Vans and The North Face parent company VF Corp. committed to medium-term financial targets at its Investor Day on Wednesday, where its executive team updated analysts on its sweeping restructuring and turnaround plan to return the company to growth.

President and CEO Bracken Darrell invited members of his now larger global executive team to share more details about how, by fiscal year 2028, the company will have:

• Adjusted operating margin of at least 10%.
• Adjusted gross margin of at least 55%.
• Adjusted SG&A as a percentage of revenue of 45% or lower.
• Net leverage of 2.5 x or below.

That will be achieved with a more integrated global executive team that’s been newly bolstered by some additional roles such as design, and marks a change from the previous siloed approach that created competition rather than shared knowledge across brands, particularly in the Americas, Darrell said.

“Let me be clear, we are all here, here and at VF, for sustainable and profitable growth,” he said, noting that colleagues such as Abishek Dalmia, chief strategy and transformation officer, have all come from high-growth industries. “But for today, we’re going to set it aside. We’re going to set aside how much we’re going to grow. We’re going to explain what sort of business, financially, we will be growing.”

VF’s Financial Transformation

Chief Financial Officer Paul Vogel noted that while revenues are down, gross margins are improving and there are some green shoots appearing across the business. VF has reduced its debt and leverage, he said.

But cost-cutting will be an ongoing process, Vogel said, always focused on improving productivity and better use of the company’s assets. The company no longer believes in high leverage, Vogel said, and capital will be allocated carefully.

Those changes will lead to achieving adjusted operating margin of at least 10%, Vogel said.

“This is not to say that we will not grow,” Vogel said. “We can and will return to growth. We’re simply saying that we believe we can reestablish a healthy, solid foundation without growth, so when growth returns, we will realize even more incremental profitability.”

AI-Powered Systems for Product, Inventory, and Markdown Management

Dalmia shared more details about VF’s Reinvent program, which created a new, better connected, and standardized organization of the company, and is not only helping to reduce costs and improve efficiency, but also improving company culture, he said.

Three areas present opportunities:

• Product creation, or SKU productivity.
• Integrated business plan, which is focused on buying and inventory trading.
• Markdowns and managing them more effectively with data.

For example, if one retail partner is selling inventory more quickly than another, VF’s new AI-powered system will identify opportunities to shift slow-moving inventory to faster-moving locations.

“This is where AI is not just a buzzword,” Dalmia said. “We are addressing this by deploying machine learning and decisioning. With this, we are able to uncover and execute almost 25 times more trades within the quarter.”

Store staff scheduling will also improve with less emphasis on manual planning, he said. Aligning labor with traffic to stores will help the company meet the demands of customers.

Wholesale Opportunities in the Americas

Martino Scabbia Guerrini, chief commercial officer and president of emerging brands, shared how VF’s platform used in Europe and Asia is now being used in the Americas to have a more consistent execution model across the company.

The platform is making brand activations easier to launch in any city worldwide, Guerrini said, such as North Face’s climbing festival activations in Brooklyn, New York, and London’s Canary Wharf. It’s also helping brands create city-specific or market-specific retail experiences targeted to more performance-level athletes or lifestyle customers or kids, depending on the location, he said.

On the wholesale front, Guerrini said the Americas presents the greatest opportunity, and VF aims to duplicate its success in Europe, where its top five key accounts sell more volume than VF does in its DTC stores.

Emerging brands under the VF umbrella, such as Smartwool or Icebreaker, are better positioned to grow more quickly under the newly streamlined platform, Guerrini said.

“They’re going to be much more agile, but also disciplined about what they need to do in the mid- and long-term,” he said.

Improving VF’s Company Culture

Chief People Officer Brent Hyder noted that 12 of the 16 leaders on the global leadership team are either new to the company or in a new role. Each brand has a new president who will appear at a second Investor Day in the coming year, date still to be announced.

Alastair Curtis is the new chief design officer, a role that was elevated to the global leadership team to boost those capabilities at the senior level. Curtis previously was the chief design officer at Logitech, which was previously led by Darrell.

Company values will no longer be brand-specific, but company-wide at VF, Hyder said. Feedback from various regions will be communicated across the company to align all staff with business plans.

“When I think about the most successful companies in the world, they all have one thing in common – strong values,” Hyder said.

Kate Robertson can be reached at [email protected].