S&P revises VF Corp. outlook to positive on lower leverage

On Tuesday, S&P Global Ratings shifted its outlook for VF Corp. (NYSE:VFC) to positive from stable and affirmed the company's 'BB' issuer credit rating, pointing to strengthened leverage and profitability. The agency noted that VF cut its adjusted leverage ratio to 3.1 times in the quarter ending June 30, 2026 — a 1.5-turn drop from the same period last year — while adjusted EBITDA margin climbed 240 basis points to 14.6%.

S&P projects that VF will push net leverage below 3 times during fiscal 2027, supported by organic revenue growth and EBITDA margin expansion. The positive outlook signals a potential upgrade within the next 12 months, provided VF keeps adjusted net leverage under 3x and preserves stability across its brand portfolio. After three straight years of falling revenue, VF returned to growth in fiscal 2026, helped by gains in most brands and a slower rate of decline at Vans.

The agency forecasts that VF's organic revenue, excluding the divested Dickies brand, will rise at least 2% in fiscal 2027, with EBITDA margin improving to roughly 15%. It also projects adjusted leverage improving to 2.8x in fiscal 2027 and 2.4x by fiscal 2028. Over the previous four quarters, VF cut leverage from 4.7x to 3.1x through operational gains and debt repayment, moving closer to its 2.5x net leverage goal for fiscal 2028.

Stripping out Dickies, 70% of VF's operations posted growth in fiscal Q1 2027 — The North Face rose 6%, Timberland grew 4%, and the other brands category advanced 5%. Vans, meanwhile, shrank 8% in the quarter, an improvement from the 14% decline seen a year earlier. S&P downgraded its business risk assessment for VF from satisfactory to fair, attributing the change to reduced scale and greater concentration after the Dickies divestiture in November 2025 and the Supreme sale in October 2024.

S&P cautions that the ratings are still capped by competitive dynamics and an uncertain macro backdrop. In particular, it flagged potential difficulty for VF in maintaining The North Face's growth and margins, as Columbia Sportswear and Kontoor Brands' Helly Hansen push for greater share in the U.S. outdoor apparel market. The agency said it might return the outlook to stable if it anticipates VF holding leverage above 3 times — driven by sales declines across several brands, soft consumer spending, or acquisitions funded with debt.

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