The News
VF Corp has collected nearly all of its $149.7 million IEEPA tariff refund. It booked the money as the tariffed goods sold, so the refund never padded its margin.
The last $18.6 million came off cost of goods sold in the quarter that ended in September. VF owns The North Face, Vans and Timberland.
Tariffs had “no net impact on gross margin” in fiscal 2026 or fiscal 2027, VF said.
VF has also committed $37.6 million of the refund to some of its vendors and partners.
The details
VF split the refund between goods already sold and goods still in inventory. It cut cost of goods sold by $93.8 million for goods it sold in fiscal 2026. The other $55.9 million sat as a reserve against tariffed goods still in inventory.
VF released the reserve as that inventory sold: $37.3 million in the June quarter and $18.6 million in the September quarter.
Gross margin rose 320 basis points to 55.4% in the quarter. VF credited the sale of its Dickies brand, price increases, lower product costs and channel mix.
VF booked the vendor share as a cost on the same goods. It charged $22.7 million of the $37.6 million to cost of goods sold in fiscal 2026 and put $14.9 million into inventory. VF still owed the money at the end of September.
My notes
VF’s method keeps a refund from distorting gross margin. VF matched each refund dollar to the tariffed goods it was paid on, so the refund offset the tariff cost in the same periods.
Importers that shared tariffs with suppliers now have three public payback rates. VF, Williams-Sonoma and Gap set aside between about a fifth and a quarter of their refunds for vendors. A supplier asking for its share of a refund can point to those numbers.
What peers are doing
Williams-Sonoma set aside $47.5 million to reimburse vendors that gave it tariff concessions, about 24% of its $197.8 million refund claim by our math. The refund, net of those concessions, added 610 basis points to its fiscal Q2 gross margin, which Williams-Sonoma left out of its non-GAAP results. VF’s 25% share is close. (More)
Gap committed about $95 million to vendors against about $512 million in refunds, roughly 19% by our math, below VF’s 25%. The net benefit added 1,140 basis points to its reported Q2 gross margin, which Gap left out of its adjusted results. (More)
What’s next
VF’s next quarterly filing, for the three months ending in December, will show how much of the $37.6 million vendor payable VF has paid.
(Photo: ajay_suresh / Wikimedia Commons, CC BY 2.0)
