Moody’s upgrades VF Corp. outlook on debt reduction progress

Moody's has upgraded VF Corporation's outlook on its debt reduction efforts. The credit ratings agency affirmed its Ba2 corporate family rating and probability of default rating, while also upgrading VF Corp.'s speculative grade liquidity rating. The change is due to VF Corp.'s operational improvements and continued debt repayment, which have enhanced its credit metrics.

Over the past year, VF Corp. reduced its debt by approximately $583 million, using free cash flow and the sale of the Dickies brand. The company anticipates further debt reduction in the coming year, with its April 2027 debt maturity to be repaid using internal sources. VF Corp.'s Ba2 rating is supported by its status as a large global apparel, footwear, and accessory company with a revenue of about $9.5 billion.

The company's financial performance is driven by its major brands, The North Face, Vans, and Timberland. The outdoor category, including The North Face and Timberland, continues to grow, while Vans sales trends remain unstable. The liquidity rating upgrade indicates strong liquidity from substantial free cash flow generation, which VF Corp. plans to use for repaying its $500 million notes due in April 2027.

Additionally, the company received a $50 million tariff refund in Q1 2027, which will bolster cash flow. Ratings could be upgraded further if each major business segment consistently shows sales and profit growth, while lease-adjusted debt/EBITDA remains below 3.25x and EBITA/interest stays above 3.5x. Conversely, ratings may be downgraded if VF Corp.'s operational performance declines, financial policies become aggressive, debt/EBITDA exceeds 4.0x, or EBITA/interest drops below 2.5x.