Financial Data and Key Metrics Changes - The company is targeting a 10% operating margin by fiscal 2028 and is trending on plan towards that goal [15] - There has been a decline in revenue, necessitating modest revenue growth to return to baseline levels [18] - The company is confident in achieving free cash flow growth this year, supported by operating income growth and improved inventory management [42][43] Business Line Data and Key Metrics Changes - The company has seen 70% of its portfolio return to growth, excluding the Dickies business [11] - The North Face brand is underdeveloped in the U.S. compared to Europe and APAC, indicating significant growth opportunities [28] - Vans is undergoing a turnaround with new product launches and marketing strategies, although financial outcomes have yet to reflect these changes [21][24] Market Data and Key Metrics Changes - The consumer environment is showing mixed signals, with a slight increase in negative commentary from medium and lower-end consumers [12] - The U.S. market remains strong for direct-to-consumer sales, with 70% of Vans' business coming from this channel [25] Company Strategy and Development Direction - The company aims to create a multi-brand organization that leverages best-in-class processes across its brands [5] - There is a focus on elevating brand positioning and expanding distribution, particularly for Timberland and North Face [32][28] - The company is committed to minimizing markdowns and using promotions strategically during key sales periods [41] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the consumer's resilience, particularly in the U.S., despite some signs of shifting trends [12][13] - The company is focused on long-term growth trajectories rather than short-term fluctuations, aiming for consistent upward trends over the next three to five years [26] Other Important Information - The company is implementing integrated business planning and markdown management to improve gross margins and operational efficiency [16][41] - There is a strong emphasis on training and aligning leadership teams to ensure a unified vision for the company's future [9][10] Q&A Session Questions and Answers Question: What is the company's plan to offset tariffs by fiscal 2027? - The company is on a run rate to offset all tariffs within fiscal 2027, having established a pricing plan and worked closely with supplier partners [39][40] Question: How does the company plan to drive favorable promotions? - The company aims to minimize markdowns and use promotions as a strategic tool during key moments rather than as a regular practice [41] Question: What is the outlook for cash flow and deleveraging the balance sheet? - The company is confident in its free cash flow growth and plans to pay down debt, supported by operating income growth and improved working capital management [42][43]

Financial Data and Key Metrics Changes - The company aims to achieve a 10% operating margin by fiscal 2028 and is trending on plan towards that goal [14][17] - The company has seen a decline in revenue but expects modest revenue growth to return to baseline levels [17][41] Business Line Data and Key Metrics Changes - Approximately 70% of the company's portfolio, excluding the Dickies business, was back to growth in fiscal Q2 [10] - The company is focused on improving the Vans brand, with new product launches and marketing strategies showing positive internal data, although financial outcomes have yet to reflect this [20][24] Market Data and Key Metrics Changes - The consumer environment is perceived as "stubbornly positive," though there are signs of mixed sentiment, particularly among medium and lower-end consumers [11][12] - The U.S. market remains a strong focus, with 70% of Vans' business being direct-to-consumer [25] Company Strategy and Development Direction - The company is committed to creating a multi-brand organization that leverages best-in-class processes across its brands [5][6] - There is a strategic focus on expanding the North Face brand into year-round categories and elevating its market presence [28][29] Management's Comments on Operating Environment and Future Outlook - Management expresses confidence in the ability to offset tariffs by fiscal 2027 through strategic pricing and partnerships [39] - The company is optimistic about cash flow growth and plans to continue improving operating income [41][42] Other Important Information - The company has made significant leadership changes to align the team with its vision, which has fostered a unified direction [8][9] - The company is exploring opportunities in the Altra brand, which has seen a 37% growth last quarter [43] Q&A Session Summary Question: What is the company's take on the consumer environment? - Management describes the consumer environment as "stubbornly positive" but notes some emerging negative sentiment among lower-end consumers [11] Question: How is the company addressing tariffs? - The company plans to be on a run rate to offset all tariffs by fiscal 2027, supported by a strategic pricing plan [39] Question: What is the outlook for cash flow and operating income? - Management is confident in growing cash flow and operating income, with a target of achieving a 10% operating income by fiscal 2028 [41][42] Question: How is the Vans brand performing? - Management believes the actions taken for Vans are correct, and while financial outcomes are not yet visible, internal data shows positive trends [20][24]

Summary of V.F. Corporation FY Conference Call (September 17, 2025) Company Overview - **Company**: V.F. Corporation (NYSE: VFC) - **Key Brands**: Vans, The North Face, Timberland, Altra, Dickies Key Points and Arguments Portfolio Review and Brand Sale - The decision to sell Dickies was unexpected and driven by an attractive inbound offer from Blue Star Alliance, despite Dickies being a valued brand within the portfolio [2][3] - The sale is expected to improve leverage ratios and allow for debt repayment, indicating a strategic long-term decision rather than a reaction to short-term performance [3][4][5] Financial Health and Debt Management - The proceeds from the Dickies sale will fully fund the next tranche of debt, reducing the need to draw on the asset-based lending facility, thus saving on interest expenses [6][8] - The company is on track to meet fiscal year free cash flow guidance and is committed to paying down debt [4][6] Consumer Sentiment and Economic Outlook - The U.S. consumer remains "stubbornly positive," with the company not overly reliant on economic conditions for growth [9] - The company is confident in its ability to offset tariffs through cost reductions and strategic pricing [10][12] Brand-Specific Insights Vans - Strategic actions affecting Vans are expected to conclude by Q4, with new product introductions planned for upcoming seasons [23][31] - The brand is focusing on both comfort and style, with a mix of trends appealing to diverse consumer preferences [29] - Marketing efforts are being enhanced, including a partnership with SZA as the new Artistic Director to attract a broader audience [33][34] The North Face - The North Face is focusing on improving its cultural relevance and expanding its product offerings, particularly in the women's segment [49] - The brand's performance in the Americas is lagging compared to Europe and APAC, with plans to elevate product offerings in the U.S. market [50][52] - The company aims to position The North Face as a four-season brand, with plans for better product availability and marketing strategies [57] Timberland - Timberland has seen strong growth, particularly driven by the 60th anniversary of the Yellow Boot and successful collaborations [58][59] - The brand is focused on sustaining growth beyond the Yellow Boot and ensuring a solid foundation for future expansion [60][61] Altra - Altra is experiencing significant growth, with a reported 20% increase last quarter, but brand awareness remains low at around 8% [68][69] - The company sees potential for Altra to grow systematically, particularly in the trail running segment [69] Marketing and Operational Efficiency - The company is improving marketing efficiency by reallocating funds from non-working media to more impactful advertising [38][40] - There is a focus on direct-to-consumer strategies, with some store closures expected to optimize the retail footprint [42][43] Conclusion - V.F. Corporation is strategically repositioning its brand portfolio, focusing on long-term growth and operational efficiency while navigating economic challenges and consumer trends. The sale of Dickies is a pivotal move to enhance financial health and prioritize core brands.

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]

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]