V.F. (VFC) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue declined 9% year-over-year to $1.9 billion, with moderating declines versus Q4 and all segments and regions experiencing decreases, especially in the Americas.

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

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

• Announced sale of Supreme for $1.5 billion to sharpen focus on core business and improve leverage; results to be reclassified as discontinued operations in Q2.

• Net loss widened to $259 million ($0.67 per share), driven by impairment charges and lower profitability.

Financial highlights

• Gross margin was 52.0%, down 80 basis points year-over-year, mainly due to unfavorable rates, mix, and higher promotional activity.

• Adjusted operating margin was (4.0)%, down 360 basis points; operating margin was (12.6)%.

• Adjusted loss per share was $(0.33), in line with expectations; net loss per share was $(0.67).

• Inventories down 24% year-over-year to $2.1 billion; net debt down $587 million year-over-year to $5.3 billion.

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

Outlook and guidance

• FY25 free cash flow guidance reiterated at approximately $600 million, excluding Supreme; proceeds from Supreme sale to be used for debt paydown.

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

• Liquidity expected to be at least $2 billion at fiscal year-end 2025.

• Additional cost savings initiatives being scoped, with more details to be shared in October.