Kontoor Brands Inc. (NYSE:KTB) on Monday reported its third-quarter earnings, which beat Wall Street estimates, driven by the strength of its expanded brand portfolio, gross margin expansion, and operational execution.
Kontoor Brands is a global lifestyle apparel company that owns denim and outdoor brands like Wrangler, Lee, and Helly Hansen.
The company reported adjusted earnings of $1.44 per share, surpassing the analysts' average estimate of $1.36.
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Net revenue rose 27% to $853.215 million, but narrowly missed analysts' expectations of $855.832 million.
Adjusted gross margin rose 80 basis points year over year to 45.8%, reflecting a 60-basis-point benefit from the Helly Hansen acquisition. Adjusted operating margin reached 14.3%, while adjusted EBITDA margin stood at 15.7%.
During the quarter, the board declared a quarterly cash dividend of 53 cents per share, representing a 2% increase, payable on December 18, 2025, to shareholders of record as of December 8, 2025.
The company returned $29 million to shareholders through dividends in the quarter and has $215 million remaining under its share repurchase authorization.
The company ended the quarter with $82 million in cash and cash equivalents and $1.34 billion in long-term debt. It also made a $25 million voluntary debt repayment during the period.
Segment Performance
Wrangler brand global revenue rose 2% to $471 million, with a three-point drag from shipment timing. U.S. sales edged up 1%, driven by an 11% gain in direct-to-consumer, while wholesale was flat. International revenue grew 6%, led by higher wholesale and a 12% rise in direct-to-consumer sales.
Lee brand global revenue totaled $187 million, down 8% year over year. The quarter's performance reflected a $7 million reduction related to proactive inventory management actions in China. In the U.S., revenue declined 9%, as an 11% drop in wholesale was partly offset by a 15% increase in digital sales. International revenue fell 5%, including an 8-percentage-point impact from the same inventory actions in China. A 7% decline in wholesale was partially offset by an 8% gain in brick-and-mortar sales.
Helly Hansen global revenue totaled $193 million, including $143 million from Sport, $42 million from Workwear, and $7 million from the Musto brand. U.S. revenue was $40 million, while international sales reached $153 million.
Outlook
Kontoor Brands expects fourth-quarter adjusted EPS of $1.64, slightly above the $1.63 analyst estimate, and projects revenue between $970 million and $980 million, compared with the consensus estimate of $974.5 million.
The company said it plans to make a $185 million voluntary term loan payment in the fourth quarter, bringing total voluntary repayments for the year to about $235 million.
Kontoor Brands raised its full-year 2025 adjusted earnings per share forecast to about $5.50 from $5.45, above analysts' average estimate of $5.45.
The company reaffirmed its full-year revenue outlook in the range of $3.09 billion to $3.12 billion, broadly in line with Wall Street expectations of $3.11 billion.
Kontoor Brands expects Helly Hansen to contribute about $460 million to 2025 revenue, up from the prior forecast of $455 million. Excluding Helly Hansen, full-year 2025 revenue is projected to grow around 2%.
Scott Baxter, President, Chief Executive Officer and Chairman of the Board of Directors, stated, âWhile a shift in the timing of shipments impacted revenue growth, Wrangler drove another quarter of broad-based growth and market share gains, Helly Hansen delivered better than expected revenue and profitability, and we launched Leeâs first equity campaign in years while improving the health of the marketplace. Based on our stronger year-to-date performance and increased visibility, we are raising our full-year outlook and are well-positioned to finish a record year with momentum.â
Price Action: KTB shares were trading lower by 9.91% to $72.90 at last check Monday.
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