Shares of VF Corp. were down 12 percent for the day on Tuesday, October 28, after the parent of The North Face, Vans, and Timberland reported fiscal second quarter earnings that topped expectations but provided guidance for the third quarter that fell below analysts’ targets. The cautious guidance came amid investor concerns about holiday selling amid an uncertain economy and the impact of higher prices tied to tariffs.
For the third quarter, VF guided sales to decline 1 percent to 3 percent, compared with analysts’ consensus for a 1.2 percent gain. VF expects adjusted operating income of $275 million to $305 million compared to the analysts’ consensus estimate of $317.6 million. The implied EPS was in the range of 45 cents to 50 cnets, versus the consensus of 55 cents a share.
Asked on an analyst call about holiday ordering patterns from retailers, VF Corp.’s President and CEO, Bracken Darrell, said, “It’s just a little too early to say. This is always the period when it’s really, exciting in this business because things start to ramp up. It starts to get cold. There are a lot of good things that will happen between now and Thanksgiving. It’s a little too early for us to say, but we’re really excited about it. We feel like we’ve got a good plan. We’ve got good products. We’re optimistic, but it’s too early to say how it will play out. There is uncertainty out there about the overall macro environment. There’s the shutdown, etc. I think I said in a conference a couple of months ago, the consumer’s been stubbornly positive, and I’m hoping that will happen again.”
Fiscal Q2 Results Surpass Top and Bottom-Line Guidance
In the quarter, sales grew 1.6 percent to $2.8 billion while declining 1 percent on a currency-neutral basis. VF had guided sales on a currency-neutral basis to decline in the range of 3 percent to 4 percent.
Vans’ sales on a currency-neutral basis were down 11 percent, an improvement from the 15 percent decline seen in the fiscal first quarter. The North Face grew 4 percent on a currency-neutral basis but decelerated from the 5 percent and 11 percent gains seen in the first quarter.
By region, sales in the Americas were down 1 percent, EMEA remained flat, and APAC fell 2 percent. By channel, DTC was down 2 percent, while wholesale sales were unchanged.
Operating income was $313 million, up from $273.9 million a year ago. Adjusted operating income totaled $330 million, up 5 percent on a reported basis and 1 percent on a currency-neutral basis, and well above VF’s guidance in the range of $260 million to $290 million.
Adjusted gross margin for the quarter was flat year-over-year, as the benefit from fewer discounts was offset by FX headwinds.
SG&A dollars were up 1 percent year-over-year, but down 1 percent in constant dollars. Back-to-school marketing increased year on year, but those expenses were offset by cost savings across the business. Overall, SG&A was slightly lower than expected, while gross profit dollars were higher than expected, driven by revenue that came in ahead of guidance.
Operating margin reached 11.2 percent, up 130 basis points year-over-year, while adjusted operating margin was 11.8 percent, up 40 basis points.
EPS was $0.48, down from $0.52 a year ago. Adjusted EPS of $0.52 was down from $0.60 a year ago but topped Wall Street’s consensus target of $0.42.
“At a really high level, it was a good quarter,” said Darrell on the analyst call.” We delivered on our commitments, and we made further progress on our turnaround. We delivered this performance despite, admittedly, an uncertain, unpredictable environment around the world.”
Darrell said VF remains “focused on returning the entire company to growth.” He noted that during the company’s first-quarter analyst call, 60 percent of its business by revenue was growing, up from 10 percent in the prior year. In the current quarter, that figure expanded by more than 65 percent and would have been nearly 70 percent excluding Dickie’s, which VF announced in the quarter is being sold to Bluestar Alliance.
Addressing the Dickies sale, he said it will enable VF to accelerate its goal of reducing leverage in the medium term to 2.5 times or below.
“I’m confident it’s a very good move for the company and for our shareholders,” said Darrell. “As we’ve said before, we’ll always evaluate any offer we receive, reflecting our commitment to shareholder value creation. We had an inbound with a very good price of $600 million. We’ve done a lot of terrific work behind the scenes on the brand and the product portfolio, and I believe this positions the brand well for growth. This was a unique opportunity.”
During the second quarter, net debt, excluding lease liabilities, was down $1.5 billion versus last year, or down 27 percent.
The North Face Sales Boosted by the Americas’ Return to Growth
The North Face’s sales grew 6.0 percent to $1.16 billion and gained 4 percent on a currency-neutral basis. The gains reflected broad-based growth across all three regions and globally in DTC and Wholesale. Growth was slightly below the 5 percent currency-neutral increase delivered in the first quarter.
By region on a currency-neutral basis, sales in the Americas were up 2 percent, rebounding from a 3 percent Q1 decline and driven by DTC. EMEA grew 4 percent, compared to 9 percent in Q1; APAC gained 7 percent versus 16 percent in Q1.
Performance apparel is up across every region, with strength in transitional outerwear, while footwear grew by double digits in every region. Darrell said, “Across categories, product innovation, newness, and elevation drove growth as we continued to show the extraordinary reach of The North Face from the summit to the street. We also celebrated 25 years of the Summit Series, expanding the collection with innovation, adding exciting new colors and designs.”
The performance was supported by a marketing campaign with mountaineer Jim Morrison, who, with Jimmy Chin, became the first person to climb and ski down the North Face of Mount Everest. Darrell said, “Across our marketing strategy, we’re driving high consumer engagement in brand experiences and amplifying that through social channels. In addition to the Ultra Trail du Mont Blanc, or UTMB, this included ClimbFest in San Francisco, community hiking events in APAC and a Beijing 100K Ultra Trail race.”
Darrell said The North Face still has “an enormous opportunity to be realized,” including the potential to expand in new categories, further develop women’s and a bigger spring business.
In the Q&A session, Darrell stressed that The North Face remains “very healthy,” but needs to execute. He said, “The key now is we just have to keep playing out the initiatives we’ve been talking about, which is not just playing in the winter quarters, but really playing year-round, making sure we’re really getting to women, taking full advantage of these categories we’re performing in, like footwear, for example, where we had strong double-digit growth again this quarter around the world. We have opportunity. We’ve just got to execute right through everything. The North Face, I feel I’m excited about.”
Vans’ Slow Recovery Continues
Vans’ revenue declined 9.1 percent in the quarter to $606.9 million. On a currency-neutral basis, sales were down 11 percent, improving sequentially from a 15 percent decline seen in the fiscal first quarter.
Sales were slightly better than expected but still impacted by channel rationalization actions to reduce exposure to promotional channels. Excluding the rationalization efforts, which accounted for more than 20 percent of Vans’ reported decline, sales would have been down in high single digits on a currency-neutral basis.
Darrell described Vans as “a little better” in the quarter, pointing to early benefits from the hiring of singer SZA as Vans’ first-ever artistic director.
“I told you that SZA’s impact on product would be visible in the back-to-school period, and it is,” said Darrell. “Product newness across footwear is drawing in new consumers, particularly women, but also youth and kids.”
Non-icons styles grew in the quarter, driven by the Super Low Pro, which “continues to perform well,” said Darrell. The new Skate Loafer “had a very strong debut and is sold out in most sizes,” while the Cross Path XC produced “a very strong launch.”
Added Darrell, “Within existing styles and icons, we’re also beginning to realize the impact of elevation, innovation, and newness. For example, the Authentic is up globally as a franchise, helped by the halo effect of the Valentino collab, which drove positive search trends in key markets.”
Within the Old Skool franchise, newness has driven higher sales of women’s styles. Said Darrell, “Just last week at ComplexCon, the largest event for young shoe dogs in the world, mostly guys it’s in Las Vegas. At that event, Vans had one of the longest, if not the longest, lines of people waiting for the pearlized Old Skool shoe we launched there. This is just the start. More newness is coming as we head into holiday and into spring of 2026.”
Digital traffic trends improved in the Americas and EMEA, particularly during peak consumer moments such as the back-to-school period, which saw digital traffic turn positive in the Americas.
Concluded Darrell on Vans, “To wrap it up on Vans, each quarter we’re making great progress. We took actions to clean up the marketplaces and set the stage for a very exciting product pipeline that has started to roll in and is delivering early results. I’m as confident as ever in Sun (Sun Choe, Vans’ global brand president) and her team leading us to a return to growth at Vans.”
Timberland Gains 7 percent, led by Double-Digit Americas Growth
Timberland’s sales grew 6.5 percent to $506.4 million and improved 4 percent on a currency-neutral basis. The brand delivered global growth across both DTC and Wholesale for the fourth consecutive quarter, though it decelerated from the 9 percent currency-neutral growth seen in the first quarter, largely due to weakness in Asia.
In the Americas, sales in the latest quarter grew 11 percent, driven by the strong back-to-school season. Sales grew 3 percent in EMEA and declined 14 percent in APAC. In the fiscal first quarter, Timberland’s sales grew 16 percent in the Americas and 10 percent in APAC while easing 1 percent in EMEA.
Darrell said continued “very strong” demand for the classic 6-inch premium boot helped propel gains.
“Today, the premium 6-inch icon represents only about 20 percent of our global revenue, so we have a lot of opportunity for growth,” said Darrell. “We can continue to grow the 6-inch business through colors, materials, innovations, collaborations, and more, while we also pursue the huge opportunity to grow this brand across other footwear and apparel categories.”
Among other styles, the Timberland 25, a lightweight version of the boot, was recently launched and is “resonating well in its early weeks in our stores.” Boat shoes are also “growing very strongly in all regions as we diversify the product lineup and give the brand more versatility and firepower during the warmer seasons.”
In marketing, Timberland’s adoption of a social-first strategy has been instrumental in driving global brand heat. The brand saw a strong response to the introduction of the Advice of an Icon campaign with events in New York, London, Shanghai, and Tokyo.
“Brand interest grew during the summer months, with consumer search interest positive in key markets in the U.S. and in India,” said Darrell. “The opportunity in Timberland is significant because we can continue to grow the boot, we can grow in other footwear franchises, and we can unlock apparel around the world, all at the same time. In the U.S., especially, this will be supported by expanded and enhanced distribution. We have the game plan to do that now.”
In the Q&A session, Darrell cautioned that Timberland will likely see low single-digit growth for the rest of the fiscal year. He said the brand remains “terribly under-distributed” in U.S. wholesale and has “only six full-price stores in the United States where there is very strong demand.” However, VF will be “very deliberate” in opening new stores and expanding wholesale accounts to retain Timberland’s brand heat. Darrell said, “We’re really trying to think in terms of driving growth longer term, not just what are we going to do this holiday and in Q4. That’s our mindset on this whole business, really, how do we, you know, I hope you’re starting to get a feel for that. We’re going to execute in the key commercial moments, but our real game plan is longer term than that. We’re going to systematically put these building blocks in place. They’re going to deliver for years and years to come.”
Altra Paces “Other Brands” Segment
VF’s “Other Brands” segment, including Dickies, Altra, Smartwool, Napapijri, Icebreaker, Kipling, Eastpak, and JanSport, delivered revenues of $532.3 million in the quarter, up 1.6 percent on a reported basis and down 1 percent on a currency-neutral basis.
The star of the segment remains Altra, where sales grew 35 percent, marking its third consecutive quarter of double-digit growth. Growth accelerated from the 20 percent gain seen in VF’s fiscal first quarter.
The gains were driven by key franchises in trail and road running, Darrell said on the analyst call.
“The growth opportunity for Altra across both road and trail is significant,” said Darrell. “We’re fueling this growth and driving higher brand awareness with targeted marketing investments, which, as a reminder, our awareness is less than 10 percent in the U.S. and even lower in other regions.”
He said Altra is seeing “particularly strong” e-commerce growth, driven by higher traffic and stronger conversion. Darrell said, “Altra’s on track to exceed $250 million in revenue this year, and I’m confident the brand has a long, strong runway for growth for many years to come.”
Among other brands in the Other Brands segment, Dickies, which is expected to complete its sale by the end of the calendar year, was down year over year, although the workwear and lifestyle brand saw strong margin expansion and positive consumer engagement from regional activations.
Napapijri’s sales decline moderated, with a positive performance from U.K. key accounts. The Pack’s businesses (Kipling, Eastpak and JanSport) declined year over year, although Eastpak’s sales grew, driven by marketplace growth, icon segmentation, and collaborations. VF didn’t indicate whether Icebreaker or Smartwool’s sales were up or down but highlighted that Icebreaker’s MerinoFine baselayer products continue to grow while Smartwool’s DTC channels were up double digits.
Outlook
Looking to the full fiscal year, VF continued to forecast free cash flow to be up versus last year, including known and anticipated tariff impacts. Adjusted operating income and operating cash flow are also expected to be up versus last year. The guidance excludes Dickies.
Paul Vogel, EVP and CFO, said VF is taking pricing actions to offset tariffs, although the majority of the price increases will be reflected starting in Q4 or the beginning of calendar 2026. VF is also working with vendors to mitigate tariff costs. Vogel also noted that VF continues to expect to benefit from less discounting. He said, “The promotional environment year-over-year has gotten better, and you’ll continue to see that throughout the rest of the year.”
