VF Corp 3Q26 Immediate Call Postmortem
Main story management selling seems to be they are back to growth again (first time since FY23). Lot of green shoots in every direction. 75% of the business grew this quarter, up from 65%-70% last quarter and 60% in 1Q26. Investors are going to find it hard to keep ignoring this trend.
There are few athletic companies getting better in the Americas right now so its impressive that VFC continues to make progress and returned to growth in the region. Positive growth in DTC which is the channel closest to ultimate consumer demand. “One of strongest performances in Americas in over three years”. Bracken feels “really good” about the region and thinks it’s probably the strongest opportunity in the world right now.
Yih asked in Q&A about them getting close to the LT gross margin target of 55%. All Vogel would say is they feel good about gross margin and hopefully over time can do better than that. Have some pricing benefits coming in during Q4 to help mitigate tariffs that they didn’t have in Q3.
Vans results were “as expected” by management but feels like the Street is getting impatient here. Such amazing “product newness” that revenue is down double digits once again. To be fair, the company stated in 2Q26 that we won’t get a read of the true underlying trend until 4Q26, and they expect the brand to only decline MSD so guess that is some progress. Global ecommerce grew for the first time in over four years (later said 19 quarters), which must be encouraging. Did not see positive traffic in stores though but saw sequential improvement.
Andreeva’s associate got Bracken to say the path to growth at Vans is DTC first with digital leading. Digital is the fastest lever they can pull and where they can get new product in front of people quickest – encouraging statement given the strength they are seeing in global e-commerce. Stores are harder and come with a lag. And then wholesale is last.
Simeon observed in Q&A they are talking more on Altra and Bracken said “yeah I am”. They are holding the brand back because they want to control distribution and establish a really good pedigree as a running brand as well as a trail brand. Bracken also said he thinks it can hit $1 billion in the future.
Bracken made a point to say that both he and Vogel really hate Debt to begin with, but the one positive to having it is that it has forced them to not rely on M&A and figure out organic growth instead.
Vogel made it a point to call out VFC’s philosophy on guidance: they are always going to give a range and the goal is to hit the top end of the range. Sometimes they will just be in the range though. They outperformed this quarter but that’s largely because DTC is a little bit more variable and did well. Essentially, he is saying we shouldn’t expect them to sandbag like other companies do.
Absolutely love that this company does video calls. But the delay between audio and video made me think I was watching a dubbed karate movie.
*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 our website here: M Squared Capital
Originally posted on X and Substack.