Kontoor Brands lifts annual profit guidance following Lee sale and steady third quarter gains

US apparel group Kontoor Brands (Kontoor), owner of Wrangler and Helly Hansen, reported a 3 percent increase in third quarter revenue from continuing operations to 685.35 million dollars, driven by balanced growth across its core brands. Following the completion of the divestiture of Lee, the Greensboro-based business raised its full year adjusted earnings guidance.

The group now expects full year 2026 adjusted diluted earnings per share (adjusted diluted EPS) to reach 5.40 dollars, up from prior guidance of 5.25 to 5.35 dollars and representing approximately 31 percent year-over-year (YoY) growth. Kontoor also projected fiscal 2027 adjusted diluted EPS of at least 6.60 dollars, indicating sustained expansion above 20 percent.

Brand performance and channel momentum

Global revenue for Wrangler rose 3 percent YoY to 485.08 million dollars during the three months ended October 3, 2026. Domestic revenue for the denim brand climbed 2 percent, supported by a 7 percent expansion in direct-to-consumer (D2C) sales and a 2% lift in wholesale. International revenue for Wrangler increased 6 percent, buoyed by a 25 percent gain in direct-to-consumer operations and a 4% rise in wholesale channels.

Helly Hansen generated global revenue of 191.32 million dollars, an increase of 3 percent YoY. Performance within the outdoor label was led by sportswear revenue, which climbed 2 percent to 147 million dollars, while workwear advanced 5 percent to 44 million dollars. Operating margins across both units benefited from ongoing operational restructuring and price realization.

Margin progression and portfolio restructuring

Reported gross margin from continuing operations rose 830 basis points to 48.3 percent, while adjusted gross margin expanded 230 basis points to 48.1 percent. Full year adjusted gross margin is now projected to land between 50 percent and 50.2 percent. Adjusted operating income advanced 6 percent YoY to 101.03 million dollars, delivering an adjusted operating margin of 14.7 percent.

Kontoor recorded a reported diluted net loss per share from continuing operations of 0.62 dollars, compared to earnings of 0.29 dollars in the prior year period. The GAAP figure included a non-cash tax charge of 1.73 dollars per share associated with internal intellectual property migrations for Helly Hansen. Adjusted diluted EPS from continuing operations, which strips out these transition items, climbed 40 percent YoY to 1.50 dollars.

Net proceeds from the sale of the Lee denim business amounted to 698 million dollars. Capital will be redeployed through an accelerated share repurchase (ASR) program scheduled for launch in November 2026 to repurchase 400 million dollars of common stock. Total fourth quarter repurchases will reach 450 million dollars, supporting a broader goal to return approximately one billion dollars to shareholders in 2026 through buybacks, dividends and debt retirement.

Chief executive officer Scott Baxter highlighted the strategic clarity of the streamlined entity: “Our third quarter results were driven by growth in both Wrangler and Helly Hansen, strong earnings and gross margin expansion. Kontoor enters its next chapter as a more focused company anchored around two iconic brands with stronger growth profiles that position us well for the future.”