VF may take on more leverage for opportunities, stays at 2x generally

By Devika Patel

Knoxville, Tenn., Oct. 23 – VF Corp. could take on up to a one-step downgrade in ratings for the right acquisition but it would improve its credit metrics “in a very rapid manner” to get back to its 2x historical leverage area.

“We’re guarding our rating, which is generally 2x debt to EBITDA,” vice president and chief financial officer Scott A. Roe said on the company’s third quarter earnings conference call on Monday.

“However, for the right acquisition, we’re willing to stretch that, even to the point of a one-step downgrade, if we had the right opportunities.

“If you do the math, that would apply a lot of capacity,” he said.

Even if the company takes on additional leverage, it would be able to reduce those levels “in a very rapid manner.”

“With our strong cash flow, our metrics snap back into line pretty quick here,” Roe said.

“We have dry powder even today.

“As we look at the contribution from Williamson-Dickey and the rest of our portfolio, we’re back in historic levels in a very rapid manner,” he said.

The clothing company is based in Greensboro, N.C.

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