US' VF Corp FY25 margins surge as transformation strategy delivers
American apparel and footwear company VF Corporation has reported a revenue of $9.5 billion in the 12 months period ended March 2025, down 4 per cent year-over-year (YoY), and adjusted operating income stood at $556 million, a significant turnaround from previous fiscal GAAP operating loss of $144 million.
The company reduced its net debt by $1.8 billion YoY, ending FY25 with a leverage ratio of 4.1x, down by a full turn compared to the previous fiscal.
VF Corporation has reported revenue of $9.5 billion in FY25, down 4 per cent YoY, with adjusted operating income of $556 million, marking a strong recovery from a prior loss. Net debt was cut by $1.8 billion, reducing leverage to 4.1x. The North Face and Timberland grew, while Vans and Dickies declined. VF expects Q1 FY26 revenue to dip 3-5 per cent.
Brand-wise, The North Face revenue rose 1 per cent, including 4 per cent in Asia Pacific (APAC) region. Timberland revenue increased 3 per cent, Vans and Dickies declined 16 per cent and 12 per cent, respectively.
Region-wise, APAC grew 1 per cent, while Americas and Europe and Middle East (EMEA) fell 7 per cent and 3 per cent. Wholesale and direct-to-consumer (DTC) channels declined by 2 per cent and 6 per cent, respectively, VF Corporation said in a press release.
In the fourth quarter (Q4) FY25, revenue was down 5 per cent YoY to $2.14 billion (down 3 per cent in constant currency), in line with guidance. The adjusted operating income reached $22 million, exceeding expectations, while the company posted a net loss of $151 million.
The gross margin improved to 53.5 per cent up 550 basis points (bps), and adjusted gross margin was 53.4 per cent, up 560 bps. In Q4, The North Face and Timberland brands delivered growth, while Vans and Dickies saw declines.
'In FY25, we achieved our goals to lower our cost base and strengthen our balance sheet. We delivered on our initial target of $300 million gross cost savings and are on track towards our medium-term targets of $500 to $600 million net operating income expansion. We paid down $1.8 billion in debt during the year, reducing leverage by a full turn versus last year and advancing towards our medium-term target of 2.5x,' said Bracken Darrell, president and chief executive officer (CEO) at VF Corporation. 'We are well-positioned to navigate increased volatility in the macro environment, and I am confident that the actions we are taking will enable our brands to return to growth and VF to deliver strong, sustainable value creation.'
'Revenue for the quarter was in-line with our guidance and excluding Vans, was up versus last year, led by growth at The North Face and Timberland. Adjusting for the revenue impact to Vans from deliberate strategic actions to establish a strong foundation for future growth and improved profitability, the decline in the brand's Q4'25 revenue was consistent with the Q3'25 trend. The transformation of VF is well underway,' added Darrell.
For Q1 FY26, VF projects revenue to decline 3-5 per cent at constant currency, and an adjusted operating loss between $110 million and $125 million. The company aims to reach 2.5x leverage by fiscal 2028 (FY28), with continued cost reductions under its 'Reinvent' transformation strategy.
Fibre2Fashion News Desk (SG)
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