VF Corporation Beats Financial Expectations in Second Quarter of Fiscal 2027
Key Facts
The company said adjusted operating income, excluding Dickies, was $364 million, compared with about $315 million expected. Revenue, meanwhile, came to $2.695 billion, down 4% year over year on a reported basis. But revenue rose 1% excluding Dickies and on a constant-currency basis, ahead of the company’s guidance, which had pointed to roughly flat revenue on that basis. The results show a contrast between declining reported revenue and improved operating performance and constant-currency revenue.
Reported operating income was $368 million, and the operating margin was 13.7%, up 250 basis points from the same period a year earlier. Gross margin also climbed to 55.4%, an annual increase of 320 basis points. Adjusted gross margin, also excluding Dickies, was 55.4%, up 290 basis points year over year. These metrics reflect margin expansion alongside adjusted operating income exceeding guidance. The company ended fiscal 2026 with revenue growth of 1%, or 4% excluding Dickies, and an adjusted operating margin of 7.0% excluding the brand, up 110 basis points.
Chief Executive Officer Bracken Darrell attributed the strong results to “good products and solid execution,” noting continued growth at The North Face and Timberland and saying Altra sales rose more than 40%. Sales at The North Face increased 4% year over year, while Timberland sales rose 4%, supported by continued strength in the Americas. By region, revenue in the Americas fell 2% on a reported basis but rose 5% excluding Dickies and on a constant-currency basis. Global direct-to-consumer sales grew 1%, or 3% excluding Dickies and on a constant-currency basis. The North Face had recorded 12% growth in the fourth quarter of fiscal 2026, while Vans sales fell 1% at the time.
Vans remained the weakest-performing brand in the quarter, with sales down 9.8% year over year. Its global direct-to-consumer sales nevertheless returned to growth, while the company expects wholesale sales to improve in the second half of fiscal 2027. Vans sales had returned to growth in the Americas direct-to-consumer channel in the fourth quarter of fiscal 2026, despite an overall decline at the time. Net inventory also rose 7% from a year earlier, which the company said was intended to support expected demand in the second half. This comes as the company maintained its revenue growth outlook for fiscal 2027, after first-quarter results exceeded guidance and the company raised its growth outlook at the time to 2% or more on a constant-currency basis.
On the balance sheet, net debt fell by $1.1 billion, or 20%, compared with a year earlier. VF maintained its fiscal 2027 revenue growth outlook at 2% or more on a constant-currency basis excluding Dickies, and its adjusted operating margin outlook at about 8%. It also expected its leverage ratio to range from 2.6 to 2.9 times at year-end. The company returned to revenue growth in fiscal 2026 for the first time in 3 years, Darrell said, adding at the time that the company expected to continue growing in fiscal 2027. His medium-term targets include reaching a 10% operating margin rate and a leverage ratio of no more than 2.5 times by fiscal 2028.
The company expected actual free cash flow of at least $515 million in fiscal 2027. It expects normalized free cash flow to be flat or higher compared with $405 million in the prior fiscal year. The board approved a quarterly cash dividend of $0.09 per share, payable on December 17, 2026, to shareholders of record on December 10. Management held a call to discuss the quarter’s results on October 28, 2026, at about 8:00 a.m. Eastern time. The announcement in the available evidence did not include information on the company’s share-price movement following the results.