V.F. Corporation Q1 FY2026 earnings call

• The company delivered above guidance this quarter, with top line trend to negative 2% in constant dollars and flat in reported. High growth business占比 from 10% to almost 60%. - North Face grew 5% led by DTC and wholesale growth, with product innovation pipeline building momentum, footwear and bags/packs growing strongly, and lifestyle apparel (especially spring/summer) having great growth potential. - Timberland revenue up 9% with global momentum, marketing strategy working to enhance brand visibility, having potential to break out of historic revenue range. - Vans has strong leader Sun Choe executing plan, Paris Fashion Week appointment bookings up 50%, new products coming, channel adjustments made (wholesale Americas sell-out trends improving, DTC closed ~140 stores improving profitability, retail playbook rolled out in Europe), and Warped Tour event held with strong response driving product sales.

Q1 revenue was $1.8 billion, flat on a reported basis and down 2% year-over-year in constant dollars. By brand, the North Face grew 5% led by growth in both DTC and wholesale. Vans revenue in the quarter was down 15%, about 40% of the decline attributed to channel rationalization actions. Timberland's momentum continued with revenue up 9%, reflecting growth across all regions. Excluding Vans, revenue was up 5%. Adjusted gross margin in the quarter was up 200 basis points to 54.1%. In terms of segment reporting, Timberland Tree and Timberland PRO were combined into one operating segment, constituting the Outdoor segment with North Face; Vans and Packs make up the active segment; Dickies, Altra, Smartwool, Icebreaker and Napa are reported in all other category.

• Q2 revenues expected to be down 2% to down 4% in constant dollars, with Q1 wholesale timing shift negatively impacting Q2 by 1%. - Q2 operating income expected in range of $260 million to $290 million, gross margins broadly flat, SG&A dollars up slightly vs last year (largely due to marketing investment and FX impact, flat in constant dollar), interest ~$50 million, effective tax rate 30%-33%. - Tariffs: incremental annualized impact now $100 million - $120 million, total annualized $250 million - $270 million, 50% to flow through in fiscal '26, expected net negative impact to gross profit of $60 million - $70 million in fiscal '26, confident to fully mitigate in fiscal '27. - Operating income expected up vs last year in fiscal '26, free cash flow expected up year-on-year including tariffs, leverage expected to decline at year-end of fiscal '26.

Tariffs pose a risk, with an expected net negative impact to gross profit of $60 million - $70 million in fiscal '26 due to the timing of tariff increases before realizing full offsets from mitigating actions.

Q: About the Warped Tour, what were expectations and metrics?

A: Bracken said expectations were modest initially but demand was enormous with 3 events selling out tickets quickly, and it's a powerful driver of product. Paul talked about the $60 million - $70 million gross profit impact and offset efforts.

Q: Longer-term views on gross margin?

A: Bracken said all brands have gross margin opportunities, especially Vans' premiumization. Paul added 3 big gross margin initiatives: product creation, integrated business planning and markdown management.

Q: Impact of tariffs on unit volumes?

A: Bracken said it's hard to model but expected roughly 1:1 price and volume impact, Paul added different elasticity curve scenarios.

Q: North Face Americas summer decline and fall/winter outlook?

A: Bracken said summer is a light seasonal quarter, product investment insufficient yet, and no forward-looking forecasting by brand.

Q: Vans Europe market situation?

A: Bracken said Europe's situation is similar to the U.S., with large city plan showing good progress.

Q: Quarter-to-date trends and Vans actions impact?

A: Bracken said in line with guidance, Vans actions impact roughly half plus or minus.

Q: Back-to-school marketing investment?

A: Bracken said it's an annual investment and will be strengthened.

Q: Free cash flow and net debt?

A: Paul said free cash flow expected to grow, leverage expected to decline, net debt will reduce.

Q: Reset actions and growth prospect?

A: Bracken said major reset actions nearly complete, Paul said gross margin outlook is flat.

Q: Wholesale partners conversation and product marketing?

A: Bracken said wholesalers have inventory hesitation, but company will offset with innovation and marketing