KTB · Kontoor Brands, Inc.

Kontoor Brands’ Q1 FY2026 results reflect strong organic growth in Wrangler and Helly Hansen, amplified by the acquisition completed in Q2 2025, driving 45% YoY revenue growth in continuing operations to $613 million. Gross margin expanded 470 bps to 50.6% on an adjusted basis, supported by Helly Hansen’s contribution, Project Jeanius benefits, and favorable channel mix—partially offset by higher product costs. SG&A rose to 36.5% of revenue due to Helly Hansen integration and increased demand creation, though mitigated by restructuring savings. Management emphasized that the Lee divestiture—now in an advanced competitive process with multi-party interest—sharpens strategic focus on Wrangler and Helly Hansen, enabling accelerated capital allocation. The $750 million buyback, replacing the December 2023 program, signals confidence in post-divestiture cash generation and is expected to be funded by both operating cash flow ($450 million projected for FY2026) and Lee sale proceeds. The updated full-year adjusted EPS outlook of $6.60–$6.70 incorporates $0.90 of Lee’s prior EPS contribution now classified as discontinued operations, while adjusted EPS from continuing operations is guided at $5.15–$5.25—reflecting successful mitigation of $0.55 per share in overhead previously allocated to Lee. Tariff-related accounting adjustments added $49 million to gross profit in Q1, with $29 million reversing 2025 expenses, underscoring volatility in trade policy impacts. Collectively, these actions position Kontoor for enhanced shareholder returns through focused brand investment, disciplined capital deployment, and structural simplification.