Research Update: VF Corp. Downgraded To 'BBB' From 'BBB+', Outlook Stable; Debt Ratings Lowered

U.S.-based VF Corp.'s reported fiscal 2023 (ended April 1) earnings were below our base-case forecast, notably with free operating cash flow (FOCF) of negative $917 million and leverage near 4x. We believe elevated inventory from realignment in the wholesale channel and weakened consumer demand will continue to pressure its credit metrics in fiscal 2024 and delay the recovery of its largest brand, Vans. We lowered our issuer credit rating to 'BBB' from 'BBB+'. The outlook is stable. At the same time, we lowered all issue-level ratings on the company to 'BBB' from 'BBB+'. The short-term and commercial paper ratings remain 'A-2' The stable outlook indicates that we forecast improvement in credit metrics over the next 18 to 24 months and

...- U.S.-based VF Corp.'s reported fiscal 2023 (ended April 1) earnings were below our base-case forecast, notably with free operating cash flow (FOCF) of negative $917 million and leverage near 4x. - We believe elevated inventory from realignment in the wholesale channel and weakened consumer demand will continue to pressure its credit metrics in fiscal 2024 and delay the recovery of its largest brand, Vans. - We lowered our issuer credit rating to '###' from '###+'. The outlook is stable. At the same time, we lowered all issue-level ratings on the company to '###' from '###+'. The short-term and commercial paper ratings remain 'A-2' - The stable outlook indicates that we forecast improvement in credit metrics over the next 18 to 24 months and expect financial policy to support leverage reduction back into the 2x-3x range....

Research Update