Kontoor Brands (KTB) Q1 2026 earnings summary

Executive summary

• Announced decision to divest the Lee brand to focus on higher-growth opportunities with Wrangler and Helly Hansen, aiming to maximize shareholder value and accelerate long-term growth and profitability.

• Net revenues rose 45% year-over-year to $613 million, driven by Helly Hansen acquisition and organic growth in Wrangler, with Lee now classified as discontinued operations.

• Operating income increased 187% to $90.1 million, and income from continuing operations surged 496% to $61.0 million, reflecting integration benefits and tariff refunds.

• Board approved a new $750 million share repurchase program, with majority of Lee sale proceeds to fund buybacks.

• The divestiture of Lee is expected to reduce operational complexity, enable more concentrated investments, and improve returns on strategic initiatives.

Financial highlights

• Q1 2026 revenue from continuing operations: $613 million, up 45% year-over-year.

• Wrangler global revenue increased 4% year-over-year to $436 million; U.S. up 1%, international up 20%.

• Helly Hansen global revenue grew 16% year-over-year to $176 million; contributed $19.7 million in segment profit.

• Adjusted gross margin expanded 470 bps to 50.6%; gross margin reached 53.7% including tariff refunds.

• Adjusted EPS from continuing operations was $1.06; reported Q1 EPS including discontinued operations was $1.65.

Outlook and guidance

• Full-year 2026 revenue (including discontinued ops) expected at $3.41–$3.46 billion; continuing ops at $2.66–$2.71 billion.

• Full-year adjusted gross margin from continuing ops expected at 48.3%–48.5%, up 180–200 bps year-over-year.

• Adjusted operating income from continuing ops expected at $411–$418 million; adjusted EPS at $5.15–$5.25.

• Capital expenditures projected at $40 million; net leverage targeted at or below 1.5x by year-end 2026.

• Management anticipates macroeconomic uncertainty, ongoing integration costs, and further Project Jeanius transformation expenses.