Second quarter 2026
Filed Aug 12, 2026KONTOOR BRANDS REPORTS 2026 SECOND QUARTER RESULTS AND RAISES FULL YEAR OUTLOOK; EXPECTS TO ENTER INTO A $400 MILLION ACCELERATED SHARE REPURCHASE AGREEMENT
Revenue from continuing operations increased 19 percent, adjusted gross margin increased 710 basis points, adjusted operating income increased 19 percent, and adjusted EPS increased 13 percent. The company raised adjusted EPS and adjusted gross-margin outlook while maintaining its full-year revenue range.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue from continuing operationsGAAP | $584 million | – | increased 19 percent |
| Wrangler brand global revenueother | $469 million | – | increased 2 percent |
| Helly Hansen global revenueother | $114 million | – | – |
| Reported gross margin from continuing operationsGAAP | 56.2 percent | – | increased 970 basis points |
| Adjusted gross margin from continuing operationsnon-GAAP | 53.8 percent | – | increased 710 basis points |
| SG&A expensesGAAP | $238 million, or 40.7 percent of revenue | – | – |
| Adjusted SG&A expensesnon-GAAP | $221 million, or 37.8 percent of revenue | – | increased |
| Operating income from continuing operationsGAAP | $91 million | – | – |
| Adjusted operating income from continuing operationsnon-GAAP | $94 million | – | increased 19 percent |
| Adjusted operating marginnon-GAAP | 16 percent | – | 10 basis point increase |
| Diluted EPS from continuing operationsGAAP | $1.03 | – | – |
| Adjusted EPS from continuing operationsnon-GAAP | $1.06 | – | increase of 13 percent |
| Helly Hansen loss per sharenon-GAAP | $0.06 loss per share | – | – |
| Inventoryother | $526 million | – | down 3 percent |
| Net receivable for IEEPA tariffs previously paidother | $54 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| WranglerWrangler U.S. revenue increased 1 percent, driven by a 9 percent increase in direct-to-consumer, while U.S. wholesale was flat. Wrangler international revenue increased 10 percent, driven by a 31 percent increase in direct-to-consumer and a 7 percent increase in wholesale. | $469 million | – | increased 2 percent |
| Helly HansenThe acquisition of Helly Hansen completed in the second quarter of 2025 contributed to revenue. Management said Helly Hansen delivered a better-than-expected quarter. | $114 million | – | – |
| Helly Hansen SportSport revenue within Helly Hansen. | $70 million | – | – |
| Helly Hansen WorkwearWorkwear revenue within Helly Hansen. | $37 million | – | – |
| MustoMusto brand revenue. | $7 million | – | – |
Full year 2026 from continuing operations outlook
- Revenue$2.66 to $2.71 billion
- Gross margin49.8 to 50.0 percent
- Operating expensesAdjusted SG&A expenses are now expected to increase approximately 23 percent compared to prior year
- Tax rateapproximately 20 percent on adjusted pre-tax earnings
- NoteRevenue growth of approximately 12 to 13 percent compared to prior year
- NoteSecond-half revenue is expected to increase in the mid-single digit range for both Wrangler and Helly Hansen, excluding the impact of the 53rd week in 2025
- NoteAdjusted operating income of $413 to $420 million
- NoteAdjusted EPS of $5.25 to $5.35
- Noteapproximately $25 million of incremental brand-building and other growth-enabling investments
- NoteCapital expenditures of approximately $30 million
- NoteInterest expense of approximately $56 million
- NoteOther expense of approximately $14 million
- NoteAverage shares outstanding of approximately 55.5 million
- NoteOutlook assumes a 15 percent reciprocal tariff rate for the second half of 2026
- NoteUpdated outlook does not include the impact of any future share repurchases, including those from the expected proceeds of the planned divestiture of the Lee business
Capital returns
- The Company returned $80 million to shareholders through dividends and share repurchases during the second quarter.
- Repurchased $50 million of common stock at an average price per share of $74 during the second quarter.
- Year-to-date, the Company repurchased $75 million of common stock at an average price per share of $75.
- Regular quarterly cash dividend of $0.53 per share, payable on September 18, 2026, to shareholders of record at the close of business on September 8, 2026.
- The Company had $700 million remaining under its existing share repurchase authorization at the end of the quarter.
- Upon closing of the Lee business divestiture, the Company intends to deploy the expected proceeds into a $400 million Accelerated Share Repurchase agreement, with remaining proceeds allocated towards voluntary debt payments.
- The Company expects to return more than $900 million of capital in 2026 through share repurchases, dividends and voluntary debt payments, including the proceeds from the Lee divestiture.
What drove it
- Revenue growth included $114 million of Helly Hansen revenue and 2 percent Wrangler growth.
- Wrangler performance was led by female, direct-to-consumer and international.
- Adjusted gross-margin expansion was driven by Project Jeanius, the acquisition of Helly Hansen, and favorable channel mix, product mix and pricing.
- Adjusted SG&A growth reflected a full quarter of Helly Hansen expenses and increased investments in direct-to-consumer, demand creation and technology, partly offset by Project Jeanius benefits.
- The updated outlook primarily reflects stronger-than-expected year-to-date results and contribution from Helly Hansen.
Concerns
- Adjusted EPS included a $0.06 loss per share from Helly Hansen.
- The updated outlook includes approximately $25 million of incremental investments and approximately $0.36 per share of incremental investments compared with the prior outlook.
- Adjusted EPS guidance includes approximately $0.55 of unmitigated overhead and other expenses previously allocated to the Lee business.
- The Company's year-to-date financial results include previously paid and expensed tariffs under Section 122, and the Company has not recorded a receivable related to Section 122 tariffs.
- The outlook continues to assume a 15 percent reciprocal tariff rate for the second half of 2026.
What to watch
- Closure of the Lee business divestiture, which is on track to close in the fourth quarter.
- Execution of the intended $400 million Accelerated Share Repurchase agreement and voluntary debt payments following the Lee divestiture.
- Second-half mid-single digit revenue growth expected for both Wrangler and Helly Hansen, excluding the impact of the 53rd week in 2025.
- Receipt of the remaining IEEPA refunds by the end of fiscal 2026.
- Potential recovery of Section 122 tariffs and the potential impact of the reciprocal trade framework between the United States and Bangladesh.
Balance sheet and cash flow
- $58 million in cash and cash equivalents at the end of the second quarter.
- $1.1 billion in long-term debt at the end of the second quarter.
- No outstanding borrowings under the Revolving Credit Facility and $493 million available for borrowing against this facility.
- Inventory was $526 million, down 3 percent compared to prior year, driven primarily by a reduction in inventory in the Helly Hansen business.
- The Company began to receive IEEPA refunds in July 2026 and has received $23 million thus far in the third quarter of 2026.
- The Company expects to receive the remaining IEEPA refunds by the end of fiscal 2026.
Analysis
Kontoor reported a strong second quarter from continuing operations. Revenue was $584 million, up 19 percent, with $114 million of Helly Hansen revenue and 2 percent growth in Wrangler. Wrangler U.S. revenue increased 1 percent, supported by a 9 percent direct-to-consumer increase, while international revenue increased 10 percent on growth in both direct-to-consumer and wholesale.
Profitability improved materially. Reported gross margin rose 970 basis points to 56.2 percent and adjusted gross margin rose 710 basis points to 53.8 percent. Management attributed adjusted gross-margin expansion to Project Jeanius, Helly Hansen, and favorable channel, product and pricing mix. Adjusted operating income was $94 million, up 19 percent, and adjusted operating margin was 16 percent, a 10 basis point increase, despite higher spending on direct-to-consumer, demand creation and technology.
Capital allocation remains central to the release. The company returned $80 million to shareholders in the quarter, including $50 million of repurchases, and had $700 million remaining under its authorization. It intends to use expected Lee divestiture proceeds for a $400 million accelerated share repurchase agreement and voluntary debt payments. The balance sheet ended the quarter with $58 million of cash and cash equivalents, $1.1 billion of long-term debt, and no revolving-credit-facility borrowings.
Management maintained full-year revenue guidance of $2.66 to $2.71 billion but raised adjusted EPS guidance to $5.25 to $5.35 from the prior outlook of $5.15 to $5.25. Adjusted gross-margin guidance increased to 49.8 to 50.0 percent from 48.3 to 48.5 percent, and adjusted operating-income guidance is $413 to $420 million. The revised outlook includes approximately $25 million of incremental investments, approximately $0.55 of unmitigated Lee-related overhead and other expenses, and excludes any impact from future share repurchases.
Key execution items are the planned fourth-quarter Lee divestiture, Helly Hansen's expected mid-single digit second-half revenue growth, and tariff developments. The company has received $23 million of IEEPA refunds thus far in the third quarter after recognizing a $54 million net receivable in the first quarter, while its outlook assumes a 15 percent reciprocal tariff rate for the second half of 2026. Section 122 tariffs remain an unresolved item because the company has not recorded a related receivable.
Management, verbatim
Our second quarter results were driven by growth from Wrangler, a stronger-than-expected contribution from Helly Hansen and robust gross margin expansion.
Scott Baxter, Chief Executive Officer and Chairman of the Board of Directors
Wrangler delivered another quarter of diversified growth led by strong performance in female, direct-to-consumer and international, coupled with exceptional profitability and cash generation. Helly Hansen delivered a better-than-expected quarter and for the first half of 2026, delivered double-digit revenue growth on a pro- forma basis and significant profitability improvement fueled in part by the benefits of our multi-brand platform.
Scott Baxter, Chief Executive Officer and Chairman of the Board of Directors
As we look ahead, we are sharpening our portfolio focus and increased investment on our largest growth opportunities. We are raising our full year outlook based on the strength we have seen in our year-to-date results, and our confidence and visibility as we enter the second half of the year.
Joe Alkire, President and Chief Financial Officer
Not in the filing
stated, not guessed- GAAP net income from continuing operations was not provided in the filing text.
- Operating cash flow was not provided in the filing text.
- Free cash flow was not provided in the filing text.
- Absolute prior-year figures for revenue, gross margin, SG&A expenses, operating income, operating margin and EPS were not provided on their respective line items.
- Prior-quarter figures for reported key metrics were not provided.
- GAAP operating-margin figure was not provided.
- Prior outlook from the previous quarterly release was not provided; therefore, no actual-versus-prior-guidance comparisons are included.
- Full guidance for operating cash flow and free cash flow was not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.