VF Corporation booked a goodwill impairment charge of $320 million on Timberland, which has not been performing as well as its other brands. In the full year ended on March 28, the group expects operating profit to be between $1.0 billion and $1.1 billion for its continuing operation. It also announced a $3 billion refinancing of its debt.

VF Corp., which also owns Vans, The North Face and other brands, has spun off its loss-making jeans business and is divesting most of its workwear business, which has been generating slim margins.

In a preliminary statement about its results for the full year, the group estimated revenues of $11.3 billion to $11.4 billion. Analysts were projecting a turnover of $11.5 billion for the year.

On an adjusted basis, excluding the impairment on Timberland and other charges, the operating income should amount to between $1.4 billion and $1.5 billion.

VF also announced the issuance of senior notes in four tranches worth a combined $3 billion, maturing between 2022 and 2030, to repay borrowings made under its senior unsecured revolving credit facility and for general corporate purposes. 

Standard & Poors revised its debt rating for VF to negative because of “significantly weaker” operating results than previously expected, as shown by the revision of its financial outlook. The rating agency said that its current store closures will likely be extended, that consumers will be slow to go shopping due to the risk of infection in the next quarters and that they may not spend much on apparel or footwear because of high unemployment. S&P anticipates that VF will take longer to meet a debt/Ebitda ratio of 2.

Moody’s assigned an investment grade of A3 to the offering, but changed its outlook from stable to negative. It felt that it will take years for VF to return to its former debt/Ebitda ratio. It noted that VF has cash of $2.4 billion on its balance sheet and has suspended a share buyback program, but is still planning to pay a dividend.