Shares of V.F. Corp (VFC, Financial) jumped 23% following Q2 results, driven by the success of its "Reinvent" turnaround plan. Known for brands like The North Face, Vans, and Timberland, VFC surpassed top and bottom-line estimates, although Q3 revenue guidance was slightly below consensus. The company anticipates further sequential improvements in Q4, pushing the stock to new one-year highs, a 70% increase from April 2024 lows.
- Q2 revenue fell 5.6% year-over-year to $2.76 billion, marking the ninth consecutive quarter of negative growth. However, this was an improvement from previous quarters' declines of -16.2% in Q3 2024, -13.4% in Q4 2024, and -8.9% in Q1. The Americas saw a decline of 9%, better than the previous quarter's 13% drop. EMEA had its best month ever in September, and APAC saw a 5% increase.
- VFC's adjusted EPS significantly outperformed expectations, marking its first double-digit beat since Q3 2023. This success was due to cost savings of $65 million in the quarter, reaching a $300 million target ahead of schedule.
- The Reinvent plan also focused on strengthening the balance sheet by normalizing inventories, reducing them by 13% year-over-year, and paying down debt. VFC is on track to retire a $750 million term loan by year-end.
- The U.S. business and Vans banner turnaround were critical focuses. Revenue declines in the Americas slowed, and Vans' performance improved, with an 11% decline compared to a 21% drop last quarter.
- The North Face and Timberland showed strong performance, despite Timberland's sequential revenue decline due to challenging comparisons. Timberland's revenue improved to a 3% year-over-year dip, with strong backpack sales and resilience in APAC and EMEA.
Under CEO Bracken Darrell, VFC's turnaround plan is showing continuous success. While the company still aims for positive year-over-year growth, its portfolio of globally recognized brands supports a promising long-term recovery.
