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After sliding moderately ahead of Q2 (Sep) results, shares of V.F. Corp (VFC +23%) did an about-face, surging today on further upward progress surrounding the company's ongoing turnaround plan, dubbed "Reinvent." The apparel maker, famous for The North Face, Vans, and Timberland banners, exceeded top and bottom-line estimates in the quarter, supported by further improvements across its brands. Meanwhile, although Q3 (Dec) revenue guidance fell mildly short of consensus, the projection signals further sequential improvements. At the same time, VFC expected Q4 (Mar) to show another round of sequential progress in yr/yr revenue trends. This string of uplifting news is propelling the stock to new one-year highs, an over +70% spike from 2024 lows hit in April.

• Revenue in the quarter still contracted by 5.6% yr/yr to $2.76 bln, marking VFC's ninth consecutive quarter of negative revenue growth. However, the sales decline translated to further improvement from the -16.2% in 3Q24, -13.4% in 4Q24, and -8.9% in Q1 (Jun). VFC also noticed moderating declines in the Americas, which registered a -9% drop versus a -13% decline last quarter, alongside several other important markets. For instance, in EMEA, September marked the biggest month ever for the region. Meanwhile, APAC enjoyed a 5% bump.
• One of the brightest highlights of Q2 was VFC's massive adjusted EPS beat, delivering its first double-digit outperformance since 3Q23. The impressive earnings reflected excellent progress on the first priority of VFC's Reinvent plan: lowering its cost base. During the quarter, VFC generated another $65 mln in cost savings, reaching its $300 mln target before the end of the year. VFC intends to go beyond these initial savings.
• Further highlights branched from VFC's Reinvent plan, such as strengthening its balance sheet. The company continued to normalize inventories, reducing them by 13% yr/yr. Furthermore, VFC made further progress in paying down debt and is on track to retire the next term loan of $750 mln by the end of the year.
• Perhaps the most critical components of Reinvent, fixing the U.S. business and turning around the Vans banner, was where most eyes were fixated. Fortunately, more good news emerged from these priorities. The constant revenue declines in VFC's Americas business slowed. Meanwhile, Vans' overall performance in Q2 slid by just 11%, a huge improvement over the 21% plunge last quarter.
• Outside of Reinvent, The North Face and Timberland performed well. The latter did endure a sequential step-down in revs due to challenging comps. However, the brand enjoyed strong performance for backpacks, with sustained resilience in the APAC and EMEA regions. Timberland revenue improved from last quarter to a mild 3% dip yr/yr.

The overarching theme from Q2 was continuous success surrounding an ambitious turnaround plan under CEO Bracken Darrell, an individual with turnaround experience who took over last year. VFC still has work to do to return to positive yr/yr growth. However, as we mentioned in April, we continue to like the company for the long term as VFC boasts a portfolio of globally recognizable brands that can support a meaningful recovery.