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…

Full post: j1cap.substack.com/p/vfc-upd…

NTM EV/EBITDA (11x) and P/E (15x) toward the low end of 3-year ranges