V.F. (VFC) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue declined 9% year-over-year to $1.9 billion, with the rate of decline moderating versus Q4 and across most brands; all segments and regions experienced decreases, most notably in the Americas.

• The Reinvent transformation program advanced, targeting cost and debt reduction, with $13.6 million in restructuring charges this quarter and $122.3 million cumulatively.

• Announced sale of Supreme for $1.5 billion to strengthen the balance sheet; Supreme to be reported as discontinued operations from Q2 FY25.

• Leadership overhaul included changes to 8 of 11 direct reports, including new CFO and brand presidents for Vans and The North Face.

• Quarterly dividend of $0.09 per share declared, with $35 million returned to shareholders in Q1.

Financial highlights

• Revenue declined 9% year-over-year to $1.9 billion, with gross margin at 52.0%, down 80 basis points, mainly due to unfavorable rates, mix, and higher promotional activity.

• Operating margin was (12.6)%, down 1,220 basis points; adjusted operating margin was (4.0)%, down 360 basis points.

• Net loss was $259 million, or $(0.67) per share, compared to $57 million, or $(0.15) per share, in Q1 FY24; adjusted loss per share was $(0.33).

• Inventories decreased 24% year-over-year to $2.1 billion; net debt was $5.3 billion, down $587 million from last year.

• Free cash flow plus proceeds from non-core asset sales totaled $24.1 million year-to-date.

Outlook and guidance

• FY25 free cash flow guidance reiterated at approximately $600 million, excluding the impact of the Supreme divestiture.

• Supreme divestiture expected to close by end of calendar 2024; results to be reported as discontinued operations from Q2 FY25.

• Proceeds from the Supreme sale will be used for debt paydown and leverage reduction.

• At least $2 billion in liquidity targeted at fiscal year-end.

• SG&A expenses in Q2 expected to be up slightly year-over-year due to reinvestment and normalized incentive compensation.