VFC

Leadership Transition

• Current CFO Paul Vogel will step down after two years of transformative work, including strengthening the balance sheet, reducing net debt by $1.1 billion (20% year-over-year in Q1), cutting structural SG&A costs by $225 million since fiscal 2024, and returning the company to full-year growth in fiscal 26. A smooth transition will occur over the next quarter.
• Current COO Abhishek Dalmia will take on the combined role of CFO and COO, bringing deep operational, strategic and financial expertise from prior roles in consulting, supply chain and technology transformation at VF.

• Full year fiscal 2027 revenue guidance was raised from 1-2% growth to 2% or better growth year-over-year, driven by better-than-expected Q1 results and improved visibility into second half performance.
• Full year operating margin guidance is maintained at approximately 8%, with management confident in achieving this target despite deliberate discretionary investments in brand building, DTC and marketing.
• Full year free cash flow is expected to be flat to up year-over-year, and year-end leverage ratio is expected to remain between 2.6x and 2.9x, unchanged from prior guidance.
• For Q2 fiscal 2027, revenue is expected to be approximately flat year-over-year, matching the trend of Q1, with operating income broadly in line with last year. The North Face is expected to be flat to slightly up, while Vans is expected to decline 9% year-over-year, matching Q1's trend.
• By brand for full year 2027: The North Face and Timberland are expected to deliver full year growth roughly in line with their 2026 growth rates, within a +/- 1 percentage point range. Vans is expected to deliver a mid-single-digit full year decline, with the second half declining only 2% or better, a material improvement from the first half's 9% decline.
• Medium-term targets are reaffirmed: 10% or higher full-year operating margin by fiscal 2029, and a leverage ratio of 2.5x or better by fiscal 2028. The mix of margin expansion is expected to be tilted more toward gross margin improvement than previously guided, with more room to sustain discretionary growth investments.

Overall company Q1 fiscal 2027 revenue was $1.7 billion, flat year-over-year, with an adjusted operating loss of $95 million and an adjusted loss per share of $0.27. Adjusted gross margin was 54.9%, up 10 basis points year-over-year, after a 140 basis point unfavorable FX impact. By brand segment:

1. The North Face: Q1 revenue grew 4% year-over-year, contributing approximately 40% of total company revenue. Full year 2027 growth is expected to be in line with last year's growth rate.
2. Timberland: Q1 revenue grew 3% year-over-year, with growth pulled down 3 percentage points by ongoing Middle East conflict and distributor adjustments. The brand contributes approximately 15% of total company revenue. Full year 2027 growth is expected to be in line with last year's growth rate.
3. Vans: Q1 revenue declined 9% year-over-year, contributing approximately 35% of total company revenue. Full year 2027 revenue is expected to decline mid-single digits year-over-year, with a 2% or smaller decline in the second half.
4. Smaller emerging brands (led by Altra): Smaller brands contribute approximately 10% of total company revenue, with Altra delivering strong double-digit growth in Q1, expanding into the larger road running market and on track for another full year of strong growth.

By region: Americas revenue grew 4% year-over-year, EMEA declined 7%, and APAC declined 1%. By channel: DTC revenue grew 5%, wholesale declined 4%.

• Vans continues to face pressure in the wholesale channel globally, particularly in Europe and APAC, as the channel completes its assortment reset, leading to continued declines in the first half of fiscal 2027.
• The APAC region, including Greater China, has seen muted performance relative to historical levels, with strong local competition putting pressure on results, and muted performance is expected to continue for the next 1-2 years.
• Timberland's performance in Q1 was negatively impacted by 3 percentage points due to the ongoing conflict in the Middle East, which creates continued regional uncertainty.

Q: What trends are you seeing in Vans' Americas wholesale business, and why do you expect improvement in the second half? / A: Management confirmed that Vans is following its previously stated trajectory of DTC turning positive first, with wholesale improving later. DTC performance is much stronger than wholesale globally; current wholesale weakness is driven by ongoing partner destocking ahead of new inventory purchases. New hit Vans products are already selling strongly in DTC channels, but are not yet available in wholesale at meaningful volumes. Management has had strong forward-looking discussions with wholesale partners globally, giving them confidence in a second half wholesale turn.

Q: Luxury brands are now adopting Vans-inspired silhouettes, how will you capitalize on this emerging brand momentum, and what are the upside/downside risks to your 8% full year operating margin guidance? / A: VF plans to capitalize on this momentum by shifting its product mix to emphasize more premium Vans styles, including both collaborations and in-house premium lines. Management stated there is no material risk to the 8% operating margin guidance. While the company is making discretionary SG&A investments in brand building, they have full flexibility to pull back spending if needed, and gross margin trends are tracking better than expected, supporting the full year margin target.

Q: What is the trajectory for Vans in Europe, and what is the long-term margin outlook for Vans as you rebuild the brand? / A: Vans in Europe follows the same trajectory as the U.S., just behind in timing: DTC is already outperforming wholesale, with ecomm turned positive and brick-and-mortar performance improving. While Vans hit peak operating margins in the low 20% in the past, management does not expect to return to that level, as that level of margin came from underinvesting in the brand that led to its decline. Management expects Vans profitability will rise to attractive sustainable levels over the next several years, supported by gross margin improvement and SG&A leverage as growth returns, with continued deliberate investment in product development and marketing.

Q: What is the split between wholesale destocking and underlying demand weakness for Vans, and is there divergence in Vans brand perception across regions? / A: Current Vans wholesale weakness is primarily driven by assortment resetting to bring in new refreshed product lines, rather than large-scale distribution changes or weak underlying consumer demand. Vans brand perception has long been strongest in the U.S., followed by Europe, then APAC, but this trend remains in place, and the trajectory of improvement is similar across the largest two regions, with Europe just behind the U.S. in timing.