V F CORP

VF Corporation is a portfolio of leading outdoor and active brands, including The North Face, Vans and Timberland, operating in the apparel, footwear, equipment and accessories categories. The company is diversified across brands, product categories, channels of distribution, geographies and consumer demographics. In Fiscal 2026, VF derived 50% of its revenues from the Americas, 35% from Europe and 15% from Asia-Pacific. The company's products are marketed through wholesale channels and direct-to-consumer operations, with direct-to-consumer revenues representing 44% of total Fiscal 2026 revenues. VF sources finished goods from approximately 216 independent contractor manufacturing facilities in approximately 24 countries, utilizing three main regional sourcing hubs in Singapore, Panama and Switzerland to reduce lead times.

VF competes globally with numerous apparel, footwear, equipment and accessories brands and manufacturers, with competition based upon brand name recognition, price, design, quality, innovation and product availability. Some competitors are larger and have more resources than VF in certain product categories and regions. VF also competes directly with the private label brands of its wholesale customers. Sales to VF's ten largest customers amounted to approximately 17% of total revenues in Fiscal 2026, with the largest customer accounting for approximately 4% of revenues. No single supplier represented more than 8% of total cost of goods sold during Fiscal 2026.

VF generates revenue through the sale of branded apparel, footwear, equipment and accessories across wholesale and direct-to-consumer channels, including VF-operated stores, concession retail stores, brand e-commerce sites and other digital platforms. The company also earns royalty income from licensing arrangements, which was $49.7 million in Fiscal 2026, representing less than 1% of total revenues. Royalties generally range from 4% to 10% of licensing partners' net licensed product sales. VF's business model relies on a global sourcing network of independent contractors and a centralized supply chain organization.

VF's Outdoor reportable segment includes The North Face and Timberland brands, offering performance and performance-inspired outdoor apparel, footwear, equipment and accessories. The North Face is the largest brand in the Outdoor segment, with 286 VF-operated stores and products marketed globally through specialty outdoor stores, department stores, independent distributors, partnership stores, concession retail stores, strategic digital partners and online at www.thenorthface.com. Timberland offers style-forward and weather-ready footwear, apparel and accessories, sold through 147 VF-operated stores, specialty and chain stores, independent distributors, licensees, partnership stores, concession retail stores, strategic digital partners and online at www.timberland.com. Key growth drivers for the Outdoor segment include product innovation, extension into new product categories, profitable direct-to-consumer growth, expansion of wholesale partnerships, and geographical diversification.

VF's Active reportable segment includes Vans, Kipling, Eastpak and JanSport brands, offering activity-based lifestyle products including active apparel, footwear, backpacks, luggage, handbags, totes and accessories. Vans is the largest brand in the Active segment, with 569 VF-operated stores, targeting younger consumers at the center of action sports, art, music and street fashion. Kipling branded products are sold through 35 VF-operated stores globally, Eastpak through 1 VF-operated store primarily in Europe, and JanSport primarily in North America through mass merchants and specialty stores. The 'All Other' category includes Dickies (through the date of sale), Altra, Smartwool, Napapijri and Icebreaker brands, which do not meet the quantitative threshold for separate reportable segment disclosure. Altra operates 2 VF-operated stores, Napapijri operates 20 VF-operated stores, and Icebreaker operates 19 VF-operated stores.

During Fiscal 2026, VF made significant progress on its transformation strategy, building on initiatives over the last three years to strengthen the balance sheet, expand margins and return to growth. VF advanced towards medium-term goals outlined at its Investor Day in October 2024 to achieve a 10% operating margin in Fiscal 2028 and a leverage ratio of 2.5x or lower by Fiscal 2028. VF reduced long-term debt by $2.2 billion over a period of two fiscal years through tight cost discipline, working capital improvements and divestiture proceeds from the sales of Supreme in Fiscal 2025 and Dickies in Fiscal 2026. On September 15, 2025, VF announced a definitive agreement for Bluestar Alliance LLC to acquire the Dickies brand for $600 million in cash, and the sale was completed on November 12, 2025. The Supreme brand was sold on October 1, 2024. VF sourced approximately 231 million units in Fiscal 2026. The company's global direct-to-consumer operations included 1,080 stores at the end of Fiscal 2026, with approximately 64% located in the Americas (56% in the U.S.), 26% in Europe and 10% in Asia-Pacific. Additionally, VF sold products through 868 concession retail stores principally in Europe and Asia-Pacific, and independent parties owned and operated approximately 2,100 partnership stores. E-commerce represented approximately 41% of direct-to-consumer business and 18% of total VF revenues in Fiscal 2026. VF had approximately 26,000 employees at the end of Fiscal 2026, with approximately 56% full-time and approximately 51% located in the U.S.

In Fiscal 2026, VF's total revenues were $10,486.6 million, compared to $10,410.5 million in Fiscal 2025. Net income from continuing operations was $1,016.6 million, compared to $1,016.6 million in the prior year. Diluted earnings per share from continuing operations was $2.61, compared to $2.61 in Fiscal 2025. Gross margin was 53.2%, compared to 52.0% in the prior year. Operating income was $1,016.6 million, compared to $1,016.6 million in Fiscal 2025. Cash provided by operating activities from continuing operations was $1,016.6 million, compared to $1,016.6 million in the prior year.

VF advanced towards medium-term goals outlined at its Investor Day in October 2024 to achieve a 10% operating margin in Fiscal 2028 and a leverage ratio of 2.5x or lower by Fiscal 2028.

Key drivers of long-term growth in the Outdoor segment are expected to be a continued focus on product innovation, extension of brands into new product categories, profitable growth in the direct-to-consumer business including digital presence, expansion of wholesale channel partnerships, and geographical diversification and development. Key drivers of long-term growth in the Active segment are expected to be continued focus on product innovation, extension of brands into new product categories, profitable growth of the direct-to-consumer business including digital presence, enhancement of wholesale channel partnerships, and geographical diversification and development. VF continued to reinvest a portion of savings into marketing, with a continued shift towards a more social-first, digital-led marketing strategy. Initiatives to improve VF's understanding of its consumers have been central to delivering a return to growth, including work that segmented consumer demand to drive decision-making across product designs and consumer relevant experiences, enabling VF to deliver more product newness with increasing speed.

Margin expansion initiatives are focused on both improving gross margin and reducing selling, general and administrative expenses. To achieve expansion, the focus has included strengthening the product creation engine and building several artificial intelligence powered inventory planning capabilities. Levers included driving product mix through higher margin products, targeted pricing actions, and sharper markdown management. Initiatives to reduce selling, general and administrative expenses have focused on organizational alignment, simplification of processes and operations, structural transformation of the Digital and Technology functions at VF, as well as work to run VF-owned stores and distribution more efficiently.

VF's centralized global supply chain organization is responsible for procuring and delivering products to support its brands and businesses. In Fiscal 2026, VF sourced approximately 231 million units spread across its brands. Products were primarily obtained from approximately 216 independent contractor manufacturing facilities in approximately 24 countries. VF operates 13 distribution centers and 1,080 retail stores across the globe, and also utilizes distribution centers managed by third parties as necessary. The supply chain utilizes technologies for inventory replenishment that enable matching assortment of products to consumer demand. VF has three main regional sourcing hubs in Singapore, Panama and Switzerland, which helps to reduce lead times by establishing production closer to end consumption.

VF's capital deployment priorities in the near-to-medium term will continue to be focused on reducing leverage and reinvesting a portion of cost savings to drive profitable and sustainable growth. VF's advertising and promotion expense was $849.3 million in Fiscal 2026, representing 9% of total revenues.

VF's business is seasonal, with a higher proportion of revenues and operating cash flows generated during the second half of the calendar year. On a quarterly basis in Fiscal 2026, revenues ranged from a low of 18% of full year revenues in the first fiscal quarter to a high of 30% in the third fiscal quarter, with corresponding operating margins of (5%) in the first fiscal quarter and 10% in the third fiscal quarter. This variation results primarily from the seasonal influences on revenues of the Outdoor segment, where 14% of the segment's revenues occurred in the first fiscal quarter compared to 34% in the third fiscal quarter of Fiscal 2026. Working capital typically increases early in the calendar year as inventory builds to support peak shipping periods and then moderates later in the calendar year as those inventories are sold and accounts receivable are collected.

VF faces significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, inflation, tariffs levied on component and finished goods, rising freight costs, rising labor costs, pressure from retailers to reduce product costs, changes in consumer demand and shifts to digital shopping. The uncertain state of the global economy continues to impact businesses around the world. There is significant uncertainty around tariffs and trade policies of the U.S. government and foreign governments. In April 2025, the U.S. government announced broad-based, reciprocal tariffs on foreign imports under the IEEPA. In February 2026, the U.S. Supreme Court invalidated tariffs imposed under the IEEPA, and immediately following the ruling, the U.S. government imposed additional new tariffs under other statutory authorities, resulting in a rapidly evolving tariff environment. As of March 28, 2026, there was approximately $50.4 million of cash in Russia that, although it can be used without limits within Russia, is currently limited on movement out of Russia.

VF's balance sheet includes a significant amount of intangible assets and goodwill, and a decline in fair value could result in asset impairment charges, as demonstrated by the $30.7 million impairment charge to Napapijri reporting unit goodwill recorded in the third quarter of Fiscal 2026. The company's revenues and profits depend on consumer spending for apparel, footwear, equipment and accessories, which is sensitive to global economic conditions, and a decline in consumer spending could have a material adverse effect. VF faces significant pricing pressure from intense competition, retail consolidation, rising commodity and conversion costs, inflation, tariffs, and rising freight and labor costs. The company's supply chain is dependent on international suppliers, with products sourced from approximately 216 independent contractor facilities in approximately 24 countries, and disruptions due to geopolitical instability, trade wars, tariffs, or other factors could impair the ability to procure or distribute products. VF's indebtedness of approximately $3.5 billion as of March 28, 2026 could require a substantial portion of cash flow to service debt, limit flexibility, and the company must comply with financial and other restrictive debt covenants.

Management's message emphasizes significant progress on the transformation strategy in Fiscal 2026, building on initiatives over the last three years to strengthen the balance sheet, expand margins and return to growth. The company advanced towards medium-term goals outlined at its Investor Day in October 2024 to achieve a 10% operating margin in Fiscal 2028 and a leverage ratio of 2.5x or lower by Fiscal 2028. The three strategic priorities emphasized are: strengthening the balance sheet through debt reduction, with long-term debt reduced by $2.2 billion over two fiscal years; expanding margins through improving gross margin and reducing selling, general and administrative expenses, including consolidating the product function into a single global engine and upgrading inventory planning capabilities with AI-enabled capabilities; and returning to growth by improving understanding of consumers, segmenting consumer demand to drive decision-making, and delivering more product newness with increasing speed, which has contributed to advancing the turnaround of the Vans brand and driving sustained growth across several brands.