q2 FY2026, management projects revenue contraction between 4% and 2% in constant currency terms [13] - Adjusted operating income is forecasted to be between $260 million and $290 million for Q2 FY2026, indicating potential sequential improvement [13] - The company aims for positive free cash flow and further debt reduction, while facing risks related to weak traffic in the direct-to-consumer channel and global trade policies [14]

Core Insights - V.F. Corporation (VFC) reported a narrower-than-expected loss per share in Q1 fiscal 2026, with a sales beat and improved earnings year over year despite a dip in revenues [1][3][9] - The company is progressing with its Reinvent program, aiming for cost savings and improved operating profitability [1][13] Revenue Performance - VFC's net revenues for Q1 fiscal 2026 were $1.76 billion, surpassing the consensus estimate of $1.69 billion, with a year-over-year decline of approximately 2% in constant currency [3][4] - The North Face and Timberland brands continued to perform well, while Altra showed strong growth; however, Vans faced challenges due to channel rationalization [2][14] Segment Analysis - Revenues in the Outdoor segment increased by 8% year over year to $812.5 million, while the Active segment saw a decline of 10% to $699.7 million [7] - The All-Other segment reported a revenue increase of 4% year over year to $248.5 million [7] Financial Position - VFC ended Q1 with cash and cash equivalents of $642.4 million and long-term debt of $3.56 billion, with net debt down $1.4 billion from the previous year [8] - The company declared a quarterly dividend of 9 cents per share, payable on September 18, 2025 [8] Future Outlook - For Q2 fiscal 2026, VFC expects revenues to decline by 2% to 4% in constant currency, with adjusted operating income projected between $260 million and $290 million [12] - For the full fiscal 2026, VFC anticipates growth in adjusted operating income and cash flow, driven by strong performance from The North Face, Timberland, and Altra [13][14]

Part I [Financial Statements (Unaudited)](index=3&type=section&id=Item%201%20%E2%80%94%20Financial%20Statements%20(Unaudited)) This section presents VF Corporation's unaudited consolidated financial statements for the quarter ended June 28, 2025, including balance sheets, statements of operations, cash flows, and notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 28, 2025, total assets increased to $10.15 billion sequentially, while total liabilities rose to $8.86 billion, reflecting seasonal patterns and discontinued operations Consolidated Balance Sheet Summary (in thousands) | Account | June 2025 | March 2025 | June 2024 | | :--- | :--- | :--- | :--- | | **Total Current Assets** | $4,375,516 | $3,786,098 | $4,349,131 | | Inventories | $2,135,478 | $1,627,025 | $2,059,728 | | **Total Assets** | **$10,150,497** | **$9,377,536** | **$11,541,363** | | **Total Current Liabilities** | $3,439,639 | $2,697,853 | $4,408,974 | | Long-term debt | $3,560,990 | $3,425,650 | $3,940,668 | | **Total Liabilities** | **$8,858,214** | **$7,890,177** | **$10,153,458** | | **Total Stockholders' Equity** | **$1,292,283** | **$1,487,359** | **$1,387,905** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 FY26, revenues were nearly flat at $1.76 billion, with a reduced operating loss of $86.6 million and a narrowed net loss per share of ($0.30) Q1 FY26 Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues** | **$1,760,666** | **$1,769,060** | | Operating Loss | ($86,609) | ($123,020) | | Loss from Continuing Operations | ($116,408) | ($152,027) | | Loss from Discontinued Operations | $— | ($106,859) | | **Net Loss** | **($116,408)** | **($258,886)** | | **Net Loss Per Share - Diluted** | **($0.30)** | **($0.67)** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash used by operating activities increased to $145.5 million in Q1 FY26, while financing activities provided $339.0 million, primarily from short-term borrowings Q1 FY26 Cash Flow Summary (in thousands) | Activity | Three Months Ended June 2025 | Three Months Ended June 2024 | | :--- | :--- | :--- | | Cash used by operating activities | ($145,460) | ($30,714) | | Cash used by investing activities | ($49,013) | ($9,035) | | Cash provided (used) by financing activities | $338,955 | ($37,444) | | **Net change in cash** | **$216,859** | **($37,015)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail segment realignment, the Supreme brand sale as discontinued operations, and revenue disaggregation by channel and geography - In Q1 FY26, VF realigned its reportable segments. The 'Outdoor' segment now includes The North Face and Timberland. The 'Active' segment includes Vans, Kipling, Eastpak, and Jansport. Prior period results have been recast[30](index=30&type=chunk)[75](index=75&type=chunk) - The Supreme brand business was sold on October 1, 2024, and its results are reported as discontinued operations. The sale resulted in a final after-tax loss of **$126.6 million**[31](index=31&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) Revenues by Channel (Q1 2025, in thousands) | Channel | Outdoor | Active | All Other | Total | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $456,831 | $392,423 | $175,252 | $1,024,506 | | Direct-to-consumer | $352,210 | $301,029 | $67,424 | $720,663 | | Royalty | $3,425 | $6,235 | $5,837 | $15,497 | | **Total** | **$812,466** | **$699,687** | **$248,513** | **$1,760,666** | - The 'Reinvent' transformation program incurred restructuring charges of **$17.5 million** in Q1 2025, bringing cumulative charges to **$207.6 million** since inception. Actions were substantially complete at the end of the quarter[104](index=104&type=chunk)[105](index=105&type=chunk)[117](index=117&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%20%E2%80%94%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY26 financial results, noting flat revenues, improved gross margin, and progress on the 'Reinvent' transformation program - Overall revenues remained flat at **$1.8 billion**, with a **2% favorable foreign currency impact**. A decline in the Active segment was offset by growth in the Outdoor segment[119](index=119&type=chunk)[121](index=121&type=chunk) - Gross margin increased by **270 basis points to 53.9%**, primarily due to favorable foreign currency impacts, higher quality inventory, and lower discounts[122](index=122&type=chunk)[123](index=123&type=chunk) - The 'Reinvent' transformation program aims to generate **$500.0 million to $600.0 million** in net operating income expansion by Fiscal 2028 compared to Fiscal 2024[116](index=116&type=chunk) [Information by Reportable Segment](index=30&type=section&id=Information%20by%20Reportable%20Segment) The Outdoor segment's revenue grew 8% to $812.5 million, while the Active segment's revenue declined 10% to $699.7 million, primarily due to Vans Segment Revenue Performance (Q1 2025 vs Q1 2024, in millions) | Segment | Revenues - 2025 | Revenues - 2024 | Change | | :--- | :--- | :--- | :--- | | Outdoor | $812.5 | $753.6 | +7.8% | | Active | $699.7 | $776.7 | -9.9% | Segment Profit (Loss) Performance (Q1 2025 vs Q1 2024, in millions) | Segment | Profit (Loss) - 2025 | Profit (Loss) - 2024 | | :--- | :--- | :--- | | Outdoor | ($42.3) | ($72.9) | | Active | $56.8 | $71.5 | - The North Face brand revenues grew **6%**, driven by Europe and Asia-Pacific, while Timberland revenues grew **11%** across all regions[136](index=136&type=chunk)[137](index=137&type=chunk) - Vans brand global revenues decreased **14%**, impacted by deliberate strategic actions including exiting value-channel wholesale customers and closing unprofitable retail stores in the Americas[140](index=140&type=chunk)[141](index=141&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital decreased to $935.9 million, and the net debt to total capital ratio increased to 80.5%, with a focus on leverage reduction - Cash used by operating activities increased to **$145.5 million** from **$30.7 million** YoY, mainly due to increased net cash used for working capital to support inventory purchases[158](index=158&type=chunk)[159](index=159&type=chunk) - As of June 2025, VF had **$350.0 million** in borrowings under its **$2.25 billion** Global Credit Facility, with approximately **$1.9 billion** remaining available[167](index=167&type=chunk) - The company's capital deployment priorities are focused on reducing leverage and reinvesting cost savings to drive growth, with no share repurchases made during the quarter[162](index=162&type=chunk)[163](index=163&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no significant changes in market risk exposures compared to its Fiscal 2025 Form 10-K disclosures - There have been no significant changes in VF's market risk exposures from the disclosures in the Fiscal 2025 Form 10-K[183](index=183&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[184](index=184&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected or are likely to materially affect such controls[185](index=185&type=chunk) Part II [Legal Proceedings](index=35&type=section&id=Item%201%20%E2%80%94%20Legal%20Proceedings) The company reports no material changes to legal proceedings or environmental proceedings exceeding the $1 million reporting threshold - There have been no material changes to legal proceedings since the Fiscal 2025 Form 10-K[187](index=187&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors) The company states that no material changes have occurred regarding the risk factors previously disclosed in its Fiscal 2025 Form 10-K - No material changes have occurred regarding the risk factors previously disclosed in the Fiscal 2025 Form 10-K[191](index=191&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) VF Corporation made no common stock repurchases during Q1 FY26, with $2.5 billion remaining under authorization, prioritizing leverage reduction - The company made no repurchases of its Common Stock during the first quarter of fiscal 2026[192](index=192&type=chunk)[193](index=193&type=chunk) - Approximately **$2.5 billion** remains available for future repurchases under the authorized program[163](index=163&type=chunk)[193](index=193&type=chunk) [Other Information](index=36&type=section&id=Item%205%20%E2%80%94%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 28, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[194](index=194&type=chunk) [Exhibits](index=37&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists filed exhibits, including an amendment to the Revolving Credit Agreement and CEO/CFO certifications - Key exhibits filed include Amendment No. 5 to the Revolving Credit Agreement and CEO/CFO certifications[196](index=196&type=chunk)

Core Insights - V.F. Corporation (VFC) reported a revenue of $1.76 billion for the quarter ended June 2025, reflecting a year-over-year decline of 7.7% and an EPS of -$0.24, an improvement from -$0.33 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $1.69 billion by 3.96%, while the EPS surprised positively by 31.43% compared to the consensus estimate of -$0.35 [1] Financial Performance - The company's shares returned +1.3% over the past month, underperforming the Zacks S&P 500 composite's +3.4% change [3] - VFC holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3] Geographic Revenue Breakdown - Americas: $937.6 million, below the average estimate of $951.6 million, with a year-over-year decline of 10.3% [4] - Europe: $551.3 million, exceeding the estimate of $495.87 million, with a slight year-over-year decline of 0.3% [4] - Asia-Pacific: $271.8 million, below the estimate of $278.36 million, with a year-over-year decline of 12.2% [4] Revenue by Segment - Outdoor: $812.47 million, slightly below the estimate of $832.32 million, with a year-over-year increase of 2.8% [4] - Active: $699.69 million, above the estimate of $691.15 million, but reflecting a significant year-over-year decline of 25.7% [4] Revenue by Brand - The North Face: $557.4 million, exceeding the estimate of $523.34 million, with a year-over-year increase of 6.3% [4] - Vans: $498 million, above the estimate of $472.72 million, but showing a year-over-year decline of 14.4% [4] - Timberland: $255.1 million, surpassing the estimate of $230.92 million, with a year-over-year increase of 11.2% [4] Revenue by Channel - Direct-To-Consumer: $720.7 million, below the estimate of $748.72 million, with a year-over-year decline of 18% [4] Segment Profit (Loss) - Active: $56.84 million, below the estimate of $66.22 million [4] - Outdoor: $-42.27 million, better than the estimate of $-78.77 million [4]

Financial Data and Key Metrics Changes - The company reported Q1 revenue of $1.8 billion, flat on a reported basis and down 2% year-over-year in constant dollars, which was better than the guidance of down 3% to down 5% [31][32] - Adjusted gross margin increased by 200 basis points to 54.1%, driven by higher quality inventory and lower discounts [34] - Adjusted loss per share was $0.24 compared to $0.35 in Q1 of the previous year [35] Business Line Data and Key Metrics Changes - Vans revenue decreased by 15%, with 40% of the decline attributed to channel rationalization actions [12][33] - The North Face grew by 5%, with strong performance in footwear and bags, aiming for higher growth rates in the future [14][32] - Timberland's revenue increased by 9%, reflecting growth across all regions and channels [16][33] Market Data and Key Metrics Changes - The APAC region grew by 4%, while the Americas and EMEA regions saw declines of 3% and 2%, respectively [33] - Excluding Vans, the Americas region was up 3% year-over-year [33] Company Strategy and Development Direction - The company is focused on transforming its operations, improving cost structures, and aiming for growth after two years of resetting [9][11] - A unified product and marketing engine is being built across brands globally, with a focus on premiumization and improved inventory management [10][29] - The company aims to reduce leverage to below 2.5 times by fiscal 2028 while investing in growth [10][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in turning the company back into a growth entity despite current macroeconomic challenges [6][9] - The anticipated impact of tariffs is expected to negatively affect gross profit by $60 million to $70 million in fiscal 2026, but management believes they can mitigate these impacts [38][39] - The company is optimistic about the upcoming back-to-school season and plans to invest more in marketing [110] Other Important Information - The company has changed its segment reporting to better reflect key areas of focus across brands [43] - The company is pursuing a $1.5 billion asset-backed revolving loan to enhance liquidity and flexibility [42] Q&A Session Summary Question: What were the expectations for the Warp Tour and its impact? - Management expected modest impact initially but saw enormous demand with tickets selling out quickly, indicating strong engagement and merchandise sales [49][52] Question: Can you clarify the $60 million to $70 million gross profit impact from tariffs? - Management confirmed that this impact is mostly in the back half of the year and will be offset through pricing and other actions [57][58] Question: What are the long-term views on gross margin improvement? - Management sees opportunities for gross margin improvement across all brands, particularly through premiumization and better product mix [66][70] Question: How do you expect unit volumes to be affected by price increases? - Management indicated that unit volumes might decrease in line with price increases, but the overall impact is uncertain due to industry-wide effects [78][79] Question: What is the outlook for free cash flow and net debt? - Management expects free cash flow to be up year-over-year despite fluctuations in quarterly performance, and net debt is anticipated to decline [118][120]