EXEC: VF Corp. CEO Bullish on Return to Growth as The North Face and Timberland Both Shine in Q1
On VF Corp.’s fiscal first quarter analyst call, Bracken Darrell spent much of the time discussing VF’s progress on the goal of returning the company to growth, highlighted by sales expanding 5 percent at The North Face in the period and 9 percent at Timberland on a currency-neutral basis. Vans’ sales were down 14 percent due to channel rationalization efforts, but Darrell expressed full confidence that an inflection point, leading to growth for Vans, will soon arrive.
“We’ll get Vans back to flat and then to healthy growth as fast as we can,” Darrell told analysts. “There are some out there who think this will never happen. I sort of love having that point of view out there. I get it. And it’s our job to show you how wrong that point of view is.”
VF’s First-Quarter Results
The first quarter exceeded both analysts’ and internal expectations, with sales for the quarter ended June 28 reaching $1.8 billion, surpassing the analysts’ consensus target of $1.7 billion. Sales were flat on a reported basis and down 2 percent on a currency-neutral basis. VF’s guidance had called for currency-neutral sales to decline in the range of 3 percent to 5 percent.
A shift in the timing of wholesale orders that shifted into fiscal Q1 2026 from fiscal Q2 2026 benefited revenue by 2 percent, or 1 percent currency neutral. Excluding Vans, total revenues increased by 6 percent and rose 5 percent in a currency-neutral basis.
DTC sales were down 3 percent reported (up 4 percent currency-neutral) to $720.7 million. Wholesale revenues were up 1 percent to $1.04 billion and flat on a currency-neutral basis.
By region, sales in the Americas totaled $937.6 million, down 4 percent on a reported basis and 3 percent on a currency-neutral basis. EMEA sales were up 4 percent on a reported basis (down 2 percent currency-neutral) to $551.3 million. In the APAC region, sales amounted to $271.8 million, up 4 percent on both a reported and currency-neutral basis.
VF’s adjusted operating loss of $56 million handily topped VF’s guidance that called for an adjusted loss in the range of $125 million to $110 million. It was also ahead of last year’s adjusted operating loss of $76.6 million.
The bottom line benefited from an improvement in adjusted gross margin by 200 basis points to 54.1 percent, driven primarily by higher-quality inventory, lower discounts and foreign exchange benefits.
SG&A dollars were flat year-over-year with the benefit of cost savings, leading to an adjusted operating margin for the quarter of negative 3.2 percent, up 270 basis points year-over-year.
The North Face Posts 6 Percent Sales Gain
Among brands, The North Face’s sales grew 6.4 percent in the quarter to $557.4 million and 5 percent on a currency-neutral basis. By region, sales on a currency-neutral basis decreased by 3 percent in the Americas but increased by 9 percent in EMEA and 16 percent in APAC.
Product drivers for TNF include technical trail running footwear (e.g., Vectiv Pro), newness in lifestyle apparel, and bags and packs (e.g., Base Camp Duffel and Base Camp Voyager). The gains were supported by growth in both DTC and wholesale. DTC sales at TNF increased 7 percent on a reported basis (6 percent currency-neutral) in the quarter, driven by new door expansion. TNF’s profitability saw “strong improvement,” driven by operational execution and lower promotions.
Growth in the current quarter is being supported by the activation of a new brand strategy focused on “snow, climb, trail,” with over 90 community trail events planned globally this summer, particularly supporting growth in footwear and trail apparel.
Vans Sales Slide 14 Percent
Vans brand revenues totaled $498.0 million in the quarter, down 14 percent on a reported basis and 15 percent on a currency-neutral basis. By region, sales on a currency-neutral basis slum[ed 14 percent in the Americas, 16 percent in EMEA and 17 percent in APAC.
VF noted that, excluding the impact of channel rationalization actions, revenue decreased in the high single digits. DTC revenues were impacted by the closure of non-strategic stores and lower traffic across regions, with key EMEA cities outperforming. On the positive side, the Americas sell-out trends were positive in non-value wholesale doors, and sales from new products are growing, with momentum from Super Lowpro, Curren Caples Skate and OTW, more than offset by declines in the icons.
Vans also saw strong consumer engagement and reach driven by its Lil Uzi partnership, Pinnacle bookings at Paris Fashion Week, and the return of Vans Warped Tour.
Timberland Sales Boosted by Strength in the Americas
Timberland’s sales grew 11 percent (up 9 percent currency-neutral) to $255.1 million. By region, sales on a currency-neutral basis were led by the Americas, up 16 percent and supported by strong double-digit comps in DTC. Sales in the APAC were up 10 percent on a currency-neutral basis while EMEA showed a 1 percent decline.
Timberland benefited from global growth in both DTC and wholesale channels with lower discounting, contributing to higher margins. Among products, sustained global momentum for the 6″ boot was seen during the warmer seasons, while the boat shoe category is growing strongly in EMEA and APAC. VF stated that Timberland is benefiting from styling-based content, and VIP placement was activated at The Met Gala, the NBA Finals and Draft, Coachella, and the Glastonbury Festival.
Other Brands
Darrell also cited the potential for VF to drive growth from smaller brands as a “multi-brand powerhouse.” Other brands owned by VF include Dickies, Altra, Eastpak, Icebreaker, JanSport, Kipling, Napapijri, and Smartwool.
The CEO highlighted the success of Altra, which grew over 20 percent in the quarter and is on track to exceed $250 million in sales this year, up from $60 million when the brand was acquired in 2018. Darrell said, “And that size with less than 10 percent awareness in the U.S. and much lower than that in the rest of the world. This is the kind of business that we can scale. It’s already tied for the #1 shoe in trail running in the U.S. and one of the fastest-growing franchises in the road running business.”
Back to Growth
On the call, Darrell noted that this month marked his two-year anniversary of taking over as VF’s CEO and pointed to progress in transformation efforts, including building out a “great team” and reducing its cost structure well over $300 million in that time frame, with another $500 million to $600 million in reductions planned.
He also said VF is building a “unified product and marketing engine across each brand” to drive go-to-market efforts and has a “clear path” to reducing its debt leverage to the target of 2.5 times set for FY28.
However, Darrell said VF is foremost committed to growth. He said, “Turnarounds, by definition, start with declines. It’s been two years of resetting the table, and soon, we too will move to growth as we did in every turnaround, I’ve been part of. That’s the focus of every leader on my team and throughout the company right now. We’re all here to grow.”
He noted that almost 60 percent of VF’s business by revenue is now growing, up from only 10 percent a year ago, while citing numerous growth opportunities to build on.
He pointed out that The North Face’s goal is to shift from mid-single-digit growth to high single digits and double digits, with a plan to double its revenue. He noted the target was highlighted at VF’s Investor Day this past March.
“We aren’t promising to achieve those growth rates in the near term, but that’s what we’re focused on delivering,” said Darrell. “Our product innovation pipeline continues to build momentum for the brand. Footwear was up strong double digits again this quarter and is becoming a meaningful part of the business. In addition, our bags and packs business also grew strong double digits. But our biggest potential is in lifestyle apparel in general and spring and summer in particular. In fact, this is all to say we have many, many untapped growth opportunities in the North Face.”
Asked by an analyst about the 3 percent decline in the Americas region for TNF in the first quarter, Darrell said the period remains a “very light seasonal quarter” for the brand, but the decline also continues to reflect lean investments in summer inventory. He said, “We really don’t have enough spring and summer product out yet, but I can promise you that it’s a real focus of the team, and they’re really working to get there. As we get into the next spring and summer, you’ll see more and then more and more.”
Darrell also cited Timberland’s potential for growth with the 9 percent gain in the first quarter, building on a 13 percent hike in its fiscal fourth quarter. He said Timberland is benefiting from global momentum in the 6-inch boot and a growing business in the boat shoe.
“Our marketing strategy is working, enhancing the brand’s visibility and further broadening its reach and relevance in warmer weather. As we’ve seen with its presence at events like the Met Gala and the NBA finals and just a lot of organic social media that we see and amplify,” added Darrell of Timberland. “We’re more confident than ever that the upside opportunity to break out of Timberland’s historic revenue range is real, and we have the team in place to do it, led by Nina Flood. This is a business where the brand and the culture are much bigger than the business itself in size and therein lies the potential.”
Outlook
VF said it expects a negative net impact to gross profit from tariffs of $60 million to $70 million in fiscal ’26 after mitigation steps, including sourcing savings and pricing actions.
VF no longer provides detailed full-year guidance as it works on its reset. For the current fiscal second quarter, VF expects revenue to decline in the range of 4 percent to 2 percent on a currency-neutral basis. Adjusted operating income is expected to be in the range of $260 million to $290 million, compared with operating income of $315.2 million a year ago.
Asked by an analyst about the outlook for wholesale orders in North America, Darrell said buyers remain cautious. He elaborated, “I think around the world, you’ve got a little bit of hesitation by wholesalers to overextend themselves on inventory. So, we’re aware of that. I’m sure everyone in the industry is. And the traffic has generally slowed a little bit as you’ve gone through the summer, especially during this period of real uncertainty around what’s going to happen to tariffs. I do think it’s kind of caused a bit of conservatism. And I think you can kind of see and feel it. But we’re just as optimistic as we’ve been before. We feel like we laid the right bricks in terms of innovation, and we’re going to keep investing in marketing as we’ve planned. And we’re not letting up at all.”
Image courtesy The North Face/VF Corp.
See below for additional SGB Executive coverage of the Vans turnaround and the Vans Warped Tour re-launch:
EXEC: Vans Parent Updates Market on Brand’s Turnaround Progress; Re-Launches Warped Tour