VF Corp. Outlook Raised to Positive by S&P on Reduced Debt, Improved Margins

S&P Global Ratings has revised its outlook on VF Corp. (NYSE: VFC) to positive from stable, citing the apparel and footwear company's significant progress in strengthening its balance sheet and improving profitability. The ratings agency affirmed VF Corp.'s 'BB' issuer credit rating while signaling that an upgrade could occur within the next 12 months.

Key Rating Drivers

The outlook change was driven by a marked improvement in the company's financial metrics. According to S&P, VF Corp. has successfully lowered its debt burden and enhanced its operational efficiency.

Key figures highlighted by the agency include:

• Adjusted leverage was reduced to 3.1x in the quarter ended June 30, 2026, a substantial improvement from 4.7x a year earlier.
• Adjusted EBITDA margin expanded by 240 basis points year-over-year to 14.6%.

S&P forecasts that VF Corp. will continue this deleveraging trend, projecting leverage to fall to 2.8x in fiscal 2027 and further to 2.4x in fiscal 2028, moving the company closer to its own target of 2.5x.

Operational Turnaround

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The stronger financial position is underpinned by a recovery in sales after a challenging period. VF Corp. returned to growth in fiscal 2026 following three straight years of revenue declines, according to the S&P report. This momentum has been supported by positive performance across most of its brand portfolio.

In the first quarter of fiscal 2027, The North Face brand grew 6% and Timberland expanded 4%. Importantly, the rate of decline at the struggling Vans brand moderated to 8%, a notable improvement from a 14% contraction in the prior-year period.

Risks and Path to an Upgrade

The positive outlook indicates that a rating upgrade is possible if VF Corp. can sustain adjusted net leverage below 3.0x while maintaining stability across its brands. However, S&P also noted remaining challenges, lowering its business risk assessment on the company to "fair" from "satisfactory."

This adjustment reflects VF Corp.'s smaller scale and increased business concentration following the divestitures of its Dickies and Supreme brands. S&P stated that the rating remains constrained by intense competitive pressures in the outdoor apparel market and an uncertain macroeconomic environment. The outlook could be revised back to stable if revenue declines or debt-funded acquisitions cause leverage to trend back above the 3.0x threshold.