VFC Stock Analysis


Bryan Zhang


VFC is a holding company for major brands/retailers within the apparel, footwear, and accessories industry. Some of the major brands that are within its portfolio are Vans, The North Face, Supreme, Dickies, and Timberland.

The Decline

Currently VFC is trading around 80% less compared to its prepandemic level and is trading around 40% less compared to a year ago.

What happened? Here are some of the highlights that helped fuel the company valuation declining

  1. Van’s, one of VFs most valuable brand in the 2010s is facing declining revenues and profits
  2. VFs leverage ratio doubled within the past 4 years, mainly to fund the acquisition of Supreme in December 2020. Since then, there has been more than $700 million in goodwill/intangible impairments on the acquisiton
  3. VF cut its dividend by more than 70% in the past 2 years (mostly as a result of the 2 reasons mentioned above)

The Turnaround

Despite this, I believe that VFC is well positioned to turnaround its business which is currently being undervalued by the market

  1. VF still has a portfolio of brands that are household names with rich histories and brand heritages
  2. VF is implementing a strategic plan to reduce leverage on its balance sheet, reduce uncessary expenses, and reinvest funds to brand builing and product innovation with a focus on the US market and the Vans brand
  3. There is a refresh in management and board members, most notably a new CEO (Bracken Darrel - ex Logitech CEO), Board Member (Caroline T. Brown - ex DKNY CEO), Independent Director (Trevor Edwards - ex Nike President ). I believe these people can help steer the company in a turnaround
  4. Activist Investor Engaged Capital has built a stake within the business and is pushing for board member changes and operational changes1

I believe that with the catalysts above, in the next 2 years VFC will be able to turnaround its business with a price target of $32 per share. As of writing, the price per share is around $15.50

Top Down Analysis

The Global Economy

If there’s one thing that I am most uncertain about, it’s the economy. VF has exposure to the benefits and risks of economies if the following operating regions

  1. Americas
  2. EMEA (Europe, Middle East, Africa)
  3. Asia-Pacific

This is pretty much the entire world so there’s a lot of moving parts to think about!


VFs biggest exposure is the Americas, especially the US. Right now the US economy is facing different headwinds and tailwinds making its difficult to see a clear path forward, but there are somethings that should be considered.

Headwinds (Challenges)

  • consumers are facing increasing financial pressure from record levels of credit card debt, low savings rates, student loan payments, and declining affordability in homes, goods and services.2 This may lead to declines in discretionary spending in the short term
  • the current tight interest rate policy is adding stress on debtors and potential borrowers. This is problematic for VF if it needs to refinance its debt

Tailwinds (Opprotunities)

  • inflation is stabilizing compared to previous years and interest rate cuts (25 - 50 basis points) are expected within the year
  • the economy is growing, as measured by Real GDP growth in the US, and has been in the past 6 quarters3

Rest of the World

The rest of the world is also facing similar risks as the US coming out of the pandemic. There is no shortage of geopolitical tensions that can cause economic disasters and one of the worlds biggest China, is currently facing a crisis in its debt and housing markets. A trend among global economies that is important to consider for apparel and footwear companies is the shift towards onshore manufacturing, weaning reliance on the worlds biggest exporter: China.

My overall view is that for a company that is looking to turn around in the consumer discretionary industry, the current economic environment can be a friend or an enemy. But I don’t think it’ll be a best friend, but it could quite possibly be an archenemy

Apparel and Footwear Industry

The apparel and footwear industry is subject to the mood swings of the economy. Spending on clothes and shoes tends to increase during good times and decrease during bad times. Yet, pretty much everyone in the world wears clothes and shoes. With a global population of more than 8 billion people4, the apparel and footwear industry is sure to thrive for generations to come.

Industry Growth

  • The Global Apparel market is expected to grow 11.5% 5 between 2023 and 2027 adding 200 billion in value to the market.
  • The Global Footwear Market is expected to grow 3.43% CAGR between 2024 and 2028 adding 400 billion in value to the market6.
  • In the short term I think theres lots of uncertainty with the global economy, causing volatility in revenues and earnings for the apparel and footwear market. Still, apparel and footwear is a necessity for almost everyone so companies with a large follower base are likely to survive


  • The US has the highest total revenue in its apparel market of around 318 billion USD
  • China is a close second of around 303 billion USD

What this means for VF?

VF has faced declining sales in its US market for the past 2 years but with refreshed management, realigned objectives, and a new strategy, the company is trying to recapture market share in the US and continue growing from there. VF faces stiff competition in the footwear space from heritage brand names like Nike (Converse), Adidas, New Balance and new entrants like On, Hoka One. The apparel business is even more saturated with players in luxury, sportswear, outdoorswear, fast fashion all competiting for closet space.

Despite the compeition I think VF has a strong portfolios of differentiated brands compared to its competitors. Brands like Vans, The North Face, and Timberland have a strong follower base, unique styles, and cultural impact that takes years to develop.


My economic and industry outlook is bearish in the short term and bullish in the long term. When valuing VF I incorporated my economic views into three different scenarios As Is, Bear, and Target. The biggest differentiator between the scenarios is how VF is able to navigate a short-term decline in revenues and free cash flow, and how it’s able to improve market share and operational efficency. I also want to note that VF does have a long history of strategically acquiring and divesting businesses but I can’t predict the future so my valuation is done with the current portfolio of brands. One exception is the divestment of the PAKS business, which was announced by management 7 with the goal of raising cash to deleverage.

Current Market Sentiment (As Is)

As of writing, VF is currently trading at around $15.50 per share with a market cap of $6 billion dollars. I believe that the market is currently pricing in the following

  • 2% CAGR in revenues the next 6 years due to short term decline in sales from unfavorable economic conditions with an emphasis on falling consumer spending, increase in price reductions, stiff compeititon

  • decline in earnings for the next 2 years and then a slow recovery due to efforts by VF’s management to revitalize the company and improve efficency

  • VF will sell off non-core assets and divest its PAKS business to make the necessary debt payments without refinancing at higher rates

  • VF will refrain from making new acquisitions and only make minimal short term borrowings at low interest rates (2%-3%) s ### Target For my target of $32 per share VF will have a market cap of $12.6 billion. This valuation is based on the following assumption.

  • Revenues grow at a 6% CAGR in the next 6 years driven by increased market share in the Americas (US), and overseas in Asia-Pacific and EMEA. This is fueled by new product innovations, increased demand for apparel and footwear products, and a succesful turnaround of VF under new leadership

  • Earnings are able to rebound after 2 years of decline due to higher revenues and improved operating efficency, driven by a slight reduction in SGA expenses relative to Net Sales, improved gross margins, and low goodwill/intagible asset impairment charges

  • VF successfully deleverages its balance sheet from a debt to equity ratio of 4 to 1.5 in the next 4 years, reducing interest expenses, and increasing equity


In a bear scenario VF has a price target of $8 per share by faceing the following catalysts:

  • -0.19% CAGR in revenues the next 6 years
  • decline in levered free cash flow (free cash flow to equity) due to struggling earnings and increased interest expense (due to debt refinancing and unfavorable interest rate environments)
  • long term decline in levered free cash flow due to changing fashion trends, warmer weather, and unsuccesful turnaround

Final Thoughts

To close out I want to comment on the liklihood of each scenario mentioned above. I think the market is currently underpricing VFs ability to turnaround its businesses, but I think that Vans and the North Face still have lots of growth potential due to a differentiated products and a strong brand image. The Bear scenario represents a worst case where VF is unable to revitalize Vans and faces structural declines in all of its businesses. I think this is unlikely to happen in the next 5 years because of the massive customer base that support VFs brands. I’m optimistic that VF can turnaround its business and I’m excited to see whats to come!


As Is DCF Model

Target DCF Model

Bear DCF Model


  1. CNBC: https://www.cnbc.com/2023/11/04/activist-engaged-capital-sees-a-path-to-lift-vf-corps-share-price-and-slash-costs-.html↩︎

  2. Federal Reserve↩︎

  3. Bureau of Economic Analysis↩︎

  4. https://www.census.gov/library/stories/2023/11/world-population-estimated-eight-billion.html↩︎

  5. Statista Value of Global Apparel Market: https://www.statista.com/forecasts/821415/value-of-the-global-apparel-market↩︎

  6. Statista Footwear outlook https://www.statista.com/outlook/cmo/footwear/worldwide↩︎

  7. Outdoor Retailer: https://thedaily.outdoorretailer.com/news/brands-and-retailers/vf-corp-to-sell-jansport-eastpak-and-kipling/↩︎