Ex-Goldman & Western Asset. Equity Research Dropout. Founder & CIO of largest global L/S FX & VIX repo HF. Not financial advice. DM open.
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$VFC is up nearly 50% since we issued our buy call three months ago.. R/R has moved to 0.6x. Some portion of the recent px is clearly flows driven. Could go on for a few more days. But wouldn't be surprised to see some give back. Taking profits here.
Our LONG $VFC position has worked well since our initial entry around $14 in August. We published an update yesterday (link in bio and replies). VFC reports tomorrow BMO.
The stock has rallied ~26% in a month, making the entry less attractive than in August. Yet we believe the fundamental risk profile has improved; incremental consumer and channel data have strengthened the case for Vans’ stabilization, prompting several sell-side upgrades.
Key thesis points:
1/ Vans’ recovery is broadening. DTC (~57% of sales by our estimate) approached flat in constant currency in 4Q26 and 1Q27, led by the Americas. The recovery first emerged in e-commerce before extending into physical stores. Europe is following a similar trajectory with a lag: e-commerce returned to growth in 1Q27, stores are improving, and DTC is materially outperforming wholesale. The recovery is increasingly evident at the aggregate channel level across Vans’ two largest regions, rather than confined to isolated product successes.
2/ Product innovation is translating into improving consumer demand, corroborated by independent channel checks.
a. Knu Skool has become Vans’ second-largest global franchise, while Authentic, Slip-On, and Old Skool have returned to growth. Recent releases, including Pearlized Yacht Club and Harris Tweed, largely sold out, with some limited releases commanding secondary-market premiums.
b. Web traffic has remained consistently strong since April. Piper Sandler’s channel checks showed September foot traffic at its strongest level since February 2023.
c. Piper’s SKU tracker found that nearly half of monitored new Vans products sold out across major wholesale accounts, providing evidence of product success beyond DTC.
d. Truist found Vans accounted for 10% of Foot Locker's brand-related Instagram posts since June, versus 1% in 2H25.
e. Piper’s Fall 2026 teen survey showed stabilization among male teens and improving relevance among upper-income males, a fashion-leading demographic.
Together, these indicators suggest consumer deterioration is abating, with the recovery gaining breadth across products, channels, and geographies.
3/ Wholesale is the next inflection, and we believe the Street is underestimating its potential acceleration. Newer products are already selling through strongly despite limited distribution, with assortments still skewed toward underperforming legacy styles. Accent Group reported that Vans' wholesale forward orders had turned positive for the first time in a long period, with management suggesting the brand was bottoming globally. DICK’S has also highlighted industry-wide excess inventory in legacy footwear alongside shortages of successful new styles. As retailers expand adoption of successful products and replenish inventories, we expect wholesale growth to accelerate earlier than consensus anticipates.
Moreover, management expects a material wholesale inflection in 2H27, citing strong DTC sell-through and discussions with global wholesale partners pointing to a strong back-half recovery. With the turnaround progressing broadly as anticipated, management delivering on its operational commitments, and a history of conservative guidance, we believe this outlook carries credibility.
4/ We believe the resulting earnings power remains underappreciated.
We have raised FY28/29 EBITDA estimates to $1.21B/$1.36B, 8%/15% above consensus, and EPS to $1.53/$1.82, 11%/10% above consensus. Our variance reflects an earlier Vans wholesale recovery and operating leverage through VFC's structurally leaner cost base, without assuming aggressive gross-margin expansion.
Our 12-month probability-weighted PT is $23 (+32% from last Friday’s close of $17.3), versus a $15 bear case (-13%). While R/R has compressed from ~6x to 3.4x, we believe the fundamental risk profile has improved. Stronger evidence of consumer stabilization reduces the probability of a failed turnaround, with a slower wholesale recovery increasingly representing a timing risk rather than continued brand impairment. Reflecting reduced execution risk and a lower likelihood of material derating, we have raised our bear/base/bull EV/EBITDA multiples to 10x/11x/12x, from 9x/10.5x/11x in August.
With VFC reporting tomorrow, the key catalyst is management's commentary on wholesale orders, Spring 2027 assortments, and confidence in the anticipated 2H27 acceleration.
For those interested in digging into the numbers, our Excel model is available here: docs.google.com/spreadsheets…
J1 Capital retweeted
updated thru 11/4 :
give this a read - this weekend we talked about the generals were next
2. The flows and the prices are telling DIFFERENT stories. Only 21% of the NET FLOWS have come out so far, but the median semi is down -46% from its own 2026 high. Outside $NVDA, $MU and $AMD
... semis have already reversed 85% of their build. The small names got flushed and people destroyed .. just wait for some Oct P&L reports...
3. What's left is three stocks. $86.4B of the $89.3B still in sits in $NVDA, $MU, and $AMD , so that's where the rest of any gross down would have to come from related to semis. It rhymes with the first wave of this cycle, which gave back 61% of its build within eight months (Jul 2024 to Mar 2025)
FRACTALS, HISTORIC NET FLOWS RIPPAH, JUNE 16-18*** & "WHAT INNING ARE WE IN?!"
"come with me if you want to live" - Terminator 2
I am continually open sourcing more of my process... here is something we track religiously... I put it into a nice report for you... trying something new to help give you some context about "what inning" this could be in... today was another bloodbath
3 MAIN POINTS TO CONTEXTUALIZE
1. The NET* INFLOWS was historic, and it came LATE in classic blow off style. Semis took in ~$117B of estimated net buying from Jan 2024 to the Jun 15 high, $51.9B of it (44%) in the final three months. Then came the biggest 3day LIQUIDATION since 2016: Jun 16–18, the market was −$68B and semis −$28B
2. The flows and the prices are telling DIFFERENT stories. Only 21% of the NET FLOWS have come out so far, but the median semi is down -46% from its own 2026 high. Outside $NVDA, $MU and $AMD ... semis have already reversed 85% of their build. The small names got flushed and people destroyed .. just wait for some Oct P&L reports...
3. What's left is three stocks. $86.4B of the $89.3B still in sits in $NVDA, $MU and $AMD, so that's where the rest of any gross down would have to come from related to semis. It rhymes with the first wave of this cycle, which gave back 61% of its build within eight months (Jul 2024 to Mar 2025)... or we shoot back to highs ...
Last but not least... how are people going to make room for $ANT in their portfolios?!?! better have an answer bc the rest of your port depends on it
REPORT: drive.google.com/file/d/1BtM…
Our LONG $VFC position has worked well since our initial entry around $14 in August. We published an update yesterday (link in bio and replies). VFC reports tomorrow BMO.
The stock has rallied ~26% in a month, making the entry less attractive than in August. Yet we believe the fundamental risk profile has improved; incremental consumer and channel data have strengthened the case for Vans’ stabilization, prompting several sell-side upgrades.
Key thesis points:
1/ Vans’ recovery is broadening. DTC (~57% of sales by our estimate) approached flat in constant currency in 4Q26 and 1Q27, led by the Americas. The recovery first emerged in e-commerce before extending into physical stores. Europe is following a similar trajectory with a lag: e-commerce returned to growth in 1Q27, stores are improving, and DTC is materially outperforming wholesale. The recovery is increasingly evident at the aggregate channel level across Vans’ two largest regions, rather than confined to isolated product successes.
2/ Product innovation is translating into improving consumer demand, corroborated by independent channel checks.
a. Knu Skool has become Vans’ second-largest global franchise, while Authentic, Slip-On, and Old Skool have returned to growth. Recent releases, including Pearlized Yacht Club and Harris Tweed, largely sold out, with some limited releases commanding secondary-market premiums.
b. Web traffic has remained consistently strong since April. Piper Sandler’s channel checks showed September foot traffic at its strongest level since February 2023.
c. Piper’s SKU tracker found that nearly half of monitored new Vans products sold out across major wholesale accounts, providing evidence of product success beyond DTC.
d. Truist found Vans accounted for 10% of Foot Locker's brand-related Instagram posts since June, versus 1% in 2H25.
e. Piper’s Fall 2026 teen survey showed stabilization among male teens and improving relevance among upper-income males, a fashion-leading demographic.
Together, these indicators suggest consumer deterioration is abating, with the recovery gaining breadth across products, channels, and geographies.
3/ Wholesale is the next inflection, and we believe the Street is underestimating its potential acceleration. Newer products are already selling through strongly despite limited distribution, with assortments still skewed toward underperforming legacy styles. Accent Group reported that Vans' wholesale forward orders had turned positive for the first time in a long period, with management suggesting the brand was bottoming globally. DICK’S has also highlighted industry-wide excess inventory in legacy footwear alongside shortages of successful new styles. As retailers expand adoption of successful products and replenish inventories, we expect wholesale growth to accelerate earlier than consensus anticipates.
Moreover, management expects a material wholesale inflection in 2H27, citing strong DTC sell-through and discussions with global wholesale partners pointing to a strong back-half recovery. With the turnaround progressing broadly as anticipated, management delivering on its operational commitments, and a history of conservative guidance, we believe this outlook carries credibility.
4/ We believe the resulting earnings power remains underappreciated.
We have raised FY28/29 EBITDA estimates to $1.21B/$1.36B, 8%/15% above consensus, and EPS to $1.53/$1.82, 11%/10% above consensus. Our variance reflects an earlier Vans wholesale recovery and operating leverage through VFC's structurally leaner cost base, without assuming aggressive gross-margin expansion.
Our 12-month probability-weighted PT is $23 (+32% from last Friday’s close of $17.3), versus a $15 bear case (-13%). While R/R has compressed from ~6x to 3.4x, we believe the fundamental risk profile has improved. Stronger evidence of consumer stabilization reduces the probability of a failed turnaround, with a slower wholesale recovery increasingly representing a timing risk rather than continued brand impairment. Reflecting reduced execution risk and a lower likelihood of material derating, we have raised our bear/base/bull EV/EBITDA multiples to 10x/11x/12x, from 9x/10.5x/11x in August.
With VFC reporting tomorrow, the key catalyst is management's commentary on wholesale orders, Spring 2027 assortments, and confidence in the anticipated 2H27 acceleration.
For those interested in digging into the numbers, our Excel model is available here: docs.google.com/spreadsheets…
Long $VFC.
The market is extrapolating backward-looking wholesale weakness. I think improving DTC sell-through at Vans will drive wholesale replenishment sooner than expected.
12-month PT: $19 (32% upside), 6:1 risk/reward.
Full thesis below.
The market has been rough lately, particularly for semis and memory stocks. Rough enough that @GavinSBaker has retreated into the bushes.🤣 @insane_analyst cooked. (Jokes aside, I suspect Gavin will have the last laugh.)
And while the rest of the market is melting down, my $VFC bags are printing. I remain constructive on the stonk following earnings, though the setup is more balanced. As of Friday's close of $18.3, my 12-month PT of $22 implies 23% upside, with a R/R of 2.6x.
And speaking of Gavin, he made an interesting point on the Capital Allocators pod (@tseides; open.spotify.com/episode/6ho…):
"This is why a lot of fundamentally based value strategies have struggled for a long time.
Because the alpha in those strategies was being willing to own these stocks that other people were embarrassed to own because they were so out of favor. And you didn't have that different of an opinion on the future business outcome.
You just were willing to tolerate 6 to 9 months of pain on something really out of favor and then it would mean revert."
That’s not what’s happening here with $VFC. This isn’t a passive 'sit in the pain cave for 9 months and wait for mean reversion' trade. A year or two ago, that might have been the case. But rn, my underwriting is based on a variant view on the actual earnings power of the business.
My latest update:
TLDR: We continue to believe the market underappreciates the product-led DTC improvement and the evidence of improving consumer demand. As retailers broaden adoption of successful products and replenish inventories, we expect wholesale growth to accelerate. Our variance rests on Vans returning to growth in FY28 and on operating leverage from a leaner cost base. We expect this to drive earnings above consensus over the next 2–3 years.
More details below:
VFC beat 2Q27 guidance and reaffirmed FY27. Revenue grew 1% C$ ex-Dickies against guidance of flat, and adjusted OI was $364M against ~$315M guided.
1/ TNF and Timberland
• TNF and Timberland continue to deliver resilient earnings, acting as a ballast; together, they accounted for 89% of total segment profit in FY26.
• TNF has grown 4–7% C$ for six consecutive quarters. EMEA remains stable, while APAC is weak, as management had expected. APAC growth has normalized after strong outperformance (+31% in FY24 and +19% in FY25), and management cites insufficient innovation against strong local competitors.
• Timberland's Americas business accelerated from ~10% in 1Q27 to 15% in 2Q27, on top of 16% and 11% growth LY. Growth is broadening beyond the 6-Inch boot into shoes, hikers, and boat shoes. The international business is flat to down, but the causes are specific:
• In APAC, VFC is working through an issue with its regional partner, and Timberland alone accounted for almost half of VFC's APAC decline across all brands.
• In 1Q27, EMEA was hit by the Middle East conflict and a distributor issue.
• Brand heat supports both brands:
◦ AlixPartners' October survey ranks Timberland the #1 fashion footwear brand.
◦ L.E.K. ranks Timberland #1 in men's casual footwear, up from #3, and TNF #1 in men's and women's outdoor clothing.
◦ Piper Sandler's Fall 2026 survey placed both in the upper-income teen top 10: TNF in athletic clothing for the first time in three years, and Timberland in athletic footwear for the first time.
2/ Vans
• Global DTC grew for the first time in almost five years, extending the sequential improvement we have been highlighting. In our October update, we estimated DTC at ~57% of Vans' business, with global DTC approaching flat in C$ in 4Q26 and 1Q27. The 2Q27 growth came against a comp 6 pts tougher than 1Q27's.
• As highlighted in our previous update, Vans’ recovery is reflected in aggregate channel performance across its two largest regions, not just in isolated product successes:
• In the Americas, e-com and stores continue to improve. About 60% of the US comparable store fleet was flat or positive in 1Q27, and management said stores improved further in 2Q27.
• In EMEA, e-com returned to growth in 1Q27, and management noted continued improvement in stores.
• Management also cited encouraging signs in APAC in 2Q27.
• The broad-based product recovery highlighted in our August initiation and October update continues to gain traction, with newness working alongside refreshed icons.
• Old Skool led icon growth in DTC, with Pearlized and Souvenir expressions driving demand. The Pearlized Old Skool Yacht Club sold through 100% in the Americas in under 24 hours.
• Authentic grew strong DD across channels, and Slip-On returned to growth in DTC.
• The Super Lowpro, mules, and loafers are adding newness that supports the core styles.
• Wholesale, however, deteriorated further. We estimate it fell 26%, versus about 17% in 1Q. Vans revenue declined 9.8%, slightly below management's guide and our forecast. Americas Vans slowed to -7% C$ despite growing DTC, suggesting destocking is heavy in Vans' largest region.
• The offset is better visibility. In July, management cited discussions with wholesale partners. It now cites visibility into confirmed orders and cancellations for both Fall/Winter '26 and Spring/Summer '27, and a strong response from partners to increased product newness. Most of the wholesale growth is expected to come from existing partners expanding shelf space.
• 3Q is guided to -4% or better, and the 2H guide implies Vans roughly flat in 4Q.
• Management expects the wholesale recovery to start in 3Q and build in 4Q, when Spring/Summer '27 sell-in begins shipping. 3Q is a DTC-heavy quarter, and management expects destocking to continue a little into it.
• That implies a ~20 pt swing in wholesale growth within two quarters, which only a firm order book makes credible.
3/ Sentiment, positioning, and setup
• The stock trades at $18.3, or 10x our FY28 EBITDA (11x Street) and 12x our FY28 EPS (13x Street).
• With the stock's post-earnings rise, R/R has compressed from 3.4x to 2.6x. Our probability-weighted PT is $22 (23% upside), based on 11x FY28 EBITDA in our base case, against a $16 bear case (12% downside). We made light revisions to our estimates and kept our 10x/11x/12x multiples. TNF & Timberland earnings contribution and improving stabilization at Vans support the bear-case multiple. Higher multiples, however, require evidence of Vans wholesale growth, which has not yet arrived.
• We remain long but view the setup as more balanced. The 3Q call will be DTC-heavy, so it can confirm the trajectory but not the inflection. Incremental positives would include continued DTC growth, improving US and European stores, delivery of the -4% guide, and reiterated visibility into Spring/Summer '27 orders.
• 4Q results are the decisive test. Roughly flat Vans revenue would confirm the order book and establish FY28 as Vans' first year of growth since FY22.
From @lord_fed latest post: "Goldman Sachs earnings work shows that companies beating EPS estimates have at median outperformed the S&P by 1.52 percentage points the following day while within TMT that number is -0.76%. Outside those sectors, it is plus 1.72%. So good earnings are getting rewarded; the difficulty is that the reward is showing up in different parts of the market."
One of the prints getting rewarded is $VFC. There's always alpha somewhere.
The market has been rough lately, particularly for semis and memory stocks. Rough enough that @GavinSBaker has retreated into the bushes.🤣 @insane_analyst cooked. (Jokes aside, I suspect Gavin will have the last laugh.)
And while the rest of the market is melting down, my $VFC bags are printing. I remain constructive on the stonk following earnings, though the setup is more balanced. As of Friday's close of $18.3, my 12-month PT of $22 implies 23% upside, with a R/R of 2.6x.
And speaking of Gavin, he made an interesting point on the Capital Allocators pod (@tseides; open.spotify.com/episode/6ho…):
"This is why a lot of fundamentally based value strategies have struggled for a long time.
Because the alpha in those strategies was being willing to own these stocks that other people were embarrassed to own because they were so out of favor. And you didn't have that different of an opinion on the future business outcome.
You just were willing to tolerate 6 to 9 months of pain on something really out of favor and then it would mean revert."
That’s not what’s happening here with $VFC. This isn’t a passive 'sit in the pain cave for 9 months and wait for mean reversion' trade. A year or two ago, that might have been the case. But rn, my underwriting is based on a variant view on the actual earnings power of the business.
My latest update:
TLDR: We continue to believe the market underappreciates the product-led DTC improvement and the evidence of improving consumer demand. As retailers broaden adoption of successful products and replenish inventories, we expect wholesale growth to accelerate. Our variance rests on Vans returning to growth in FY28 and on operating leverage from a leaner cost base. We expect this to drive earnings above consensus over the next 2–3 years.
More details below:
VFC beat 2Q27 guidance and reaffirmed FY27. Revenue grew 1% C$ ex-Dickies against guidance of flat, and adjusted OI was $364M against ~$315M guided.
1/ TNF and Timberland
• TNF and Timberland continue to deliver resilient earnings, acting as a ballast; together, they accounted for 89% of total segment profit in FY26.
• TNF has grown 4–7% C$ for six consecutive quarters. EMEA remains stable, while APAC is weak, as management had expected. APAC growth has normalized after strong outperformance (+31% in FY24 and +19% in FY25), and management cites insufficient innovation against strong local competitors.
• Timberland's Americas business accelerated from ~10% in 1Q27 to 15% in 2Q27, on top of 16% and 11% growth LY. Growth is broadening beyond the 6-Inch boot into shoes, hikers, and boat shoes. The international business is flat to down, but the causes are specific:
• In APAC, VFC is working through an issue with its regional partner, and Timberland alone accounted for almost half of VFC's APAC decline across all brands.
• In 1Q27, EMEA was hit by the Middle East conflict and a distributor issue.
• Brand heat supports both brands:
◦ AlixPartners' October survey ranks Timberland the #1 fashion footwear brand.
◦ L.E.K. ranks Timberland #1 in men's casual footwear, up from #3, and TNF #1 in men's and women's outdoor clothing.
◦ Piper Sandler's Fall 2026 survey placed both in the upper-income teen top 10: TNF in athletic clothing for the first time in three years, and Timberland in athletic footwear for the first time.
2/ Vans
• Global DTC grew for the first time in almost five years, extending the sequential improvement we have been highlighting. In our October update, we estimated DTC at ~57% of Vans' business, with global DTC approaching flat in C$ in 4Q26 and 1Q27. The 2Q27 growth came against a comp 6 pts tougher than 1Q27's.
• As highlighted in our previous update, Vans’ recovery is reflected in aggregate channel performance across its two largest regions, not just in isolated product successes:
• In the Americas, e-com and stores continue to improve. About 60% of the US comparable store fleet was flat or positive in 1Q27, and management said stores improved further in 2Q27.
• In EMEA, e-com returned to growth in 1Q27, and management noted continued improvement in stores.
• Management also cited encouraging signs in APAC in 2Q27.
• The broad-based product recovery highlighted in our August initiation and October update continues to gain traction, with newness working alongside refreshed icons.
• Old Skool led icon growth in DTC, with Pearlized and Souvenir expressions driving demand. The Pearlized Old Skool Yacht Club sold through 100% in the Americas in under 24 hours.
• Authentic grew strong DD across channels, and Slip-On returned to growth in DTC.
• The Super Lowpro, mules, and loafers are adding newness that supports the core styles.
• Wholesale, however, deteriorated further. We estimate it fell 26%, versus about 17% in 1Q. Vans revenue declined 9.8%, slightly below management's guide and our forecast. Americas Vans slowed to -7% C$ despite growing DTC, suggesting destocking is heavy in Vans' largest region.
• The offset is better visibility. In July, management cited discussions with wholesale partners. It now cites visibility into confirmed orders and cancellations for both Fall/Winter '26 and Spring/Summer '27, and a strong response from partners to increased product newness. Most of the wholesale growth is expected to come from existing partners expanding shelf space.
• 3Q is guided to -4% or better, and the 2H guide implies Vans roughly flat in 4Q.
• Management expects the wholesale recovery to start in 3Q and build in 4Q, when Spring/Summer '27 sell-in begins shipping. 3Q is a DTC-heavy quarter, and management expects destocking to continue a little into it.
• That implies a ~20 pt swing in wholesale growth within two quarters, which only a firm order book makes credible.
3/ Sentiment, positioning, and setup
• The stock trades at $18.3, or 10x our FY28 EBITDA (11x Street) and 12x our FY28 EPS (13x Street).
• With the stock's post-earnings rise, R/R has compressed from 3.4x to 2.6x. Our probability-weighted PT is $22 (23% upside), based on 11x FY28 EBITDA in our base case, against a $16 bear case (12% downside). We made light revisions to our estimates and kept our 10x/11x/12x multiples. TNF & Timberland earnings contribution and improving stabilization at Vans support the bear-case multiple. Higher multiples, however, require evidence of Vans wholesale growth, which has not yet arrived.
• We remain long but view the setup as more balanced. The 3Q call will be DTC-heavy, so it can confirm the trajectory but not the inflection. Incremental positives would include continued DTC growth, improving US and European stores, delivery of the -4% guide, and reiterated visibility into Spring/Summer '27 orders.
• 4Q results are the decisive test. Roughly flat Vans revenue would confirm the order book and establish FY28 as Vans' first year of growth since FY22.
The market has been rough lately, particularly for semis and memory stocks. Rough enough that @GavinSBaker has retreated into the bushes.🤣 @insane_analyst cooked. (Jokes aside, I suspect Gavin will have the last laugh.)
And while the rest of the market is melting down, my $VFC bags are printing. I remain constructive on the stonk following earnings, though the setup is more balanced. As of Friday's close of $18.3, my 12-month PT of $22 implies 23% upside, with a R/R of 2.6x.
And speaking of Gavin, he made an interesting point on the Capital Allocators pod (@tseides; open.spotify.com/episode/6ho…):
"This is why a lot of fundamentally based value strategies have struggled for a long time.
Because the alpha in those strategies was being willing to own these stocks that other people were embarrassed to own because they were so out of favor. And you didn't have that different of an opinion on the future business outcome.
You just were willing to tolerate 6 to 9 months of pain on something really out of favor and then it would mean revert."
That’s not what’s happening here with $VFC. This isn’t a passive 'sit in the pain cave for 9 months and wait for mean reversion' trade. A year or two ago, that might have been the case. But rn, my underwriting is based on a variant view on the actual earnings power of the business.
My latest update:
TLDR: We continue to believe the market underappreciates the product-led DTC improvement and the evidence of improving consumer demand. As retailers broaden adoption of successful products and replenish inventories, we expect wholesale growth to accelerate. Our variance rests on Vans returning to growth in FY28 and on operating leverage from a leaner cost base. We expect this to drive earnings above consensus over the next 2–3 years.
More details below:
VFC beat 2Q27 guidance and reaffirmed FY27. Revenue grew 1% C$ ex-Dickies against guidance of flat, and adjusted OI was $364M against ~$315M guided.
1/ TNF and Timberland
• TNF and Timberland continue to deliver resilient earnings, acting as a ballast; together, they accounted for 89% of total segment profit in FY26.
• TNF has grown 4–7% C$ for six consecutive quarters. EMEA remains stable, while APAC is weak, as management had expected. APAC growth has normalized after strong outperformance (+31% in FY24 and +19% in FY25), and management cites insufficient innovation against strong local competitors.
• Timberland's Americas business accelerated from ~10% in 1Q27 to 15% in 2Q27, on top of 16% and 11% growth LY. Growth is broadening beyond the 6-Inch boot into shoes, hikers, and boat shoes. The international business is flat to down, but the causes are specific:
• In APAC, VFC is working through an issue with its regional partner, and Timberland alone accounted for almost half of VFC's APAC decline across all brands.
• In 1Q27, EMEA was hit by the Middle East conflict and a distributor issue.
• Brand heat supports both brands:
◦ AlixPartners' October survey ranks Timberland the #1 fashion footwear brand.
◦ L.E.K. ranks Timberland #1 in men's casual footwear, up from #3, and TNF #1 in men's and women's outdoor clothing.
◦ Piper Sandler's Fall 2026 survey placed both in the upper-income teen top 10: TNF in athletic clothing for the first time in three years, and Timberland in athletic footwear for the first time.
2/ Vans
• Global DTC grew for the first time in almost five years, extending the sequential improvement we have been highlighting. In our October update, we estimated DTC at ~57% of Vans' business, with global DTC approaching flat in C$ in 4Q26 and 1Q27. The 2Q27 growth came against a comp 6 pts tougher than 1Q27's.
• As highlighted in our previous update, Vans’ recovery is reflected in aggregate channel performance across its two largest regions, not just in isolated product successes:
• In the Americas, e-com and stores continue to improve. About 60% of the US comparable store fleet was flat or positive in 1Q27, and management said stores improved further in 2Q27.
• In EMEA, e-com returned to growth in 1Q27, and management noted continued improvement in stores.
• Management also cited encouraging signs in APAC in 2Q27.
• The broad-based product recovery highlighted in our August initiation and October update continues to gain traction, with newness working alongside refreshed icons.
• Old Skool led icon growth in DTC, with Pearlized and Souvenir expressions driving demand. The Pearlized Old Skool Yacht Club sold through 100% in the Americas in under 24 hours.
• Authentic grew strong DD across channels, and Slip-On returned to growth in DTC.
• The Super Lowpro, mules, and loafers are adding newness that supports the core styles.
• Wholesale, however, deteriorated further. We estimate it fell 26%, versus about 17% in 1Q. Vans revenue declined 9.8%, slightly below management's guide and our forecast. Americas Vans slowed to -7% C$ despite growing DTC, suggesting destocking is heavy in Vans' largest region.
• The offset is better visibility. In July, management cited discussions with wholesale partners. It now cites visibility into confirmed orders and cancellations for both Fall/Winter '26 and Spring/Summer '27, and a strong response from partners to increased product newness. Most of the wholesale growth is expected to come from existing partners expanding shelf space.
• 3Q is guided to -4% or better, and the 2H guide implies Vans roughly flat in 4Q.
• Management expects the wholesale recovery to start in 3Q and build in 4Q, when Spring/Summer '27 sell-in begins shipping. 3Q is a DTC-heavy quarter, and management expects destocking to continue a little into it.
• That implies a ~20 pt swing in wholesale growth within two quarters, which only a firm order book makes credible.
3/ Sentiment, positioning, and setup
• The stock trades at $18.3, or 10x our FY28 EBITDA (11x Street) and 12x our FY28 EPS (13x Street).
• With the stock's post-earnings rise, R/R has compressed from 3.4x to 2.6x. Our probability-weighted PT is $22 (23% upside), based on 11x FY28 EBITDA in our base case, against a $16 bear case (12% downside). We made light revisions to our estimates and kept our 10x/11x/12x multiples. TNF & Timberland earnings contribution and improving stabilization at Vans support the bear-case multiple. Higher multiples, however, require evidence of Vans wholesale growth, which has not yet arrived.
• We remain long but view the setup as more balanced. The 3Q call will be DTC-heavy, so it can confirm the trajectory but not the inflection. Incremental positives would include continued DTC growth, improving US and European stores, delivery of the -4% guide, and reiterated visibility into Spring/Summer '27 orders.
• 4Q results are the decisive test. Roughly flat Vans revenue would confirm the order book and establish FY28 as Vans' first year of growth since FY22.
Our LONG $VFC position has worked well since our initial entry around $14 in August. We published an update yesterday (link in bio and replies). VFC reports tomorrow BMO.
The stock has rallied ~26% in a month, making the entry less attractive than in August. Yet we believe the fundamental risk profile has improved; incremental consumer and channel data have strengthened the case for Vans’ stabilization, prompting several sell-side upgrades.
Key thesis points:
1/ Vans’ recovery is broadening. DTC (~57% of sales by our estimate) approached flat in constant currency in 4Q26 and 1Q27, led by the Americas. The recovery first emerged in e-commerce before extending into physical stores. Europe is following a similar trajectory with a lag: e-commerce returned to growth in 1Q27, stores are improving, and DTC is materially outperforming wholesale. The recovery is increasingly evident at the aggregate channel level across Vans’ two largest regions, rather than confined to isolated product successes.
2/ Product innovation is translating into improving consumer demand, corroborated by independent channel checks.
a. Knu Skool has become Vans’ second-largest global franchise, while Authentic, Slip-On, and Old Skool have returned to growth. Recent releases, including Pearlized Yacht Club and Harris Tweed, largely sold out, with some limited releases commanding secondary-market premiums.
b. Web traffic has remained consistently strong since April. Piper Sandler’s channel checks showed September foot traffic at its strongest level since February 2023.
c. Piper’s SKU tracker found that nearly half of monitored new Vans products sold out across major wholesale accounts, providing evidence of product success beyond DTC.
d. Truist found Vans accounted for 10% of Foot Locker's brand-related Instagram posts since June, versus 1% in 2H25.
e. Piper’s Fall 2026 teen survey showed stabilization among male teens and improving relevance among upper-income males, a fashion-leading demographic.
Together, these indicators suggest consumer deterioration is abating, with the recovery gaining breadth across products, channels, and geographies.
3/ Wholesale is the next inflection, and we believe the Street is underestimating its potential acceleration. Newer products are already selling through strongly despite limited distribution, with assortments still skewed toward underperforming legacy styles. Accent Group reported that Vans' wholesale forward orders had turned positive for the first time in a long period, with management suggesting the brand was bottoming globally. DICK’S has also highlighted industry-wide excess inventory in legacy footwear alongside shortages of successful new styles. As retailers expand adoption of successful products and replenish inventories, we expect wholesale growth to accelerate earlier than consensus anticipates.
Moreover, management expects a material wholesale inflection in 2H27, citing strong DTC sell-through and discussions with global wholesale partners pointing to a strong back-half recovery. With the turnaround progressing broadly as anticipated, management delivering on its operational commitments, and a history of conservative guidance, we believe this outlook carries credibility.
4/ We believe the resulting earnings power remains underappreciated.
We have raised FY28/29 EBITDA estimates to $1.21B/$1.36B, 8%/15% above consensus, and EPS to $1.53/$1.82, 11%/10% above consensus. Our variance reflects an earlier Vans wholesale recovery and operating leverage through VFC's structurally leaner cost base, without assuming aggressive gross-margin expansion.
Our 12-month probability-weighted PT is $23 (+32% from last Friday’s close of $17.3), versus a $15 bear case (-13%). While R/R has compressed from ~6x to 3.4x, we believe the fundamental risk profile has improved. Stronger evidence of consumer stabilization reduces the probability of a failed turnaround, with a slower wholesale recovery increasingly representing a timing risk rather than continued brand impairment. Reflecting reduced execution risk and a lower likelihood of material derating, we have raised our bear/base/bull EV/EBITDA multiples to 10x/11x/12x, from 9x/10.5x/11x in August.
With VFC reporting tomorrow, the key catalyst is management's commentary on wholesale orders, Spring 2027 assortments, and confidence in the anticipated 2H27 acceleration.
For those interested in digging into the numbers, our Excel model is available here: docs.google.com/spreadsheets…
"With Jordan accounting for roughly 25% of Foot Locker’s revenue, the athletics retailer will have some gaps to fill next year."
retaildive.com/news/nike-jor…
A few additional developments could reinforce Vans' recovery:
· Cultural visibility is improving, supported by Olivia Rodrigo's repeated appearances in Vans and high-profile collaborations, including Satoshi Nakamoto at ComplexCon and Valentino x Vans.
· Skate-inspired footwear is regaining cultural relevance. Vogue has highlighted renewed celebrity adoption and luxury reinterpretations of heritage silhouettes. Pacsun's rise from #8 to #4 among upper-income males in Piper Sandler's Fall 2026 survey further suggests growing interest in skate/streetwear aesthetics among fashion-leading consumers.
· Nike's rationalization of legacy lifestyle products could create opportunities for Vans to gain shelf space at major footwear retailers.
J1 Capital retweeted
The Alchemist, The Handbook to Higher Consciousness, everything Richard Rohr has written (for men), everything David Hawkins has written (particularly Letting Go), the Joseph Campbell Hero’s Journey YouTube Series, The Bhagavad Gita, How to Find Peace in Times of War, Radical Acceptance, The Power of Now. Off top of my head.
On the recent rally and positioning: $VFC has advanced 26% over the past month, significantly outperforming the Apparel & Sneakers basket (+5.6%). The rally coincided with significant factor rotation: momentum trades unwound while short-covering and squeeze-related baskets rallied despite broader market weakness. Positioning adjustments likely amplified VFC's gains, but the magnitude of its outperformance suggests substantial stock-specific repricing, supported by improving fundamentals and sell-side upgrades. Charts via liqn.ai. @JaredKubin
Vans is a key part of the investor debate for $VFC, as it has been a drag on the company’s otherwise growing portfolio. Our wholesale channel checks are not yet reporting positive comps in the current quarter, consistent with what management predicted.
However, select retailers are seeing newer fashion-forward and novelty SKUs generate renewed excitement for the brand and support full-price sales. Several experts expressed optimism about this momentum continuing into 2027, which may be an early signal that DTC recovery will eventually reach the wholesale channel.
AlphaSense channel checks are providing an early look into how this dynamic is playing out: research.alpha-sense.com/com…
