VF Corp Inc "Mixed 4Q Report; Lower PT by $2, but Reiterate Neutral Rating"

Research evidence excerpt

VF Corp Inc "Mixed 4Q Report; Lower PT by $2, but Reiterate Neutral Rating"

VF Corp Inc UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Can VFC's big three brands power VF's earnings past market expectations?

No. We believe a fair outlook is already priced into the consensus forecast, particularly for Vans and

The North Face. We forecast flat to +LSD% to +M-HSD% annual growth for Vans and The North

Face, respectively, post FY26. Timberland is VFC's other key brand, but we don't expect it to drive

more than +LSD% growth.

Q: How might M&A impact VFC?

M&A is part of VFC's stated strategy. The company recently sold its Dickies brand for $600M. We

don't expect the company to make additional meaningful moves over the NTM, but it could happen.

Q: Can VFC grow its EBIT margin off of its FY24 base?

Yes. We are modeling ~85 bps EBIT CAGR growth through FY2031E in our base case scenario. We

expect VFC to continue to shift more of its business towards DTC, international, and high-performing

brands, which should all be margin-accretive. We forecast a 10.5% EBIT margin in FY2030.

UBS VIEW We rate VFC Neutral. We think the company's 20% 5-yr. EPS growth CAGR potential justifies the

stock's current valuation. The reason our rating is Neutral is because the market likely has a similar

view and we see risk VFC's growth rate takes longer than expected to inflect into consistently positive

territory.

EVIDENCE UBS Evidence Lab's sportswear survey shows VFC's three big brands have strong Net Promoter Scores

in the US and EU. Plus, a UBS Evidence Lab Glassdoor study shows VF employees view the company

favorably. This positive internal morale ranks in the peer group's top quintile. However, UBS Evidence