VF Corp, The North Face, Vans, Timberland, and Dickies parent is continuing to make progress on its turnaround plan, delivering sequential sales improvement, a year-over-year gross margin increase, and a 13 percent drop in inventories in Q2 ended Sep. 30. The group is expected to provide more details on its go-forward strategic plans during a planned investor day on Oct. 30.
Operating income slipped by 22 percent to $273.9 million from $350.5 million in Q2, but the year-over-year net profit was $52.2 million against a loss of more than $450.7 million. During the period VF Corp. generated another $65 million in cost savings as it guided previously, bringing it closer to its FY objective of $300 million in savings. An unspecified percentage of that total will be re-invested back into the business, including for both product development and marketing.
| VF Corp. - Income | |||
|---|---|---|---|
| 2024 | 2023 | Change | |
| Three months ended Sept. 30 ($ thousand) | |||
| Net revenues | 2,757,948 | 2,920,123 | -5.6% |
| Costs of goods sold | 1,317,391 | 1,430,194 | -7.9% |
| SG&A expenses | 1,166,654 | 1,139,390 | 2.4% |
| Total costs and operating expenses | 2,484,045 | 2,569,584 | -3.3% |
| Operating income | 273,903 | 350,539 | -21.9% |
| Interest expense, net | 42,688 | 41,111 | 3.8% |
| Other expense, net | 660 | 2,183 | -69.8% |
| Pre-tax from continuing operations | 230,555 | 307,245 | -25.0% |
| Tax | 28,046 | 758,887 | -96.3% |
| Income from continuing operations | 202,509 | -451,642 | – |
| Income from discontinued operations, net of tax | -150,331 | 945 | – |
| Net income | 52,178 | -450,697 | – |
| Diluted EPS continuing operations | 0.52 | -1.16 | – |
| Diluted EPS discontinued operations | -0.38 | – | – |
| Six months ended Sept. 30 ($ thousand) | |||
| Net revenues | 4,527,008 | 4,888,186 | -7.4% |
| Costs of goods sold | 2,180,773 | 2,369,828 | -8.0% |
| SG&A expenses | 2,195,352 | 2,197,668 | -0.1% |
| Total costs and operating expenses | 4,376,125 | 4,567,496 | -4.2% |
| Operating income | 150,883 | 320,690 | -53.0% |
| Interest expense, net | 83,635 | 76,687 | 9.1% |
| Other expense, net | 2,146 | 5,826 | -63.2% |
| Pre-tax from continuing operations | 65,102 | 238,177 | -72.7% |
| Tax | 14,620 | 752,794 | -98.1% |
| Income from continuing operations | 50,482 | -514,617 | – |
| Income from discontinued operations, net of tax | -257,190 | 6,495 | – |
| Net income | -206,708 | -508,122 | 59.3% |
| Diluted EPS continuing operations | 0.13 | -1.33 | – |
| Diluted EPS discontinued operations | -0.66 | 0.02 | – |
| Source: VF Corp. | |||
Sequential sales improvement in Q2
Total revenues declined by 5.6 percent to $2.76 billion from $2.92 billion. Geographically on a constant-currency basis, EMEA sales slipped by 5 percent as Americas’ revenues declined by 9 percent, and APAC sales rose by 5 percent.
By segment, Outdoor operating profit declined by 3.1 percent year-over-year to $287.4 million on a 4 percent drop in constant-currency revenues to $1.66 billion. During the period, The North Face launched its first global brand campaign in more than three years. And the EMEA had its strongest month in September after North Face athlete Katie Scheid broke had a course record and won the Ultra-Trail du Mont-Blanc race in August. Elsewhere, the brand benefitted from strong backpack sales in the Americas and its Summit Series in APAC. A new North Face store will debut on New York City’s Fifth Avenue in Fall 2025. At Timberland, bolstered by a new brand campaign in September and continued sales momentum from its yellow boot, suffered a 3 percent sales contraction in Q2 versus a 9 percent decline in Q1.
| VF Corp. - Revenues | ||||
|---|---|---|---|---|
| 2024 | 2023 | Change | ||
| Three months ended Sept. 30 ($ million) | ||||
| Brands | ||||
| The North Face | 1,091.4 | 1,128.8 | -3.3% | |
| Vans | 667.4 | 748.8 | -10.9% | |
| Timberland | 475.3 | 488.6 | -2.7% | |
| Dickies | 152.4 | 171.4 | -11.1% | |
| Other | 371.4 | 382.4 | -2.9% | |
| VF Revenue | 2,757.9 | 2,920.1 | -5.6% | |
| Regions | ||||
| Americas | 1,355.9 | 1,506.1 | -10.0% | |
| EMEA | 1,009.6 | 1,042.8 | -3.2% | |
| Asia-Pacific | 392.5 | 371.3 | 5.7% | |
| VF Revenue | 2,757.9 | 2,920.1 | -5.6% | |
| International | 1,572.5 | 1,605.0 | -2.0% | |
| Channels | ||||
| DTC | 914.9 | 997.5 | -8.3% | |
| Wholesale | 1,843.0 | 1,922.7 | -4.1% | |
| VF Revenue | 2,757.9 | 2,920.1 | -5.6% | |
| Six months ended Sept. 30 ($ million) | ||||
| Brands | ||||
| The North Face | 1,615.6 | 1,667.0 | -3.1% | |
| Vans | 1,249.3 | 1,486.3 | -15.9% | |
| Timberland | 704.8 | 742.5 | -5.1% | |
| Dickies | 269.2 | 308.1 | -12.6% | |
| Other | 688.2 | 684.3 | 0.6% | |
| VF Revenue | 4,527.0 | 4,888.2 | -7.4% | |
| Regions | ||||
| Americas | 2,331.6 | 2,624.9 | -11.2% | |
| EMEA | 1,541.9 | 1,607.1 | -4.1% | |
| Asia-Pacific | 653.6 | 656.3 | -0.4% | |
| VF Revenue | 4,527.0 | 4,888.2 | -7.4% | |
| International | 2,482.2 | 2,578.4 | -3.7% | |
| Channels | ||||
| DTC | 1,655.9 | 1,852.8 | -10.6% | |
| Wholesale | 2,871.1 | 3,035.4 | -5.4% | |
| VF Revenue | 4,527.0 | 4,888.2 | -7.4% | |
| Source: VF Corp. | ||||
Active segment profitability tumbled 14.5 percent in Q2 to $103.7 million on a 9 percent revenue decline to $879.8 million versus $968.2 million in the year-ago quarter. Vans’ sales declined by 11 percent versus a 21 percent decline in Q1. The brand is seeing some “encouraging results” from new product franchises that debuted over the summer, including the Upland and High Lane.
Work segment profitability was $20.4 million in Q2, up 140 percent year-over-year from $8.5 million in the year-ago period. Q2 segment sales contracted by 8 percent to $219.5 million from $238.3 million.
Outlook for Q3
VF Corp. currently anticipates that its Q3 results will show further sequential revenue improvement. Total sales are forecast to be down 1 to 3 percent year-over-year on a reported basis to $2.7 to $2.75 billion. The wholesale segment will drive the sales progress. Period operating income is forecast at $170 to $200 million with gross margin also expected to increase year-over-year, benefitting from lower product costs and fewer reserves.
