VF Corp Q1 2026 slides: Margin expansion and debt reduction offset flat revenue

Introduction & Market Context

VF Corporation (NYSE:VFC) presented its Q1 2026 earnings results on July 30, 2025, highlighting sequential improvement in financial performance despite flat revenue. The company reported revenue of $1.8 billion, which remained unchanged on a reported basis but decreased 2% on a constant currency basis. Despite this, VF Corp significantly outperformed its guidance on profitability metrics, showing progress in its ongoing transformation efforts.

The company’s stock reacted negatively to the results, declining 2.14% in aftermarket trading following the announcement, despite the improved operational performance. This reflects continued investor caution about the company’s turnaround efforts, particularly regarding the struggling Vans brand.

Quarterly Performance Highlights

VF Corp delivered a notable improvement in its bottom line for Q1 2026, with an adjusted operating loss of $56 million, substantially better than the guided range of $125-110 million. The company’s adjusted operating margin improved by 270 basis points year-over-year to -3.2%, while gross margin expanded by 290 basis points.

As shown in the following comprehensive financial review, VF Corp demonstrated significant progress in profitability metrics despite flat revenue:

The company’s adjusted loss per share of $0.24 improved from $0.35 in the prior year period, reflecting enhanced operational efficiency. CEO Bracken Darrell emphasized the company’s transformation progress: "We are lowering costs, improving margins, reducing debt and transforming the organization. We have reset the table and soon will move to growth."

VF Corp’s performance against guidance was particularly strong, as illustrated in this detailed breakdown:

Brand Performance Analysis

VF Corp continued to experience divergent performance across its brand portfolio. The North Face delivered 6% growth (5% in constant currency), driven by technical trail running footwear, lifestyle apparel, and bags. Timberland showed even stronger performance with 11% growth (9% in constant currency), benefiting from global momentum in its iconic 6" boot and boat shoe category.

The following chart details the revenue trends across VF Corp’s major brands, regions, and channels:

The North Face maintained its position as a growth driver, with particular strength in EMEA (+15%) and APAC (+16%), as shown in this brand performance summary:

Conversely, Vans continued to struggle with a 14% decline (15% in constant currency), impacted by channel rationalization efforts and lower traffic. The company noted that excluding the impact of these rationalization actions, Vans revenue would have been down high-single digits. Management emphasized that these strategic changes are necessary to position the brand for sustainable future growth.

The Vans performance breakdown reveals the challenges and strategic initiatives underway:

Timberland delivered impressive results with double-digit growth in the Americas and strong performance globally:

Other brands in VF Corp’s portfolio showed mixed results, with Altra standing out with over 20% growth. The company’s smaller brands collectively grew 4% (2% in constant currency):

Financial Position and Debt Reduction

A significant highlight of VF Corp’s Q1 2026 results was the substantial reduction in net debt, which decreased by $1.4 billion or 20% year-over-year to $5.3 billion. This improvement reflects the company’s focus on strengthening its balance sheet as part of its transformation strategy.

The following chart illustrates VF Corp’s progress in debt reduction:

The company’s inventory position increased slightly by 4% year-over-year (1% in constant currency), while cash dividends of $35 million were paid during the quarter. VF Corp remains committed to its medium-term leverage target, which it aims to achieve by FY 2028.

To provide additional transparency, the company presented a detailed reconciliation of GAAP to non-GAAP measures, highlighting the impact of its Reinvent transformation program:

Outlook and Guidance

Looking ahead, VF Corp provided guidance for Q2 2026, projecting a revenue decline of 2-4% in constant currency compared to the prior year, partly due to a 1% negative impact from wholesale timing shifts. The company expects adjusted operating income of $260-290 million for the quarter.

The detailed guidance for Q2 and full-year FY 2026 is presented below:

For the full fiscal year 2026, VF Corp anticipates improved free cash flow and adjusted operating income compared to FY 2025, despite factoring in known and anticipated tariff impacts. The company remains focused on its transformation strategy, with the goal of returning to sustainable growth in both revenue and profit.

The regional breakdown of the top three brands’ performance provides additional context for understanding growth opportunities across markets:

VF Corp’s Q1 2026 results demonstrate meaningful progress in its transformation journey, with significant improvements in profitability metrics and debt reduction offsetting flat revenue performance. While challenges remain, particularly with the Vans brand, the strong performance of The North Face and Timberland, along with the company’s focus on operational efficiency, suggest that VF Corp’s strategic initiatives are gaining traction. Investors will be watching closely to see if these improvements translate into sustainable revenue growth in the coming quarters.

Full presentation:

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