V.F. Corporation (VFC) investor relations material

Executive summary

• Q2 revenue reached $2.8 billion, up 2% year-over-year, driven by strong back-to-school and wholesale demand, with operating income of $330 million, both ahead of guidance.

• The North Face and Timberland delivered strong growth of 6% and 7% year-over-year, respectively, while Vans' declines moderated and sequential improvement was noted.

• Announced the sale of Dickies for $600 million, expected to close by year-end 2025 or Q3'26, with proceeds to be used for debt reduction and investment capacity.

• Net debt, excluding lease liabilities, decreased by $1.5 billion year-over-year, a 27% reduction, reflecting strong deleveraging progress.

• Over 65% of the business by revenue is now growing, up from 60% last quarter and just 10% a year ago.

Financial highlights

• Adjusted operating income was $330 million, up 5% year-over-year and above guidance; operating margin improved to 11.2%, adjusted margin at 11.8%.

• Gross margin held steady at 52.2% year-over-year.

• Adjusted EPS was $0.52 (down from $0.60 last year); reported EPS was $0.48 (down from $0.52 last year), mainly due to a higher tax rate.

• Net inventories (excluding Dickies) down 4% year-over-year; free cash flow through Q2 was -$453 million, in line with expectations due to seasonality.

• Net interest expense was $46 million; effective tax rate was 29% for Q2'26.

Outlook and guidance

• Q3'26 revenue expected to decline 3% to 1% in constant currency year-over-year, with adjusted operating income guidance of $275–$305 million.

• Gross margin for Q3 will be down year-over-year due to tariffs, partially offset by lower discounts; most pricing actions to offset tariffs will take effect in Q4.

• Fiscal 2026 operating income and free cash flow (excluding asset sales) are expected to increase year-over-year.

• Progressing toward medium-term targets of $500–$600 million operating income expansion and leverage ratio of 2.5x or below by fiscal 2028.