Executive Summary
VF Corporation (NYSE: VFC) experienced a challenging but strategically significant first quarter of fiscal 2026, reporting revenues of $1.76 billion, reflecting a 2% decrease year-over-year in constant dollars and flat in reported terms. Encouragingly, management is controlling costs effectively with gross margins improving by 200 basis points to 54.1%. Although the company incurred a net loss of $126.6 million, this was $50 million better than guidance, courtesy of strong performance in the North Face and Timberland brands. CEO Bracken Darrell outlined key growth opportunities and significant operational transformations underway, emphasizing a company commitment to returning to profitability and growth by investing strategically in product innovation and marketing.
Key Performance Indicators
QoQ: -17.87% | YoY:-7.69%
Key Insights
**Revenue Performance**: The reported revenue of $1.76 billion showed a flat trend compared to Q1 2025, but a decrease of 2% when adjusted for constant currency, beating guidance that anticipated a decline of 3% to 5%. North Face and Timberland displayed resilience, achieving 5% and 9% revenue growth, respectively, while Vans struggled with a 15% decline.
**Profitability**: Adjusted gross margin increased to 54.1%, reflecting strategic improvements in inventory management and lower discounting ...
Financial Highlights
Revenue Performance: The reported revenue of $1.76 billion showed a flat trend compared to Q1 2025, but a decrease of 2% when adjusted for constant currency, beating guidance that anticipated a decline of 3% to 5%. North Face and Timberland displayed resilience, achieving 5% and 9% revenue growth, respectively, while Vans struggled with a 15% decline.
Profitability: Adjusted gross margin increased to 54.1%, reflecting strategic improvements in inventory management and lower discounting policies. The adjusted operating margin was negative 3.2%, an improvement of 270 basis points year-over-year despite the overall negative performance.
Cash Flow: The company reported a negative consolidated operating cash flow of -$145 million and a decline in free cash flow of $174 million, attributed mainly to timing shifts in working capital.
Balance Sheet Health: VF Corporation recorded total assets of $10.15 billion against total liabilities of $8.86 billion, maintaining a relatively healthy balance sheet with a reduction in net debt by $1.4 billion or 20% year-on-year, aided by cost-cutting initiatives.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.76B |
-7.69% |
-17.87% |
| Net Income |
-126.59M |
51.10% |
16.05% |
Management Commentary
Transformation and Growth Strategy: Bracken Darrell stated, "We've dramatically improved our cost structure... and have a clear path to below the 2.5x leverage target that we initially set by fiscal 2028."
Vans Recovery Strategy: On Vans, he emphasized, "About 40% of the decline can be attributed to channel rationalization actions. Excluding these, if you look at the underlying trends, Vans is running down high single digits."
Market Dynamics: Darrell is optimistic, asserting: "We feel like we laid the right bricks in terms of innovation, and we're going to keep investing in marketing as we've planned."
"We're on track with the turnaround and could be more excited about what's coming next. Keep watching. We are well on our way to transforming V.F. and this quarter is another step in the right direction."
— Bracken P. Darrell
"Our quarterly 2-year stack trends have shown gross margins up roughly 200 basis points with SG&A down 5% over that same time period."
— Paul Aaron Vogel
Forward Guidance
Looking ahead, VF Corporation anticipates Q2 revenues will continue to reflect pressures with estimates of a decline of 2% to 4% due to a continuation of previous channel actions on Vans. However, management is optimistic about a potential uptick in profitability with continued margin improvements expected. Key focuses include enhancing the product mix and leveraging successful marketing campaigns, particularly as the company leans into back-to-school initiatives. The expected tariff impacts ultimately represent a significant headwind for FY2026 but management is confident in implementing mitigating strategies that include pricing increases and vendor negotiations.