VF Corp., the maker of clothing and footwear, notched a solid second quarter despite weak sales of Van shoes as it makes what one analyst called "authentic progress" in a turnaround.
While sales of The North Face and Timberland each grew 4% in the quarter, with the Americas the strongest for both brands, Vans sales fell 10% to $547.6 million.
Laurent Vasilescu, senior equity analyst at BNP Paribas Securities, wrote that after speaking with company management, he updated his rating to Neutral from Underperform and raised his target price to $16 from $13.
The company "has been climbing a mountain with this turnaround and it appears it is now seeing the other side," Vasilescu said in a note. "Management evoked a lot of confidence with this turnaround, particularly with Vans and the sustainability of growth for The North Face."
Although the company's Active Segment, which is mostly Vans, saw a material 18% wholesale decline in the quarter, he said that after speaking with management, "we're not worried," adding that "We are confident that Vans can achieve its outlook," driven by wholesale acceleration in the second half of the year.
The shoes were "heating up" in May and June right as Spring and Summer 2027 wholesale orders began, and given the usual six to nine month lag, "that momentum showed up at a good time for those bookings."
He also raised his full-year fiscal 2027 earnings estimate to $1.08 a share from 61 cents a share based on "what we believe to be a more credible guide than what we previously thought," citing greater confidence in fiscal 2028 and the cash flow profile as the company's net leverage continues to improve.
Baird senior research analyst Jonathan Komp also raised his price target on the stock to $16, from $15, noting slightly better-than-expected revenue in its second fiscal quarter despite the declining sales of Vans shoes. He maintained his Neutral rating and called the turnaround "authentic progress."
For its second quarter ended Sept. 26, VF Corp. reported adjusted earnings of 70 cents a share on revenue of $2.7 billion, which was down 4% from a year ago.
Komp said that the gap between active direct-to-consumer and wholesale "reflects a difficult footwear backdrop and de-stocking," adding that Vans profitability "will take time to improve."
Strong results were ahead of guidance across key measures "as a result of great product and solid execution," CEO Bracken Darrell said, adding that "Our plan to reignite Vans is working." Global direct-to-consumer is growing again for the first time in almost five years, and strong orders from wholesale partners makes VF confident in a second-half improvement.
Komp said he is balancing the company's longer-term optimism for a full Vans recovery against near-term caution tied to the required profit ramp in the second half of fiscal 2027, "uncertain ongoing Vans wholesale," and margin headwinds in fiscal 2028.
VF Corp. shares closed up 6.4%, at $18.33 on Thursday. The stock is up 1.4% this year and 30.3% over the past 12 months. The S&P 500 is up 12.8% this year
VF Corp. maintained its full-year fiscal guidance for revenue to increase 2% or better from the prior year and adjusted operating margin of about 8%.
The company in July said Vans sales fell 15% in its fiscal first quarter. Although total revenue increased 6% from the year earlier, with The North Face up 5% and Timberland up 9%, sales growth was flat compared with the previous year, reflecting ongoing turnaround efforts at the Vans brand.
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