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Key Brands Struggle as Vans Falls by 21% and Timberland by 10%, While VF Corporation Strengthens Balance Sheet
Financials
04 October, 2024
Table of contents
On 6 August 2024, VF Corporation reported its first quarter financial results for fiscal 2025, covering the period ending 29 June 2024. Despite facing headwinds across several key markets and brands, the company has made progress in its transformation plan, focusing on long-term growth and operational efficiency. This article reviews the financial performance, brand and regional highlights, and the company's achievements in environmental, social, and governance (ESG) initiatives.
VF Corporation reported revenue of €1,91 billion, reflecting a 9% decline year-over-year, and an 8% decline in constant currency. This drop in revenue is primarily attributed to weaker performance in key brands such as Vans and Timberland. The company’s gross margin decreased to 52%, down by 80 basis points compared to the same period last year, affected by foreign currency headwinds and an unfavourable product mix.
The adjusted operating margin for Q1 FY2025 was (4%), reflecting a substantial decline of 1.220 basis points year-over-year. In terms of profitability, the company recorded a net loss of €258,9 million, equating to a loss per share of €0,67. This represents a significant increase from the previous year's first-quarter loss of €0,15 per share. The impairment of goodwill and intangible assets related to the Supreme brand accounted for €145 million of this loss.
Among VF Corporation's key brands, The North Face remains a strong performer, with a modest revenue decline of 3% compared to Q1 FY2024. The brand's direct-to-consumer (DTC) segment saw a 6% increase in sales globally, indicating the strength of its brand presence despite challenges. However, Vans, one of the group's flagship brands, experienced a steep decline in revenue of 21%, although this represents a modest improvement from the previous quarter. Timberland saw a 10% reduction in revenue, and Dickies reported a 15% drop.
| Brand | Revenue Change (%) |
|---|---|
| The North Face | -3% |
| Vans | -21% |
| Timberland | -10% |
| Dickies | -15% |
Regionally, the Americas saw the steepest decline, with revenue falling 12% compared to Q1 FY2024, while EMEA (Europe, the Middle East, and Africa) recorded a 5% decline. The APAC (Asia-Pacific) region fared better, with a 3% decline, buoyed by growth in Greater China, where revenue was flat but improved by 4% in constant currency.
In terms of distribution channels, the DTC segment experienced a 10% decline in revenue, while wholesale revenues fell by 8%. Within DTC, the digital segment, a crucial driver of VF Corporation’s direct sales, saw a 5% decline.
VF Corporation has made substantial progress on its sustainability and ESG front. The company’s mission, to power movements of sustainable and active lifestyles,
drives its initiatives toward reducing environmental impact and enhancing product circularity. A major focus has been on increasing the use of renewable and recycled materials in its products, with brands like The North Face and Timberland leading the way.
The group’s Climate Action Strategy is aligned with the Science-Based Targets initiative (SBTi), aiming to reduce its scope 1 and scope 2 greenhouse gas emissions by 55% by 2030. In addition, the company has been actively working on expanding its circular economy efforts, offering take-back programmes and developing recycling initiatives for its outdoor and workwear segments. These efforts contribute to reducing waste and promoting the reuse of materials.
On the social front, VF Corporation has committed to ensuring ethical labour practices across its global supply chain, focusing on worker welfare and safety. Its alignment with the UN Sustainable Development Goals (SDGs) is particularly strong around responsible production and consumption. The group’s community engagement and ethical practices further support its goal of being a responsible corporate citizen.
Despite the challenging external environment, VF Corporation remains focused on its Reinvent transformation plan, aiming to stabilise its financial performance and return to growth. The sale of the Supreme brand, expected to be completed by the end of 2024, is a crucial step in strengthening the company’s balance sheet. VF Corporation has reiterated its guidance for free cash flow of €600 million for FY2025, excluding the Supreme divestiture.
The group’s ability to recover will depend on its success in revitalising struggling brands such as Vans and Timberland, while continuing to grow its DTC and international sales channels. VF Corporation’s ongoing investments in sustainability initiatives are also central to its long-term strategy, positioning the company as a leader in responsible fashion.
The sharp decline in Vans's revenue is a major concern, indicating potential brand fatigue or market saturation. A detailed revitalisation strategy will be essential for the brand’s recovery. Additionally, VF Corporation’s reliance on international markets, particularly in APAC, suggests that further analysis into market-specific growth strategies could provide valuable insights.
The company’s commitment to ESG remains strong, but a deeper evaluation of how its circular economy initiatives can integrate into its digital strategy and could offer new opportunities for sustainable growth. Expanding product lines that use recycled materials and scaling up take-back programmes will be vital for maintaining its competitive edge in sustainability.
Read the full VF Corp Company report Here.
Cover Image Courtesy: The North Face Website