V.F. Corp. Q1 Earnings Miss Estimates as Vans Wholesale Weighs

Revenues declined 5.2% year over year to $1.669 billion and missed the consensus mark of $1.674 billion by 0.3%. Excluding Dickies, revenues rose 1% on a reported basis, supported by growth at The North Face, Timberland and Altra.

V.F. Corp.’s first-quarter fiscal 2027 performance reflected continued strength at The North Face, Timberland and Altra, along with sustained growth in the global direct-to-consumer business. Vans remained under pressure as weakness in global wholesale more than offset improving trends in the Americas’ direct-to-consumer channel. Gross margin expanded, while the company continued to reduce net debt and strengthen its balance sheet. Management also raised its full-year revenue outlook, citing better visibility into the remainder of fiscal 2027 and expectations for a meaningful improvement in Vans’ wholesale trends during the second half.

V.F. Corp.’s Q1 Revenue Details

On a regional basis, revenues in the Americas declined 4% year over year on a reported basis. EMEA revenues fell 7% as reported and 9% in constant currency. APAC revenues decreased 3% on a reported basis and 6% in constant currency. Overall, international revenues declined 4% year over year as reported and 7% in constant currency.

Channel-wise, wholesale revenues fell 10% on a reported basis. Direct-to-consumer revenues were up 2% year over year on a reported basis and 1% on a constant-currency basis. Our model estimated the wholesale revenues to fall 5.2% and direct-to-consumer revenues to decline 3.4% year over year.

Revenues in the Outdoor segment improved 5% year over year on a reported basis (up 4% on a constant-currency basis) to $857 million. In the Active segment, revenues of $667 million declined 5% year over year on a reported basis and 6% on a constant-currency basis. Revenues in the All Other segment fell 42% year over year on a reported basis (down 42% on a constant-currency basis) to $145 million.

VF Corp.’s Gross Margin Expands

The company’s reported gross margin increased 100 basis points year over year to 54.9%. Adjusted gross margin excluding Dickies improved 10 basis points to 54.9%, indicating modest underlying progress after removing the divested brand’s prior-year contribution.

Reported selling, general and administrative expenses were $1 billion, representing 59.9% of revenues. Adjusted expenses were $1.012 billion, or 60.6% of revenues.

Financial Details of VFC

V.F. Corp. ended the fiscal first quarter with cash and cash equivalents of $670 million, long-term debt of $3 billion and shareholders’ equity of $1.76 billion. Net debt was down $1.1 billion from the year-ago period.

What to Expect From VFC in FY27?

VFC raised its fiscal 2027 revenue outlook to growth of 2% or better in constant currency from the prior guidance of 1-2%. The projection reflects expected growth at The North Face, Timberland and Altra, partly offset by a mid-single-digit decline at Vans, with Vans’ second-half revenues expected to improve to a decline of 2% or better year over year.

The company maintained its adjusted operating margin forecast of approximately 8%, supported by a higher adjusted gross margin and a lower adjusted SG&A rate. Free cash flow is still expected to be flat to higher than fiscal 2026’s $405 million, aided by year-over-year growth in operating cash flow. VFC anticipates ending fiscal 2027 with a leverage ratio of roughly 2.6x to 2.9x.

The Zacks Rank #4 (Sell) company's shares have lost 3.6% in the past three months against the industry’s 10.7% growth.

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