VF shares surge after earnings beat and margin expansion
The North Face and Timberland drive growth as transformation gains momentum
VF Corporation shares rose more than 5 percent on Wednesday after the apparel and footwear maker reported third-quarter earnings that easily surpassed Wall Street expectations, signaling meaningful progress in its multiyear turnaround effort.
The Denver-based company reported adjusted earnings per share of $0.58, beating analyst estimates of $0.44 and marking a 32.5 percent upside to consensus expectations. Revenue reached $2.88 billion, exceeding the $2.76 billion projected by analysts, with growth of 4 percent on a constant-currency basis excluding the Dickies brand, which VF sold in November 2025.
The stronger-than-expected results represent a notable turnaround for VF, which has struggled in recent years amid declining sales at its Vans brand and mounting debt pressures. The stock has lost roughly 70 percent of its value over the past five years, though it has rebounded nearly 40 percent over the past three months as investors have grown more optimistic about the company's recovery prospects.
"This quarter demonstrates our strategy is gaining traction and we're positioned to accelerate," VF Chief Executive Officer Bracken Darrell said in the earnings release. "Our core outdoor brands continue to deliver strong growth, and we're seeing encouraging signs across the business as we execute our transformation."
The North Face, VF's largest and most profitable brand, grew 8 percent on a constant-currency basis, while Timberland increased 5 percent. Both brands benefited from favorable winter weather conditions across key markets, according to company commentary. The Americas region delivered its strongest performance in three years, and direct-to-consumer sales turned positive after recent declines.
Perhaps most encouragingly, operating margins expanded by 210 basis points to 10.1 percent, and adjusted operating income of $341 million topped the company's guidance range of $275 million to $305 million. The margin improvement reflects VF's efforts to reduce promotional activity, optimize inventory levels, and streamline operations. Net debt decreased by $0.5 billion during the quarter, bringing leverage below 3.5 times adjusted earnings.
For the full fiscal year 2026, VF raised its outlook, projecting growth in both free cash flow and operating income. The company committed to maintaining leverage at or below 3.5 times, addressing a key concern among fixed-income analysts and credit rating agencies.
Analysts responded cautiously to the results, with most maintaining their ratings while acknowledging progress. JPMorgan Chase raised its price target to $17 from $14, maintaining a neutral rating, while UBS increased its target to $19 from $18, also keeping a neutral rating. The consensus analyst rating remains at hold, with an average price target of $16.86, according to MarketBeat data.
Despite the enthusiasm around The North Face and Timberland, analysts continue to express skepticism about Vans, once VF's growth engine but now its most significant challenge. The skate footwear brand has struggled with changing consumer preferences, inventory missteps, and intensifying competition from newer players in the streetwear space.
"The improvement in outdoor brands is clear, but Vans remains the elephant in the room," analysts at UBS wrote in a note to clients. "Management needs to demonstrate credible progress there for the stock to sustainably re-rate higher."
VF's transformation strategy, launched by Darrell after he took the helm in 2023, focuses on reigniting growth at Vans, expanding digital capabilities, reducing costs, and deleveraging the balance sheet. The sale of Dickies for approximately $1.1 billion in November provided a cash infusion that accelerated debt reduction efforts.
The company also announced a quarterly dividend of $0.09 per share, maintaining its commitment to returning capital to shareholders despite the ongoing restructuring efforts. VF has paid consecutive quarterly dividends since 1971.
Wednesday's rally extends VF's recent momentum, though the stock remains well below its 52-week high of $28.37 reached earlier in the year. The shares closed at $20.28 on Tuesday and are up roughly 22 percent over the past year, as investors have gradually warmed to the turnaround narrative.
Looking ahead, VF will need to demonstrate that the third-quarter strength wasn't merely a weather-driven anomaly but reflects structural improvements. Winter apparel brands typically outperform during colder quarters, and analysts will be watching closely to see if The North Face and Timberland can maintain momentum as seasons change. The company's fourth-quarter guidance and commentary on Vans during its earnings call will provide crucial signals about whether the transformation is entering its next phase.