V.F. Downgraded by S&P on 'Weak Metrics'

MT Newswires Live11-14

V.F. Corp. (VFC) was downgraded to "BB" from "BBB-" by S&P Global's (SPGI) ratings unit due to "ongoing revenue declines in its top four brands and weaker credit ratios," the rating agency said.

The company's weak earnings for fiscal Q2 suggest that its brand portfolio continues to face challenges, S&P said, adding that it has adjusted its forecast to reflect lower demand and the sale of V.F.'s Supreme brand. Leverage is expected to remain "well above" 4.5x in fiscal 2025, S&P said.

"We believe the brand's waning resonance with consumers over the last few years will continue to hamper turnaround efforts in fiscal 2025. Specifically, the brand fell to the number 13 share position in the global sportswear category in 2023 from number 6 in 2018 according to Euromonitor," the agency said.

V.F.'s outlook was revised to stable -- reflecting the expectation that leverage will decrease to around 4x over the next 12 months, driven by growth in earnings before interest, taxes, depreciation, and amortization from cost savings, the rating agency said.

Shares of V.F. were down 1.7% in recent trading.

Price: 19.82, Change: -0.45, Percent Change: -2.24

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