VF Corp. (NYSE:VFC, XETRA:VFP) is showing early signs of stabilization in key areas of its business, though uncertainty tied to macroeconomic factors continues to weigh on near-term visibility, according to Jefferies analysts following recent discussions with company management.
Jefferies maintains a “Hold” rating on the stock with a $19 price target, implying roughly 10% upside from current levels.
A central focus for investors remains the turnaround of Vans, which has faced prolonged weakness. Recent alternative data cited by Jefferies suggests some improvement, with US foot traffic turning positive in January for the first time since 2023 and remaining stable in February. Web traffic and search interest have also shown signs of recovery, aligning with the brand’s first quarter of positive global e-commerce growth in more than four years.
Management has indicated that direct-to-consumer momentum in the US could continue to support Vans, with physical retail expected to be the next area of improvement, followed by wholesale channels. However, international markets are still anticipated to remain more challenged.
Beyond Vans, VF Corp.’s broader brand portfolio is providing some stability. The North Face continues to deliver steady growth, with management expecting performance in the coming year to remain consistent with its roughly 7% year-to-date increase. Timberland has also contributed to growth, with high-single-digit gains helping lift overall company revenue.
Margin expansion remains a key component of the company’s longer-term strategy. VF Corp. has reiterated its goal of reaching a 10% operating margin by the fourth quarter of fiscal 2028, above current market expectations. Jefferies noted that cost savings initiatives of $500 million to $600 million could support this target, though potential headwinds from tariffs and rising freight costs may limit near-term progress.
Recent increases in oil prices have introduced additional uncertainty, particularly around supply chain costs. Higher fuel costs can affect freight and raw material expenses, though VF Corp. has previously taken steps to mitigate these risks, including diversifying shipping partners and negotiating contracts in advance. The company is also seen as having minimal direct exposure to the Middle East.
Inventory levels are described as more balanced compared with prior periods, reducing the risk of heavy discounting that weighed on margins in earlier years. Still, longer lead times and higher input costs, including synthetic materials and cotton, could present challenges.
Looking ahead, Jefferies believes that investors are focused on sustained improvement at Vans, along with greater visibility on margins and earnings growth. While the stock is currently trading near its historical average valuation, longer-term projections imply a lower multiple if execution improves.
VF Corp. has not yet reinstated full-year guidance, and Jefferies expects the company may continue to hold off amid ongoing uncertainty related to tariffs and commodity costs. Updates on free cash flow, leverage, and earnings trends are likely to remain in focus in upcoming quarters.