Research Update: VF Corp. Outlook Revised To Negative From Stable Due to Elevated Leverage; Ratings Affirmed

U.S.-based VF Corp.'s second-quarter 2024 earnings (ended Sept. 30, 2023) were below our base-case forecast, and leverage increased further to 4.4x compared with 3.6x in the same prior year period. VF pulled its full-year guidance and further cut its dividend to free up cash flow for debt reduction. Proceeds from the company's contemplated sale of the Packs business could reduce debt. However, its largest brand, Vans, continued to decline, and the timing of its recovery and the ability of the company to restore its credit metrics remains uncertain. We affirmed our 'BBB' issuer credit rating and our 'A-2' short-term and commercial paper (CP) ratings. We revised the outlook to negative from stable. The negative outlook indicates that we could lower

...- U.S.-based VF Corp.'s second-quarter 2024 earnings (ended Sept. 30, 2023) were below our base-case forecast, and leverage increased further to 4.4x compared with 3.6x in the same prior year period. - VF pulled its full-year guidance and further cut its dividend to free up cash flow for debt reduction. Proceeds from the company's contemplated sale of the Packs business could reduce debt. However, its largest brand, Vans, continued to decline, and the timing of its recovery and the ability of the company to restore its credit metrics remains uncertain. - We affirmed our '###' issuer credit rating and our 'A-2' short-term and commercial paper (CP) ratings. We revised the outlook to negative from stable. - The negative outlook indicates that we could lower the ratings if credit metrics do not improve within the next 12-24 months, including achieving S&P Global Ratings-adjusted debt to EBITDA below 3x....

Research Update