Sign in

You're signed outSign in or to get full access.

VF

V F CORP (VFC)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue was $1.76B, flat year over year (−2% constant currency) and above guidance; adjusted EPS loss of $0.24 beat Wall Street consensus, driven by gross margin expansion and flat adjusted SG&A dollars .
  • The North Face (+6% reported) and Timberland (+11%) sustained momentum; Vans declined 14% as deliberate channel rationalization actions continued; excluding Vans, total revenue grew +6% .
  • Margins improved materially: GAAP gross margin rose 270 bps to 53.9% (adjusted 54.1% +290 bps), and adjusted operating margin improved 270 bps to −3.2% versus Q1’25; adjusted operating loss was far better than guidance (−$56M vs −$110M to −$125M) .
  • Management issued Q2 guidance of revenue down 2%–4% (C$) and adjusted operating income of $260M–$290M; reiterated FY26 directional outlook for higher free cash flow, adjusted operating income, and operating cash flow, even after anticipated tariff impacts .
  • Strategic catalysts: Vans Warped Tour demand and retail format pilots, product innovation at The North Face (trail footwear, bags/packs) and Timberland premiumization, and tariff mitigation actions; CFO quantified net tariff impact of $60M–$70M to FY26 gross profit with full mitigation expected in FY27 .

What Went Well and What Went Wrong

What Went Well

  • The North Face and Timberland delivered sustained profitable growth (TNF +6% global; Timberland +11%), supported by stronger DTC, lower discounts, and product innovation (TNF trail footwear, bags/packs) .
  • Material margin progress: GAAP gross margin 53.9% (+270 bps); adjusted 54.1% (+290 bps), and adjusted operating margin improved 270 bps year over year; adjusted SG&A dollars were flat vs LY, reflecting ongoing savings initiatives .
  • CEO tone on transformation and growth: “We have reset the table and soon will move to growth… We are as confident as ever in our plans to transform VF and return the company to long-term growth” .

What Went Wrong

  • Vans revenue declined 14% (−15% C$), with DTC impacted by closures and lower traffic; actions in value channel and store rationalizations are still weighing on results through Q3 before subsiding in Q4 .
  • Americas declined 4% (−3% C$), reflecting ongoing Vans headwinds; Greater China was −5% (−6% C$), while EMEA constant currency growth was negative despite reported +4% .
  • Operating cash flow was −$145M in the quarter (seasonal and timing factors), and inventories rose 4% year over year, though management emphasized improved inventory quality and mix .

Financial Results

Revenue and EPS vs prior periods and consensus

MetricQ3 2025Q4 2025Q1 2026Q1 2026 Consensus
Revenue ($USD Billions)$2.834 $2.144 $1.761 $1.701*
Adjusted Diluted EPS ($USD)$0.62 ($0.13) ($0.24) ($0.338)*
GAAP Diluted EPS ($USD)——($0.30) —

Notes: Values with * retrieved from S&P Global.

Margins progression (GAAP vs adjusted)

MetricQ3 2025Q4 2025Q1 2026
Gross Margin % (GAAP)56.3% 53.4% (+560 bps YoY) 53.9% (+270 bps YoY)
Gross Margin % (Adjusted)——54.1% (+290 bps YoY)
Operating Margin % (GAAP)11.4% 1.0% (4.9%)
Operating Margin % (Adjusted)——(3.2%)

Q1 2026 Segment revenue breakdown

Segment / BrandRevenue ($USD Millions)YoY % (Reported)YoY % (C$)
The North Face$557.4 +6% +5%
Vans$498.0 (14%) (15%)
Timberland$255.1 +11% +9%
Other Brands$450.2 +4% +2%
Total$1,760.7 0% (2%)

Q1 2026 Geography and Channel

CategoryRevenue ($USD Millions)YoY % (Reported)YoY % (C$)
Americas$937.6 (4%) (3%)
EMEA$551.3 +4% (2%)
APAC$271.8 +4% +4%
International$926.1 +2% (1%)
DTC$720.7 (3%) (4%)
Wholesale$1,040.0 +1% 0%

KPIs

KPIQ1 2026Q1 2025 / PriorNotes
Net Debt ($USD Billions)$5.3 $6.7 Down $1.4B YoY (−20%)
Inventories ($USD Millions)$2,135.5 $2,059.7 Up 4% YoY; +1% C$
VF-operated stores (count)1,113 1,158 Fleet rationalization
Net Interest Expense ($USD Millions)$41.1 $40.9 —
Effective Tax Rate (%)8.0% (GAAP) —Adjusted ETR 3.5%
Cash from Operations ($USD Millions)(145.5) 19.8 Timing/seasonality

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue growth (C$)Q2 2026N/A(4%) to (2%) Newly issued
Adjusted Operating Income ($USD)Q2 2026N/A$260M–$290M Newly issued
Gross Margin (YoY)Q2 2026N/ABroadly flat vs LY Newly issued
SG&A dollars (YoY)Q2 2026N/ASlightly up vs LY; broadly flat on C$ basis Newly issued
Interest Expense ($USD)Q2 2026N/A~$50M Newly issued
Effective Tax Rate (%)Q2 2026N/A30%–33% Newly issued
Free Cash Flow (directional)FY 2026Up vs LY Up vs LY; includes known/anticipated tariffs Maintained/Reiterated
Adjusted Operating Income (directional)FY 2026Up vs LY Up vs LY Maintained/Reiterated
Operating Cash Flow (directional)FY 2026Up vs LY Up vs LY Maintained/Reiterated
Dividend per shareQuarterly$0.09 $0.09 (payable Sep 18, 2025) Maintained

Earnings Call Themes & Trends

TopicQ3 2025 (Prior-2)Q4 2025 (Prior-1)Q1 2026 (Current)Trend
Tariffs/MacroProactive mitigation; asset-light flexibility; US China finished goods <2% Unmitigated impact ~$150M annualized; ~65% timing FY26, mostly H2 Updated annualized impact $250M–$270M; ~50% timing FY26; net $60M–$70M gross profit hit in FY26; full mitigation expected FY27 Tariff headwind quantified; mitigation plan advancing
Vans TurnaroundDown 8%; improving; non-value wholesale sell-out turning positive; value channel ~1/3 of business targeted Down 20%; ~60% of decline from deliberate actions; store/value closures; DTC softness Down 15%; ~40% of decline from deliberate actions; Warped Tour demand; retail pilots outperforming; continued rationalization through Q3 Executing reset; early demand/format green shoots
Gross Margin ElevationGM 56.3%; OM 11.4%; cost savings progressing GM +560 bps to 53.4% vs LY GM 53.9% (GAAP)/54.1% adj; +270/290 bps vs LY Structural improvement from inventory quality/markdown management
Debt Reduction/LeverageNet debt −$1.9B YoY; on path to 2.5x by FY28 Net debt −$1.8B; leverage 4.1x YE; FCF $313M Net debt −$1.4B YoY; planning $1.5B asset-backed revolver; leverage to decline in FY26 Balance sheet strengthening continues
Supply Chain & Pace-to-MarketIntegrated planning to optimize inventory Asset-light model; diversified sourcing Vans product engine pace improving; agility emphasized Building agility/product cycle acceleration
Regional TrendsAll regions positive; Americas +2% APAC +2%; Americas −5%; EMEA −2% Americas −4%; EMEA +4%; APAC +4% APAC stabilizing; EMEA mixed on C$ basis

Management Commentary

  • CEO: “We performed ahead of our expectations and guidance in Q1'26… The North Face and Timberland sustained their positive momentum… Vans was impacted by channel rationalization actions” .
  • CEO: “We have reset the table and soon will move to growth… We are as confident as ever in our plans to transform VF and return the company to long-term growth, in revenue and in profit” .
  • CFO: “We expect Q2 revenues to be down 2% to down 4% (C$)… operating income $260M–$290M; gross margins broadly flat; SG&A up slightly vs last year (broadly flat on a C$ basis)” .
  • CFO on tariffs: “Incremental annualized tariff impact of $100M–$120M, bringing total annualized to $250M–$270M… expect 50% to flow through in FY26… negative net impact to gross profit of $60M–$70M in FY26; fully mitigate in FY27” .
  • CEO on Vans demand creation: Vans Warped Tour events sold out rapidly; ~170,000 attendees in Long Beach; “You could really feel the love for Vans… a huge boost for the brand” .

Q&A Highlights

  • Tariffs and mitigation: Analysts probed timing and elasticity; management modeled scenarios with pricing actions and sourcing savings, expecting full mitigation by FY27; Q2 ETR guided to 30%–33% .
  • Vans execution: Discussion on Warped Tour impact, retail pilots (Fifth Avenue comps positive; London elevated store +15% vs EMEA fleet) and product cadence (Super Low Pro, OTW, upcoming collaborations) .
  • North Face seasonality: Focus on building spring/summer assortments and growing lifestyle apparel and footwear to drive four-season relevance; orders not disclosed .
  • Wholesale sentiment: Some hesitancy amid tariff uncertainty; VF leaning into innovation and marketing to offset macro conservatism .
  • Free cash flow and leverage: Q1 FCF timing headwinds; net debt to decline in FY26; paying down upcoming €500M bond largely from FCF; finalizing $1.5B asset-backed revolver .

Estimates Context

  • Q1 FY26 vs S&P consensus: Revenue $1.761B actual vs $1.701B consensus*; adjusted EPS ($0.24) actual vs ($0.338) consensus* — both beats .
  • Forward consensus snapshots (quarterly):
    • Q2 FY26 EPS $0.425*, revenue $2.733B*; management guided operating income $260M–$290M and revenue −2% to −4% C$, implying conservatism on top-line growth relative to recent reported trends .
    • Q3 FY26 EPS $0.451*, revenue $2.817B*; Q4 FY26 EPS ($0.0138), revenue $2.129B — directional only; company reiterated FY26 operating income and FCF up vs LY despite tariffs .

Notes: Values with * retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 print was quality: top-line above guidance and consensus, with significant margin expansion; the beat was driven by healthier inventory and lower discounting rather than transitory items .
  • Brand divergence continues: TNF/Timberland momentum offsets Vans reset; excluding Vans, VF delivered +6% revenue growth, underscoring portfolio resilience .
  • Vans reset is progressing; expect drag through Q3 before rationalization actions subside; watch Warped Tour brand heat, premium product pipeline, and retail format roll-outs for inflection signals .
  • Tariffs are manageable: quantified FY26 net gross profit impact of $60M–$70M with full mitigation in FY27 via pricing and sourcing — reduces risk of structural margin erosion .
  • Balance sheet trajectory constructive: net debt −$1.4B YoY; asset-backed revolver enhances liquidity flexibility; leverage expected to decline in FY26, supporting medium-term 2.5x target by FY28 .
  • Near-term setup: Q2 guide calls for modest revenue decline (C$) and strong adjusted OI; SG&A investment into back-to-school marketing suggests management is positioning for demand capture .
  • Estimate implications: Consensus likely lifts on margins (gross/operating) and Q1 beat; top-line revisions may be tempered by Q2 C$ guide and tariff timing, but FY26 operating income/FCF up vs LY provides support .

Appendix Citations

  • Press release and 8-K exhibits: .
  • Earnings call transcript Q1 FY26: .
  • Prior quarters call details: .
  • Segment and quarterly revenue (recast): .