Kontoor Brands, Inc.

What they do

Kontoor designs, manufactures, procures, sells and licenses apparel, footwear and accessories under the Wrangler, Lee and Helly Hansen brands. Products are sold through wholesale and direct-to-consumer channels in the U.S. and internationally, primarily in EMEA, APAC and Non-U.S. Americas. The company also licenses its brands in certain regions and operates a joint venture for Helly Hansen in China.

Revenue drivers

• Wrangler — Global revenue of $469 million in Q2 2026, up 2% year-over-year, driven by growth in female, direct-to-consumer and international segments.
• Helly Hansen — Acquired May 31, 2025 for $957.5 million; contributed $114 million revenue in Q2 2026, exceeding expectations, with Sport and Workwear revenue of $70 million and $37 million respectively.
• Lee — Company is divesting the Lee business, expected to close in Q4 2026; it remains a legacy brand in the portfolio but is not a growth focus.
• Musto — Premium sailing and outdoor brand acquired with Helly Hansen; contributed $7 million revenue in Q2 2026.

Recent performance

In Q2 2026, revenue from continuing operations was $584 million, up 19% year-over-year. Reported gross margin was 56.2%, while adjusted gross margin was 53.8%, up 710 basis points. Adjusted operating income increased 19% to $94 million, and adjusted EPS of $1.06 rose 13% versus prior year. For the six months ended June 2026, revenue from continuing operations was $1.20 billion, up from $915.6 million in the prior year period.

Strategy

Management is focusing on its largest growth opportunities, particularly Wrangler and Helly Hansen, and sharpening portfolio focus. The company is executing Project Jeanius, a business transformation program that has contributed to gross margin expansion. It plans to use proceeds from the Lee divestiture for a $400 million Accelerated Share Repurchase and voluntary debt payments, and expects to return more than $900 million in 2026 through repurchases, dividends and debt payments.

Risks

• Tariff exposure — Increased U.S. tariffs on virtually all imports have adversely impacted gross margins in 2025 and are expected to continue to do so in future periods.
• Macroeconomic uncertainty — Inconsistent consumer demand, fluctuating foreign currency exchange rates, and moderating inflation continue to pressure results and retailer inventory management.
• Integration risk — The Helly Hansen acquisition may not achieve expected synergies or growth, and the joint venture in China adds operational complexity.
• Divestiture execution — The Lee divestiture may not close as anticipated or deliver expected proceeds, which could impact capital return plans.

Outlook

For full year 2026, management raised adjusted EPS guidance to $5.25-$5.35, representing 27-29% growth. Adjusted gross margin is now expected at 49.8%-50.0%, up 330-350 basis points. The outlook includes about $25 million of incremental brand-building and growth investments. The Lee divestiture is on track to close in Q4, and proceeding with a $400 million ASR upon closing.