KONTOOR BRANDS, INC.

Recommendation history

• Q2 2025BuyBuy: Kontoor delivered strong Q2 momentum, with revenue up 8%, adjusted EPS of $1.21 (+23%), Wrangler revenue up 7%, and Helly Hansen ahead of plan. FY2025 revenue guidance rose to $3.09-$3.12 billion and adjusted EPS remains approximately $5.45, but the thesis still depends on executing Lee’s turnaround, integrating Helly Hansen, and offsetting tariffs while carrying $1.3 billion of net debt.
• Q1 2025HoldHold: Kontoor delivered a strong Q1, with adjusted EPS of $1.20 ($1.31 excluding acquisition-related stock compensation), gross margin up 200 bps to 47.7%, and operating cash flow expected above $350 million for 2025. The Helly Hansen acquisition improves the growth and margin profile, with $425 million of 2025 revenue and $0.20 of EPS contribution expected, but the investment case is offset by weak POS trends, Lee revenue down 8%, tariff exposure of up to $50 million, and post-deal leverage approaching 3x.
• Q4 2024HoldHold: Kontoor exited 2024 strongly, with Q4 revenue up 5%, adjusted gross margin up 160 bps to 44.7%, and adjusted EPS of $1.38, while Wrangler revenue rose 9% and continued taking share. However, 2025 guidance is only 1%-3% revenue growth and $5.20-$5.30 adjusted EPS, with February POS declining at a low-single-digit rate, Lee still in transition, and potential Mexico tariffs carrying an unmitigated $50 million operating-profit risk.
• Q3 2024BuyBuy: Kontoor delivered a clean Q3 beat with revenue up 2%, adjusted gross margin up 150 bps to 45.0%, adjusted EPS up 12% to $1.37, and inventory down 24%. The stronger trajectory is supported by Wrangler’s 4% growth and 90 bps U.S. market-share gain, while FY24 guidance calls for $2.6 billion revenue, 45.1% gross margin and $4.83 EPS. The key tension is that Lee remains globally weak and the $100 million Project Jeanius savings target still lacks disclosed implementation costs and detailed timing.
• Q2 2024HoldHold: Kontoor delivered a strong quarter—revenue declined 1%, gross margin expanded 420 bps to 45.2%, EPS rose 27% to $0.98, and cash-from-operations guidance increased to above $350 million. Wrangler is gaining share and Lee’s POS improved, but the investment case still depends on an unproven Lee turnaround, a difficult APAC recovery, and second-half growth that partly reflects a $12 million shipment pull-forward.
• 2024-05-02BuyBuy: Kontoor delivered a strong Q1 and raised profitability guidance, with adjusted gross margin up 270 bps to 45.7%, EPS of $1.16, inventory down 24%, and full-year EPS now guided to $4.70-$4.80 and operating income to $377-$387 million. The bull case is sustained Wrangler and Lee share gains, DTC growth, category expansion, and more than $335 million of operating cash flow; the tension is that Q1’s roughly $25 million revenue beat did not lift full-year sales guidance, April POS softened, and the second-half growth outlook depends heavily on new distribution and launches.
• Q4 2023HoldKontoor delivered strong share gains, cash generation, and margin expansion, but the investment case still depends on a back-half recovery that is not yet visible in retail demand. FY2024 guidance calls for revenue of $2.57-$2.63 billion (-1% to +1%), adjusted gross margin of 44.2%-44.4%, operating income of $372-$382 million, and adjusted EPS of $4.65-$4.75; with FY2023 revenue down 1%, retailers still cutting inventory, and 130 days of forward inventory versus roughly 100 normal, the stock is a hold rather than a clean buy.