Vans still in freefall, ‘but VF rate of decline moderated’

VF Corporation reports first quarter fiscal 2025 results and reiterates FY25 free cash flow guidance

Denver, U.S. (06 August 2024) - VF Corporation today reported financial results for its first quarter (Q1'FY25) ended June 29, 2024, announcing a quarterly per share dividend of $0.09.

Bracken Darrell, President and CEO, said: "As I complete my first year at VF, I feel more energized than ever. While the business is still down, the rate of decline moderated quarter-over-quarter versus Q4 and across almost all our brands. We advanced further on the Reinvent transformation plan. We are on track to deliver our targeted cost savings, and we have addressed one of our top financial priorities to strengthen the balance sheet with the announced sale of Supreme. Together with the first-class leadership team I have built, we are confident we will continue to make progress to return to growth and drive strong, sustainable value creation at VF."

• Revenue $1.9 billion, down 9% (down 8% in constant dollars)
◦ The North Face down 3% (down 2% in constant dollars), with global brand DTC up 6% (up 8% in constant dollars), inclusive of broad-based DTC growth in all regions, more than offset by US wholesale.
◦ Vans down 21%, reflecting a modest improvement relative to the previous quarter
• Gross margin 52.0%, down 80 basis points
◦ Gross margin contraction driven by 60 basis points of unfavourable rate, which includes foreign currency headwinds, and 20 basis points from unfavourable mix
• Operating margin (12.6)%, down 1,220 basis points; adjusted operating margin (4.0)%, down 360 basis points
◦ Adjusted operating margin reflects approximately 280 basis points of deleverage and 80 basis points of unfavourable gross margin
• Loss per share $(0.67) vs. Q1'FY24 $(0.15); adjusted loss per share $(0.33) vs. Q1'FY24 $(0.15)
• Q1'FY25 ending inventories down 24% versus the prior year
• Net debt at the end of Q1'FY25 is $5.3 billion, down by approximately $587 million relative to last year

FY25 Outlook
• The company reiterates guidance for free cash flow plus the proceeds from non-core physical asset sales of approximately $600 million, excluding the impact of the divestiture of Supreme, which is anticipated to be completed by the end of calendar year 2024. Supreme is expected to be reported as discontinued operations beginning in Q2'FY25.