Helly Hansen Owner Kontoor Brands Reports 2025 Fourth Quarter and Full Year Results; Provides Initial 2026 Outlook

Kontoor Brands, Inc. (NYSE: KTB) has reported financial results for its fourth quarter and full year ended January 3, 2026.

Fourth Quarter 2025 Highlights

• Revenue of $1.02 billion increased 46 percent compared to prior year

• Reported gross margin was 46.2 percent. Adjusted gross margin of 46.8 percent increased 210 basis points compared to prior year

• Reported operating income was $121 million. Adjusted operating income of $150 million increased 48 percent compared to prior year. Adjusted operating income includes $8 million of incremental demand creation and brand investments relative to the Company’s prior outlook

• Reported EPS was $1.31. Adjusted EPS of $1.73 increased 26 percent compared to prior year. Adjusted EPS includes $0.10 of incremental demand creation and brand investments relative to the Company’s prior outlook

• Inventory of $567 million decreased $198 million from the third quarter, representing a 26 percent decrease from the third quarter

• The Company made a $200 million voluntary term loan payment

• The Company repurchased $25 million of shares

• As previously announced, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.53 per share

Full Year 2026 Outlook

• Revenue expected to be in the range of $3.40 to $3.45 billion, representing an increase of approximately 9 percent compared to prior year

• Adjusted gross margin expected to be in the range of 47.2 percent to 47.4 percent, representing an increase of 60 to 80 basis points compared to prior year

• Adjusted operating income expected to be in the range of $506 million to $512 million, representing an increase of 8 percent to 9 percent compared to prior year

• Adjusted EPS expected to be in the range of $6.40 to $6.50, representing an increase of 15 percent to 16 percent compared to prior year

• Cash from operations expected to be approximately $425 million

• The Company expects to make voluntary term loan payments of $225 million and to achieve a net leverage ratio below 1.5 times by year-end

The Company’s outlook includes the impact from increases in tariffs on all countries from which the Company sources product with the exception of Mexico, which is exempt under USMCA. The Company is evaluating the impact of the recent U.S. Supreme Court ruling on tariffs and trade agreement with Bangladesh. The Company utilizes U.S.-grown cotton in more than 80 percent of products sourced from Bangladesh which may qualify for a duty exemption under the trade agreement

“We had a strong finish to the year driven by better-than-expected revenue, earnings and cash generation,” said Scott Baxter, President, Chief Executive Officer and Chairman of the Board of Directors. “2025 was a transformational year for Kontoor, highlighted by the acquisition of Helly Hansen, strong growth in Wrangler and disciplined execution.”

“Our results highlight the strength and resiliency of our expanded brand portfolio as well as the impact from our transformation initiatives,” added Baxter. “Supported by record cash generation, including a $100 million contribution from Helly Hansen, we are ahead of our planned deleverage path, allowing us to capitalize on opportunistic share repurchases in the fourth quarter. I want to thank our colleagues around the globe for positioning us to deliver strong returns for our shareholders in the years ahead.”

Fourth Quarter 2025 Income Statement Review

Revenue was $1.02 billion and increased 46 percent compared to prior year, including a 36 percentage point benefit from the acquisition of Helly Hansen. Excluding the revenue contribution from Helly Hansen and the 53rd week of 2025, revenue increased 2 percent.

Wrangler brand global revenue was $562 million and increased 12 percent compared to prior year. Revenue growth benefitted by approximately 8 percentage points from the 53rd week. Wrangler U.S. revenue increased 12 percent, driven by a 16 percent increase in direct-to-consumer and an 11 percent increase in wholesale. Wrangler international revenue increased 10 percent compared to prior year, driven by a 35 percent increase in direct-to-consumer and a 6 percent increase in wholesale.

Lee brand global revenue was $198 million and increased 2 percent compared to prior year. Revenue growth benefitted by approximately 6 percentage points from the 53rd week. Lee U.S. revenue increased 9 percent driven by a 9 percent increase in wholesale and an 8 percent increase in direct-to-consumer. Lee international revenue decreased 6 percent driven by a decline in wholesale partially offset by an increase in direct-to-consumer.

Helly Hansen global revenue was $254 million. Revenue benefitted by approximately $3 million from the 53rd week. Sport and Workwear revenue was $194 million and $54 million, respectively. Musto brand revenue was $7 million. U.S. revenue was $68 million and international revenue was $186 million.

Gross margin increased 250 basis points to 46.2 percent on a reported basis and increased 210 basis points to 46.8 percent on an adjusted basis compared to prior year, including a 180 basis point benefit from the acquisition of Helly Hansen. Excluding Helly Hansen, adjusted gross margin increased 30 basis points driven by the benefits from Project Jeanius, and channel and product mix, partially offset by increased product costs and the impact from previously enacted increases in tariffs, net of pricing actions.

Selling, General & Administrative (SG&A) expenses were $350 million, or 34.3 percent of revenue on a reported basis. On an adjusted basis, SG&A expenses were $326 million, or 32.0 percent of revenue. Excluding Helly Hansen, adjusted SG&A expenses were $234 million representing an increase of 11 percent driven primarily by an increase in demand creation investments and volume-based variable expenses, including the impact of the 53rd week, partially offset by the benefits from Project Jeanius.

Operating income was $121 million on a reported basis. On an adjusted basis, operating income was $150 million and increased 48 percent compared to prior year. Adjusted operating income includes $8 million of incremental demand creation and brand investments relative to the Company’s prior outlook. Adjusted operating margin of 14.8 percent increased 30 basis points compared to prior year. Excluding Helly Hansen, adjusted operating income was $110 million and increased 9 percent compared to prior year.

Earnings per share (EPS) was $1.31 on a reported basis. On an adjusted basis, EPS was $1.73, representing an increase of 26 percent, including a $0.44 contribution from Helly Hansen. Adjusted EPS includes $0.10 of incremental demand creation and brand investments relative to the Company’s prior outlook.

Full Year 2025 Income Statement Review

Revenue was $3.15 billion and increased 21 percent compared to prior year, including an 18 percentage point benefit from the acquisition of Helly Hansen. Excluding the revenue contribution from Helly Hansen and the 53rd week, revenue increased 1 percent.

Wrangler brand global revenue was $1.91 billion and increased 6 percent compared to prior year. Revenue growth benefitted by approximately 2 percentage points from the 53rd week. Wrangler U.S. revenue increased 6 percent, driven by a 14 percent increase in direct-to-consumer and a 6 percent increase in wholesale. Wrangler international revenue increased 3 percent compared to prior year, driven by a 10 percent increase in direct-to-consumer and a 2 percent increase in wholesale.

Lee brand global revenue was $750 million and decreased 5 percent compared to prior year. Revenue growth benefitted by approximately 1 percentage point from the 53rd week. Lee U.S. revenue decreased 4 percent driven by a 5 percent decrease in wholesale partially offset by a 5 percent increase in direct-to-consumer. Lee international revenue decreased 7 percent driven by a decline in wholesale partially offset by an increase in direct-to-consumer.

Helly Hansen global revenue was $475 million for the June through December period. Revenue benefitted by approximately $3 million from the 53rd week. Sport and Workwear revenue was $354 million and $105 million, respectively. Musto brand revenue was $16 million. U.S. revenue was $113 million and international revenue was $362 million.

Gross margin increased 70 basis points to 45.2 percent on a reported basis and increased 150 basis points to 46.6 percent on an adjusted basis compared to prior year, including a 40 basis point benefit from the acquisition of Helly Hansen. Excluding Helly Hansen, adjusted gross margin increased 110 basis points driven by the benefits from Project Jeanius, and channel and product mix, partially offset by increased product costs and the impact from previously enacted increases in tariffs, net of pricing actions.

Selling, General & Administrative (SG&A) expenses were $1.09 billion, or 34.5 percent of revenue on a reported basis. On an adjusted basis, SG&A expenses were $1.00 billion, or 31.8 percent of revenue. Excluding Helly Hansen, adjusted SG&A expenses were $815 million representing an increase of 2 percent driven by an increase in demand creation investments and volume-based variable expenses, including the impact of the 53rd week, partially offset by the benefits from Project Jeanius.

Operating income was $337 million on a reported basis. On an adjusted basis, operating income was $468 million and increased 23 percent compared to prior year. Adjusted operating margin of 14.9 percent increased 30 basis points compared to prior year. Excluding Helly Hansen, adjusted operating income was $423 million and increased 11 percent compared to prior year, resulting in a 120 basis point increase in adjusted operating margin to 15.8 percent of revenue.

Earnings per share (EPS) was $4.05 on a reported basis. On an adjusted basis, EPS was $5.59, representing an increase of 14 percent, including a $0.35 contribution from Helly Hansen.

Balance Sheet and Liquidity Review

The Company ended the fourth quarter with $108 million in cash and cash equivalents, and $1.13 billion in long-term debt. During the quarter, the Company made a $200 million voluntary term loan payment.

At the end of the fourth quarter, the Company had no outstanding borrowings under the Revolving Credit Facility and $493 million available for borrowing against this facility. At the end of the fourth quarter, the Company’s pro-forma net leverage ratio was 2.0 times.

Inventory at the end of the fourth quarter was $567 million, including inventory from the acquisition of Helly Hansen. Total inventory at the end of the fourth quarter decreased $198 million on a sequential basis from the third quarter.

As previously announced, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.53 per share, payable on March 20, 2026, to shareholders of record at the close of business on March 10, 2026.

The Company returned $54 million to shareholders through dividends and share repurchases during the fourth quarter, including the repurchase of $25 million of common stock. For the full year, the Company returned approximately $140 million to shareholders through dividends and share repurchases. The Company has $190 million remaining under its authorized share repurchase program.

Full Year 2026 Outlook

The Company’s outlook includes the impact from increases in tariffs on all countries from which the Company sources product, with the exception of Mexico. Based on currently available information, the Company’s imports from Mexico to the U.S. remain exempt under USMCA.

The Company’s outlook assumes a 15 percent reciprocal tariff rate on applicable inventory receipts effective February 24, 2026. The Company’s outlook assumes at least a 20 percent reciprocal tariff rate on applicable inventory owned prior to February 24, 2026.

The Company is evaluating the impact of the recent U.S. Supreme Court ruling on tariffs and trade agreement with Bangladesh. The Company utilizes U.S.-grown cotton in more than 80 percent of products sourced from Bangladesh which may qualify for a duty exemption under the trade agreement.

“We are entering 2026 from a position of strength, with sharp strategic clarity and a relentless focus on execution,” said Scott Baxter, President, Chief Executive Officer and Chairman of the Board of Directors. “We have the team and platforms in place to drive another year of record revenue and earnings, cash generation, and investment behind our brands. The strength and resiliency of our model provides significant capital allocation optionality to deliver superior returns for our shareholders.”

The Company’s outlook includes the full year expected contribution from Helly Hansen as well as the impact from increases in tariffs. The Helly Hansen business exhibits revenue and earnings seasonality, specifically in the second quarter, Helly Hansen’s smallest revenue quarter of the year. Further, the Company expects the negative impact from tariffs to be larger in the first half of the year due to the timing of inventory flows at higher costs and other mitigating actions, including the expected benefits from Project Jeanius.

The Company’s full year 2026 outlook includes the following assumptions:

• Revenue is expected to be in the range of $3.40 to $3.45 billion, representing growth of approximately 9 percent compared to prior year, including an approximate 2 percent impact from the 53rd week in the prior year.

• For the first half of 2026, revenue is expected to be in the range of $1.56 to $1.57 billion, reflecting growth of between 22 and 23 percent compared to prior year, including the contribution from Helly Hansen.

• Adjusted gross margin is expected to be in the range of 47.2 percent to 47.4 percent, representing an increase of 60 to 80 basis points compared to prior year. The benefits from Project Jeanius, channel and product mix, and the contribution from Helly Hansen are expected to offset the impact from increases in tariffs, net of pricing actions.

• For the first half of 2026, adjusted gross margin is expected to be in the range of 47.1 percent to 47.3 percent.

• Adjusted SG&A expenses are expected to increase approximately 12 percent compared to prior year. Excluding Helly Hansen, SG&A expenses are expected to be consistent with prior year, including an increase in investment in demand creation and other strategic growth initiatives, offset by disciplined expense management, Project Jeanius and the impact of the 53rd week in prior year.

• For the first half of 2026, SG&A is expected to increase approximately 33 percent, primarily reflecting the impact of Helly Hansen.

• Adjusted operating income is expected to be in the range of $506 to $512 million, representing an increase of 8 percent to 9 percent compared to prior year, including the impact from increases in tariffs.

• For the first half of 2026, adjusted operating income is expected to be in the range of $195 to $198 million.

• Adjusted EPS is expected to be in the range of $6.40 to $6.50, representing an increase of 15 percent to 16 percent compared to prior year, including the impact from increases in tariffs.

• For the first half of 2026, adjusted EPS is expected in the range of $2.25 to $2.30.

• Capital expenditures are expected to be approximately $45 million.

• The Company expects an effective tax rate of approximately 20 percent on adjusted earnings, including the benefit of synergies from Helly Hansen. For the first half of 2026, the Company expects an effective tax rate of approximately 23 percent.

• Interest expense is expected to be approximately $55 million. Other expense is expected to be approximately $15 million. Average shares outstanding are expected to be approximately 56 million. There are no share repurchases contemplated in the Company’s outlook.

• The Company expects cash from operations of approximately $425 million.

• The Company expects to make voluntary term loan payments of $225 million, and to achieve a net leverage ratio below 1.5 times by year-end.

Kontoor Brands is a portfolio of three of the world’s most iconic lifestyle, outdoor and workwear brands: Wrangler, Lee and Helly Hansen. Kontoor Brands is a purpose-led organization focused on leveraging its global platform, strategic sourcing model and best-in-class supply chain to drive brand growth and deliver long- term value for its stakeholders.