V.F. Q4 Earnings Call Highlights

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V.F. (NYSE:VFC) executives said the apparel and footwear company ended fiscal 2026 with improving sales trends, wider margins and lower leverage, while reinstating annual guidance for fiscal 2027.

President and CEO Bracken Darrell said the company “finished this year strong” and exceeded its fourth-quarter guidance. He said VF returned to full-year sales growth for the first time in three years and that 70% of the company’s portfolio is now growing, compared with 43% in fiscal 2024 when including Dickies.

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“Our portfolio is getting healthier,” Darrell said, adding that operating margin expanded to 7% in fiscal 2026, up 220 basis points from fiscal 2024. He also pointed to balance-sheet progress, saying net debt excluding lease liabilities fell from $5.8 billion to $2.7 billion over three years, while leverage declined from 5.1 times to 2 times on that basis.

Fourth-Quarter Sales Beat Expectations

EVP and CFO Paul Vogel said fourth-quarter revenue was $2.2 billion, up 3% from a year earlier and above the company’s guidance for flat to 2% growth. He said wholesale demand, led by The North Face, helped drive the stronger-than-expected performance.

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By brand, The North Face revenue rose 7%, led by double-digit growth in the Americas. Vans declined 5%, in line with expectations, including about a 2-point benefit from earlier wholesale orders. Timberland rose 2%, marking its sixth consecutive quarter of growth.

By region, the Americas grew 10% in the quarter and 3% for the full year. EMEA declined 5% as the company navigated regional macroeconomic headwinds, while APAC rose 1% on demand across The North Face and Timberland. Direct-to-consumer sales rose 2%, and wholesale increased 3%.

Gross margin in the quarter rose 240 basis points to 56.4%, helped by a roughly $50 million net benefit tied to tariff receivables and offsetting charges following a Supreme Court ruling related to certain tariff refunds. Vogel said normalized gross margin was roughly flat from a year earlier. Adjusted earnings per share were $0, compared with a loss of $0.14 in the prior-year quarter.

Vans Shows DTC Improvement in the Americas

Darrell said Vans remains a key focus of the turnaround. While global Vans revenue was down 5% in the fourth quarter, he said Americas direct-to-consumer sales grew 5%, with the region representing more than half of the total Vans business.

“This is where we said the recovery would start,” Darrell said, adding that Americas DTC momentum should eventually show up in other parts of the business. He said Vans’ e-commerce business in the Americas returned to growth in the third quarter and that product newness is building across the assortment.

Darrell highlighted strong consumer response to Pearlized product drops and said the Authentic silhouette grew 80% from a year earlier. Slip-Ons and apparel also returned to growth in the quarter. He said Vans is using a social-first, culture-led marketing strategy, including its Off The Wall campaign anchored around the Authentic.

During the question-and-answer session, Darrell said wholesale sell-through is not yet as strong as DTC because of channel mix and the company’s ability to drive traffic to its own digital platforms. He said DTC performance is a “good harbinger” for wholesale as products roll through the broader network over time.

The North Face, Timberland and Altra Continue Growth

The North Face grew 7% in the quarter, with Darrell citing broad-based category growth and a 16% increase in the Americas. He said softshells and fleece were key drivers in apparel, while footwear delivered its fifth consecutive quarter of double-digit growth.

Darrell also noted The North Face’s newly announced multi-year strategic partnership with the U.S. Ski Snowboard Team. Under the agreement, The North Face will serve as exclusive performance apparel sponsor for athletes at major events, including World Cup events and the Winter Olympic Games, through at least 2034.

Timberland grew 2% in the quarter. Darrell said direct-to-consumer sales increased 8%, helped by full-price stores, while wholesale was slightly lower because of reduced distressed sales. He said the six-inch premium boot remains a key driver and that boat shoes are growing across all regions.

Altra posted 45% revenue growth in the quarter, its fifth consecutive quarter of double-digit growth, and grew more than 30% for the full year, with revenue surpassing $270 million. Darrell said Altra has a differentiated product in a large addressable market and “can be a billion-dollar-plus brand over time.”

Cost Discipline and Margin Targets Remain Central

EVP and COO Abhishek Dalmia said VF is two years into a four-year transformation plan focused on gross margin expansion, SG control and top-line growth. He said gross margin improved from 51.6% in fiscal 2024, including Dickies, to 55.2% in fiscal 2026. About 100 basis points came from the Dickies divestiture, while the rest came from product mix, targeted pricing, markdown improvements and other operational work.

Dalmia said VF has removed more than $225 million of sustained SG savings since fiscal 2024, excluding Dickies, through organizational simplification, DTC and distribution efficiencies, and digital and technology optimization. He said the company is also investing in product development and marketing, with more spending shifted toward media that directly reaches consumers.

Vogel said inventories declined 11% in constant currency, and inventory days were down year over year. Net debt was down approximately $800 million from last year, or 16%, following repayment of a €500 million maturity. Year-end leverage improved to 3.1 times, down one full turn from last year.

Fiscal 2027 Guidance Reinstated

For fiscal 2027, VF expects constant-dollar revenue growth of 1% to 2% and operating margin of approximately 8%. Vogel said the guidance includes expected growth at The North Face, Timberland and Altra, while Vans is expected to decline in the mid-single digits, an improvement from an 11% decline in fiscal 2026 and a 15% decline in fiscal 2025.

The company expects first-quarter revenue to decline in the low single digits and anticipates an operating loss of about $100 million, roughly $40 million worse than the prior year. Vogel said the first quarter is a small period for the company and that the outlook reflects investment in Altra and DTC, as well as wholesale timing shifts.

VF expects the Middle East conflict to reduce fiscal 2027 revenue by about 100 basis points, while a 53rd week is expected to add about 0.5 percentage point to growth. Vogel said the company is assuming tariffs return at the end of July and expects a potential $70 million to $80 million negative gross-margin impact, though management said mitigation actions are expected to offset nearly all of that in fiscal 2027.

Free cash flow is expected to be flat to up versus fiscal 2026 when excluding the $100 million cash benefit from pension termination activity. VF also expects year-end leverage between 2.6 times and 2.9 times, with a medium-term goal of 2.5 times or less by fiscal 2028.

Darrell clarified that VF’s operating margin target is an exit run rate of 10% in fiscal 2028, rather than a full-year fiscal 2028 margin. “The conversation inside this company has shifted from turnaround to growth,” Dalmia said.

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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