VF Corp 2Q26 Immediate Call Postmortem
Got a treat today with a video conference call. “It was a good quarter” – Bracken. Last quarter they said 60% of business was growing. This quarter that expanded to 65% or 70% ex. Dickies.
Bracken talks about the mountaineer Jim Morrison and all I can think about is the song “Break On Through”, which is strangely appropriate to this story. I just get this nagging feeling like the growth part of the story is getting pushed out. Can’t put my finger on why.
Bracken specifically said you can see Sun’s impact on Vans with the back-to-school product. Very bullish towards the product pipeline. More newness as head into holiday and into Spring 2026. Digital traffic was up in Americas. I hear you Bracken but would be nice if we saw something better than yet another double-digit decline (cc). The problem is that Timberland is already decelerating into much more difficult compares and even The North Face won’t have it as easy going forward. Just seems unlikely that everything starts working together now and guidance (3Q26 revenue down 1-3% cc) doesn’t provide confidence in that regard.
Vans was a little better than expected but still impacted by channel rationalization efforts which drove 20% of the decline (includes store closures). If you take that out then the runrate of business is down HSD. Thanks Binetti for asking a question to clarify this. Expect a similar pace in 3Q and then the dynamic around the value channel will moderate. Will have a true underlying trend by Q4.
Boss asked the best question on Vans with why trend down HSD despite the product improvements? Bracken just said everything is about product and making sure marketing is relevant. Need to expand the new product into the marketplace. Investors are likely to roll their eyes on this answer
Timberland terribly under distributed in the US and they are going to address that going forward. Have more growth potential than they are going to get. Rest of year expect LSD growth. Going to control their expansion and be very deliberate. Only have six stores and could go out and expand aggressively into wholesale but not going to do that.
Brand awareness in US for Altra is less than 10% yet on track to exceed $250 mm this year.
Too early to discuss the holiday order book but the consumer has remained stubbornly positive overall.
Start to get tougher compares on gross margin improvement beginning next couple of quarters. Tariff pricing kicks in during 4Q and 3Q is a little tricky because have a promotional tailwind that is offset by the tariffs.
Not getting into specific pricing conversation. Targeted and thoughtful by brand. Not aggressive raising price to lower end price points. With Vans maybe not taking pricing but cutting back on discounting so effectively better pricing.
“Jay Sole still watching the World Series” – Bracken. Seemed like every analyst had a problem with the mute button today.
*These are our unabridged quick thoughts and notes from the call. We get them out as soon as possible after the call ends. Management has given some topics to dig deeper into and will circle back afterwards with much more in depth work on what was mentioned. You can find that work (and more on VF Corp and other retail/consumer research) at the website here: M Squared Capital
Originally posted on X and Substack.