S&P changes VF outlook to negative

S&P said it changed its outlook for VF Corp. to negative from stable and affirmed its BBB issuer credit rating.

“Despite announcing capital allocation changes and cost-savings initiatives, we forecast VF's leverage will remain above 3x through fiscal 2025. Further leverage reduction will be dependent on restoring EBITDA, which will be challenging in a weaker demand and macroeconomic environment, as well as with potential asset sales. At this time, it is also unclear how costs required to achieve the $300 million in potential cost-savings will impact profitability.

“The company ended the second quarter with sales down 2% and S&P Global Ratings-adjusted EBITDA margin weakening to the 15%-16% range, reflecting a higher promotional environment from lower demand and an attempt to clear excess inventory,” S&P said in a press release.

The agency warned it could downgrade VF if credit metrics do not improve within the next 12-24 months, including reaching S&P Global Ratings-adjusted debt to EBITDA below 3x.

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