VF’s Q2 Profit Indicates Progress on Turnaround Plan

Core Insights - VF Corp. is successfully executing its turnaround plan, exceeding Wall Street's expectations in Q2 with a net income of $189.8 million, or 48 cents per diluted share, compared to $52.2 million, or 13 cents, in the same period last year [1][2] - Revenues increased by 1.6% to $2.80 billion from $2.76 billion, with direct-to-consumer sales down 1% to $909.9 million and wholesale sales up 3% to $1.89 billion [1][5] Financial Performance - Operating income reached $313 million, or $330 million on an adjusted basis, surpassing guidance of $260 million to $290 million [5] - Operating margin improved to 11.2%, up 130 basis points from the previous year, while gross margin remained flat at 52.2% [5] - Net debt decreased by $1.5 billion, indicating improved financial health [5] Brand Performance - Revenue growth was observed in The North Face (up 6% to $1.16 billion) and Timberland (up 7% to $506.4 million), while Vans experienced a decline of 9% to $606.9 million [6] - The North Face saw strong performance in performance apparel across all regions, with double-digit growth in transitional outerwear and footwear [6][7] Strategic Initiatives - The company announced the pending sale of its Dickies brand for $600 million, which is expected to enhance investment capacity and drive shareholder returns [3][4] - The sale proceeds will be used to pay down debt and are projected to be accretive to VF's growth rate [4] Regional Sales Performance - Sales in the Americas decreased by 1% to $1.34 billion, while EMEA sales increased by 6% to $1.07 billion, and APAC sales fell by 2% [8] Future Guidance - For Q3, the company anticipates revenues to decline by 1% to 3%, with adjusted operating income projected between $275 million to $305 million [9][10] - For Fiscal Year 2026, free cash flow is expected to increase compared to the previous year, along with an increase in adjusted operating income [9]