Core Viewpoint - V.F. Corporation (VFC) reported a narrower-than-expected loss per share in the fourth quarter of fiscal 2025, despite a sales miss, with revenues declining year over year but improvements in earnings and margins [1][2][3] Financial Performance - Adjusted loss per share was 13 cents, better than the Zacks Consensus Estimate of a loss of 15 cents, and improved from a loss of 30 cents per share in the same quarter last year [2] - Net revenues were $2.14 billion, down 5% year over year, and below the consensus estimate of $2.18 billion [2] - Adjusted gross margin expanded by 560 basis points to 53.4% due to lower material costs and improved inventory quality [3] Revenue Breakdown - Revenues in the Americas fell 6% year over year, while EMEA revenues decreased by 4% and APAC revenues were flat [5] - Wholesale revenues declined by 4%, and direct-to-consumer revenues were down 5% year over year [6] - The Outdoor segment saw a revenue increase of 5% to $1.28 billion, while the Active segment declined by 18% to $645.3 million [7] Future Outlook - Management projects a revenue decline of 3-5% on a constant dollar basis for the first half of fiscal 2026, with Q1 expected to be the smallest quarter of the fiscal year [11] - An operating loss of $110-$125 million is anticipated for Q1, with gross margins expected to rise year over year [12] - Adjusted operating income is forecasted to expand year over year in fiscal 2026, with higher free cash flow expected compared to fiscal 2025 [13] Cost-Saving Initiatives - The company has achieved its initial target of $300 million in gross cost savings by the end of fiscal 2025 and aims for $500-$600 million in net operating income expansion through the next phase of its Reinvent program [10]

Financial Data and Key Metrics Changes - Revenue for Q4 fiscal year 2025 was down 3% year-over-year, aligning with guidance of a decline between 2% to 4% [7][28] - Operating income increased by 400 basis points year-over-year to $22 million, exceeding guidance [7] - Gross margin improved by 560 basis points to 53.4%, driven by lower material costs and reduced discounting [7][30] - Net debt decreased by 26% year-over-year, with leverage reduced by one full turn to 4.1 times [8][31] - Adjusted loss per share improved to negative $0.13 from negative $0.30 in the same quarter last year [30] Business Line Data and Key Metrics Changes - Vans revenue declined by 20% in Q4, attributed to strategic actions and reduced storefronts, with 60% of the decline linked to deliberate revenue management [10][11] - The North Face brand saw a revenue increase of 4% in Q4, with direct-to-consumer (DTC) sales rising by 9% [17][28] - Timberland reported a strong performance with a 13% revenue increase in Q4, benefiting from lower discounts [17][28] Market Data and Key Metrics Changes - The APAC region experienced a revenue growth of 2%, while The Americas and EMEA regions saw declines of 5% and 2% respectively due to reduced promotional activities [29] - DTC sales were down 3%, while wholesale sales decreased by 2% [29] Company Strategy and Development Direction - The company is focused on a transformation strategy called "Reinvent," aimed at improving operational profitability and simplifying the business structure for long-term growth [7][30] - Strategic actions include reducing unprofitable storefronts and managing marketplace dynamics to achieve profitable growth [11][12] - The company is diversifying its supply chain and has reduced reliance on China for finished goods to less than 2% [20][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround of Vans, indicating that progress is being made despite current numerical setbacks [10][14] - The company is navigating macroeconomic uncertainties with a proactive approach, leveraging its asset-light model for flexibility [20][22] - Future cash flow is expected to improve year-over-year, with operating cash flow and free cash flow anticipated to rise [33] Other Important Information - The company is not providing full-year guidance but expects Q1 revenue to decline by 3% to 5% on a constant dollar basis [34] - The impact of tariffs is being managed through strategic pricing and cost management initiatives [26][27] Q&A Session Summary Question: Thoughts on gross margin and free cash flow - Management expects continued improvement in gross margins and free cash flow, with the $313 million free cash flow not including Supreme [41][44] Question: One-time strategic reset actions at Vans - The impact of strategic reset actions will continue into Q1 and Q2, with expectations of fading by Q3 and being eliminated by Q4 [52][56] Question: Free cash flow and debt management - The company plans to use free cash flow and a revolver to manage upcoming debt maturities, with confidence in improving cash flow [61][64] Question: Store count strategy and dividend considerations - The company has aggressively edited its store count, with further optimization expected but heavy lifting largely completed [126][128] - Dividend reductions are on the table if necessary, but no immediate changes are anticipated [132][134] Question: Gross margin components and outlook - Management discussed the contributions to gross margin improvements, including product cost tailwinds and lower promotions, with expectations for these trends to continue [140]

Financial Data and Key Metrics Changes - In Q4 2025, revenue decreased by 3%, aligning with guidance of a decline between 2% to 4% [6][28] - Operating income increased by 400 basis points year-over-year to $22 million, exceeding guidance [6] - Gross margin improved by 560 basis points to 53.4%, driven by lower material costs and reduced discounting [6][30] - Net debt decreased by 26% year-over-year, with leverage reduced by one full turn to 4.1 times [7][32] - Adjusted loss per share improved to negative $0.13 from negative $0.30 in Q4 of the previous year [31] Business Line Data and Key Metrics Changes - Vans revenue declined by 20% in Q4, following an 8% decline in the prior quarter, with 60% of the decline attributed to strategic actions to eliminate unprofitable business [9][29] - The North Face brand saw a revenue increase of 4% in Q4, with direct-to-consumer (DTC) sales rising by 9% [17][28] - Timberland experienced a strong performance with a 13% revenue increase in Q4, driven by lower discounts and higher margins [17][28] Market Data and Key Metrics Changes - The APAC region grew by 2%, while The Americas and EMEA regions saw declines of 5% and 2% respectively due to reduced promotional activity [29] - DTC sales were down 3%, while wholesale sales decreased by 2% [29] Company Strategy and Development Direction - The company is focused on a transformation strategy called "Reinvent," aimed at improving operational profitability and simplifying the business structure [6][30] - Strategic actions include reducing storefronts and channel inventory in China to set up for long-term growth [11][19] - The company is pursuing brand elevation through channel cleanup and enhanced digital experiences [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround of Vans, indicating that progress is being made despite current numerical setbacks [9][14] - The company is well-positioned to manage tariff impacts through a diversified supply chain and proactive cost management strategies [19][26] - Management remains optimistic about returning to growth and delivering sustainable value creation despite macroeconomic uncertainties [21][22] Other Important Information - The company expects operating cash flow and free cash flow to increase year-over-year, although specific full-year guidance is not provided [34] - The company has strategically reduced its reliance on finished goods sourced from China to less than 2% [19][25] Q&A Session Summary Question: Thoughts on gross margin improvements and free cash flow - Management expects continued improvement in gross margins and free cash flow, with the $313 million free cash flow not including Supreme [40][43] Question: One-time strategic reset actions at Vans - The impact of strategic reset actions will continue into Q1 and Q2, with expectations of fading by Q3 and being gone by Q4 [50][55] Question: Free cash flow and debt management - The company plans to use free cash flow and a revolver to manage upcoming debt maturities, with confidence in improving cash flow [58][61] Question: Health of The North Face brand and DTC momentum - The North Face brand is performing well, with strong DTC sales and plans to increase product offerings [82][84] Question: Tariff impacts and pricing strategies - The company is confident in its ability to offset tariff impacts through strategic pricing and cost management [108][110]