Kontoor Brands, Inc.

Kontoor reported first-half revenue of $1.2 billion, up 31% versus prior year, adjusted gross margin of 52.2% (+590 bps), and adjusted EPS of $2.12 (+36%). In Q2, adjusted gross margin was 53.8% (+710 bps) and adjusted EPS was $1.06 (+13%); SG&A was $221 million, or 37.8% of revenue. Helly Hansen Q2 pro forma revenue was $114 million, up 6%, and Helly posted positive operating profit. Full-year guidance was raised for adjusted gross margin to 49.8%–50% (vs. 48.3%–48.5% prior), adjusted operating income to $413 million–$420 million, and adjusted EPS to $5.25–$5.35; revenue guidance was unchanged at $2.66 billion–$2.71 billion. Management also expects second-half revenue of $1.46 billion–$1.51 billion, full-year cash from operations of about $450 million, and more than $900 million of capital returned in 2026 including the planned $400 million ASR tied to Lee proceeds. Net debt was $1.1 billion, cash was $58 million, inventory was $526 million (down 3%), and the revolver remained undrawn.

Scott Baxter framed the quarter as evidence that Kontoor has reached an inflection point in its transformation, driven by Wrangler momentum, Helly Hansen integration, Project Genius, and the Lee divestiture. He stressed that the company is investing behind growth while building a stronger long-term operating model, including separating Helly sport and workwear, sharpening Wrangler’s focus after Lee, and finishing Project Genius above its $100 million gross savings target. His tone was upbeat and confident, especially around the talent base, product innovation, and the idea that 2027 should benefit from the portfolio changes now being put in place.

Joe Alkire focused on the financial step-up and the mechanics behind the raised outlook. He highlighted stronger-than-expected gross margin, driven by Helly, Project Genius, and mix, and said the company now expects full-year adjusted gross margin of 49.8% to 50%, adjusted operating income of $413 million to $420 million, and adjusted EPS of $5.25 to $5.35, while absorbing about $0.55 of Lee-related stranded expenses and about $0.36 of incremental investment versus the prior plan. He also pointed to $526 million of inventory, $1.1 billion of net debt, $58 million of cash, an undrawn $500 million revolver, $75 million of year-to-date share repurchases, and expected capital returns above $900 million in 2026 including the planned ASR and debt paydown.

Analysts pressed on how much of the second-half acceleration in Wrangler and Helly is visible today and how much depends on new distribution, DTC expansion, and brand-building spend. Management said the back-half outlook is supported by committed inventory and visible distribution wins, not by assuming any meaningful improvement in retail inventory conditions; for Helly, they said growth should remain mid-single-digit in constant currency and that 2027 growth should accelerate as more of the brand’s potential becomes under Kontoor’s control. Questions also focused on Helly’s unusually strong profitability and the gap between prior Street EPS expectations and today’s 2027 framework; management responded that Helly’s Q2 positive operating profit was a meaningful milestone and that the Lee divestiture can be offset over time through an ASR, debt paydown, and underlying brand growth.