VF (1VFC) Q2 2027 Earnings Report

The call was strongly positive overall. The company exceeded second-quarter revenue and operating income guidance, expanded gross margin, delivered more than 40% EPS growth, and reported broad-based growth across The North Face, Timberland, and Altra. Vans remains the main challenge, with a 9.8% quarterly decline and continued wholesale destocking, while APAC weakness, higher inventory, negative year-to-date free cash flow, and second-half tariff expense were also noted. However, management reaffirmed full-year guidance and medium-term targets and expressed confidence in Vans' product pipeline, DTC momentum, and wholesale order visibility.

V.F. reaffirmed fiscal 2027 revenue growth of 2% or better, with The North Face and Timberland each up mid-single digits for the full year and Vans down 2% or better in the second half, resulting in down mid-single digits for the full year; operating margin is expected to be approximately 8%, the full year effective tax rate in the high 20s range, normalized free cash flow flat to up versus last year on a normalized basis of $405 million, actual free cash flow approximately $515 million or better, and year-end leverage between 2.6 and 2.9x. For Q3, revenue growth is expected to be approximately 3% or better, operating income approximately $390 million or better, about $50 million or more above last year, The North Face and Timberland each up 4% or better, and Vans down 4% or better. The company expects gross margin to be still up for Q3, but not as high as 180 basis points, with approximately $70 million-$80 million of overall unmitigated tariff in the second half, and reiterated medium-term targets of a leverage ratio of 2.5 x or better by fiscal 2028 and an operating margin of 10% or better for the full year fiscal 2029.