VF Corporation Reports 5.6% Decline in Net Revenues, Improved Profitability in Q2 Fiscal 2025

VF Corporation reported its financial results for the second quarter of fiscal year 2025, ending September 28, 2024. The company experienced a decline in net revenues, which totaled $2,757.9 million, down 5.6% from $2,920.1 million in the same period of the previous year. For the six months ended September 2024, net revenues were $4,527.0 million, a decrease from $4,888.2 million in the prior year. The decline was attributed to reduced sales across all segments, particularly in the Active and Work segments, which saw decreases of 9% and 8%, respectively.

Despite the revenue drop, VF Corporation reported a significant improvement in profitability. The company recorded income from continuing operations of $202.5 million, or $0.52 per diluted share, compared to a loss of $(451.6) million, or $(1.16) per diluted share, in the same quarter of 2023. For the six months, income from continuing operations was $50.5 million, compared to a loss of $(514.6) million in the prior year. The effective income tax rate for the six months ended September 2024 was 22.5%, a notable decrease from 316.1% in the same period of 2023, which had been impacted by a significant tax case.

The company’s gross margin improved to 52.2%, up from 51.0% in the prior year, driven by lower product costs. However, selling, general, and administrative expenses as a percentage of total revenues increased to 42.3% from 39.0%, contributing to a decline in operating margin to 9.9% from 12.0%.

Strategically, VF Corporation completed the sale of its Supreme brand to EssilorLuxottica for $1.5 billion on October 1, 2024. This transaction is expected to enhance the company’s focus on its core brands and reduce debt, with $1.0 billion of the proceeds used to prepay a delayed draw term loan. The sale resulted in an after-tax estimated loss of $124.8 million, which was recognized in the current quarter.

Additionally, VF Corporation is undergoing a restructuring program named "Reinvent," aimed at enhancing brand-building and improving operational performance. The program is expected to incur restructuring charges between $190 million and $210 million, with approximately 70% related to severance and employee benefits.

As of September 2024, VF Corporation's total current assets increased to $6,458.9 million, while total current liabilities rose to $4,982.4 million. The company’s long-term debt decreased to $4,028.5 million from $4,702.3 million in March 2024. Stockholders' equity stood at $1,406.4 million, down from $1,658.4 million in March 2024, reflecting the impact of the net loss for the period.