GICS Sector : Consumer Cyclical
Kontoor Brands, Inc., a lifestyle apparel company, designs, manufactures, procures, markets, and distributes denim, apparel, and accessories under the Wrangler, Lee, and Rock & Republic brands in the United States and internationally.It operates through two segments, Wrangler and Lee.The company sells its products primarily through mass merchants, specialty stores, mid-tier and traditional department stores, company-operated stores, and online.
Kontoor Brands delivered a robust Q4 2025, with record revenue, earnings, and cash flow. Revenue grew driven by Wrangler's 3% increase and Helly Hansen's 10% growth, while Lee's revenue declined 6% due to challenges in U.S. mid-tier and distribution. Adjusted gross margin expanded 210 basis points to 46.8%, driven by the benefits of Project Genius and channel and product mix. Adjusted EPS came in at $1.73, beating estimates of $1.65.
Publication Date: 08:33
Wrangler finished the year strong, with revenues increasing 3% driven by 10% growth in DTC and 2% growth in wholesale. Helly Hansen exceeded expectations, with revenue growing 10% and earnings outperforming by 50%. Lee's revenue decline was attributed to challenges in U.S. mid-tier and distribution, but the company expects inflection to growth in the second half of 2026.
Adjusted SG&A expense was $326 million, with an 11% increase excluding Helly Hansen driven by increased investments in demand creation and volume-based variable expenses. The company finished the quarter with net debt of $1.0 billion and $108 million of cash on hand, with a net leverage ratio of 2.0x on a pro forma basis. The company repurchased $25 million of shares in the quarter and declared a regular quarterly cash dividend of $0.53 per share.
Kontoor Brands expects full-year 2026 revenue to be in the range of $3.4 billion to $3.45 billion, representing growth of approximately 9%. Adjusted EPS is expected to be in the range of $6.40 to $6.50, representing an increase of 15% to 16%. Given the current valuation metrics, with a P/E Ratio of 20.1 and EV/EBITDA of 14.87, the market appears to be pricing in moderate growth expectations. With the company's strong track record of execution and growth prospects, particularly with the integration of Helly Hansen, there may be potential for upside.
Project Genius remains on track, with gross savings of over $50 million in 2025 and approaching $100 million in 2026. The company is confident in its ability to mitigate the tariff headwind, which remains over $100 million in 2026, through pricing, strategic supplier partnerships, and inventory management. As Scott H. Baxter mentioned, "We're confident in our ability to achieve our '26 plan driven by intense focus on execution and strategic clarity."
Icons Collide: Wrangler® and Avirex Launch Limited-Edition Collection
14:00
Why Kontoor Brands Stock Popped Today
Mar -03
Kontoor Brands, Inc. (KTB) Q4 2025 Earnings Call Transcript
Mar -03
Kontoor Brands to Host Helly Hansen® Investor Day on September 2, 2026
Mar -03
Kontoor Brands Reports 2025 Fourth Quarter and Full Year Results; Provides Initial 2026 Outlook
Mar -03
Kontoor Brands: Too Many Challenges To Justify An Upgrade
Mar -01
Kontoor Brands Announces Fourth Quarter 2025 Earnings and Conference Call Date
Feb -10
Comparing Kontoor Brands (NYSE:KTB) & Lanvin Group (NYSE:LANV)
Feb -09
Wrangler's 2.0% growth is driven by increasing demand for comfort-focused denim, successful product innovations, and strategic marketing campaigns targeting younger consumers. Additionally, the brand's expansion into new markets, such as Asia, and e-commerce growth contribute to its growth momentum.
Lee's 1.8% growth is driven by increasing demand for outdoor apparel, strategic pricing, and expanding e-commerce presence. Additionally, the brand's focus on sustainability and innovative products resonates with environmentally conscious consumers, contributing to its growth momentum.
Kontoor Brands' 1.5% growth is driven by increasing demand for outdoor apparel, strategic partnerships, and expansion into new markets. The company's focus on sustainability and digital transformation also contributes to growth. Additionally, the rise of athleisure wear and growing popularity of outdoor activities further boost sales.
High-quality denim jeans for men and women, offering comfort, durability, and style
Premium denim jeans for men and women, featuring innovative fabrics and timeless designs
Fashion-forward denim and trendy apparel for men and women, emphasizing style, comfort, and quality
Kontoor Brands, Inc. operates in the apparel industry, where substitutes are available, but the company's strong brand portfolio, including Wrangler and Lee, helps to mitigate the threat.
Kontoor Brands, Inc. sells its products through various channels, including wholesale, retail, and e-commerce, which reduces the bargaining power of individual customers.
Kontoor Brands, Inc. relies on a diverse supplier base, which reduces dependence on individual suppliers, but the company still faces some pressure from suppliers, particularly in the areas of raw materials and logistics.
The apparel industry has high barriers to entry, including significant capital requirements, established distribution networks, and strong brand recognition, making it difficult for new entrants to compete with Kontoor Brands, Inc.
The apparel industry is highly competitive, with many established players, including VF Corporation, Levi Strauss & Co., and Ralph Lauren Corporation, which increases the intensity of rivalry and competition for market share.
| Value | |
|---|---|
| Debt Weight | 69.35% |
| Debt Cost | 5.65% |
| Equity Weight | 30.65% |
| Equity Cost | 9.62% |
| WACC | 6.87% |
| Leverage | 226.31% |
Value: 2.4
Growth: 6.1
Quality: 6.8
Yield: 3.0
Momentum: 9.0
Volatility: 6.3
1-Year Total Return ->
Value: 3.8
Growth: 4.0
Quality: 5.7
Yield: 7.0
Momentum: 3.0
Volatility: 4.3
1-Year Total Return ->
Value: 5.7
Growth: 5.4
Quality: 6.2
Yield: 3.0
Momentum: 1.0
Volatility: 6.0
1-Year Total Return ->
Value: 7.8
Growth: 4.4
Quality: 4.7
Yield: 0.0
Momentum: 2.5
Volatility: 4.0
1-Year Total Return ->
Value: 5.1
Growth: 4.8
Quality: 2.2
Yield: 3.0
Momentum: 1.0
Volatility: 5.0
1-Year Total Return ->
Value: 7.5
Growth: 2.1
Quality: 4.2
Yield: 0.0
Momentum: 1.0
Volatility: 4.3
1-Year Total Return ->