Kontoor Brands, Inc. (KTB), the owner of the Helly Hansen, Lee and Wrangler brands, once again lifted its 2025 full-year outlook as President, CEO & Chair of the Board Scott Baxter focused on the power of the company’s expanded brand portfolio.

“Helly Hansen grew double digits. Wrangler gained market share for the 14th consecutive quarter, and we launched Lee’s first equity campaign in years, while taking proactive steps to improve the health of the marketplace,” he shared when first addressing participants in the company’s third quarter conference call with analysts.

One factor impacting the quarter involved the sacrifice of some year-over-year grow for Q3 as some shipments were pushed back into the fourth quarter.

“While the timing shift impacted growth in the quarter, stronger gross margin expansion and disciplined expense management drove better-than-expected earnings,” Baxter continued. “Based on our year-to-date performance and improving profitability, we are raising our full year outlook while the environment remains dynamic, we are well positioned to finish the year strong and enter ’26 with momentum.”

Third Quarter Business Summary
Third quarter revenue increased 27 percent year-over-year to $853 million, including a 2-point impact from the shift in the timing of shipments from the third quarter to the fourth quarter.

Helly Hansen
Third quarter results for the Helly Hansen (Helly) business reportedly exceeded expectations with revenue growth of 11 percent and 3 cents of earnings accretion. Baxter said brand growth was “broad-based across both Sport and Workwear in all regions.”

Total brand revenues were $185.9 million in the third quarter and segment profit was pegged at $8.0 million for the quarter. Helly Hansen global revenue amounted to $193 million in Q3 after increasing 11 percent y/y compared to prior-year Q3 reported results.

Growth was said to be broad-based across both Sport and Workwear and in all geographic regions.

“We are encouraged by the stronger-than-expected results,” commented company CFO Joe Alkire. “The integration is progressing well, and we are confident Helly will be a significant contributor to both revenue and earnings growth in the coming years.”

Alkire said the company now has “line of sight” to experience greater than $25 million of run rate synergies, which he said will begin to meaningfully impact profitability in 2026.

“These synergies will help fund investments in business, including geographic and category expansion, demand creation, DTC, supply chain capabilities and our technology platform,” the CFO added. “As we look forward to 2026, we expect Helly’s momentum to continue to build. The spring/summer order book has accelerated from fall/winter 2025 and Workwear preorders are up at a double-digit rate.”

Sport revenue was $143 million for the quarter and Workwear amounted to $42 million for the period. Musto brand revenue was $7 million. U.S. revenue was $40 million, and International revenue was $153 million for the third quarter.

“The business is performing at a high level, the integration is progressing well, and we continue to uncover new opportunities to create significant value together,” he said. “To build on this momentum, we are focused on our strategic pillars.”

Baxter first called out the focus on accelerating growth. “It starts with product,” Baxter outlined. “Our iconic platforms, including Crew, Alpha, Legendary and LIFA Merino continue to differentiate Helly in the marketplace and generate strong demand from our consumers.” He said the brand’s latest product launches have made 2025 a record year.

“We won 6 Red Dot Design awards, our most ever in a single year,” he boasted. “Award-winning products include the Odin Ultimate Infinity jacket, Arctic Patrol Down Parka, and within Workwear, the Magne Evolution Jacket. These are scalable platforms that we will drive global growth and nowhere is that opportunity greater than in the U.S.

He said the company sees significant room to grow Helly Hansen through a combination of new distribution DTC (direct-to-consumer) growth and investments in demand creation to increase brand awareness.

“Currently, awareness [of the Helly Hansen brand] in the U.S. is only 29 percent,” he shared. “This has grown by 6 points since 2019, while revenue has more than doubled. Starting next year, we will be making investments in top funnel demand creation to increase awareness and fuel accelerated growth.”

Within Helly Workwear, Baxter noted what he called “considerable market share opportunities,” leveraging Helly’s unique dual brand position.

“The connection to technical outdoor products worn by professionals on the mountain or water has made Helly a leader in pro-grade workwear in Europe,” he explained. “In the U.S., we are leading with footwear in regions where Helly Sport penetration is greatest.”

Baxter said this will expand over time to include the broader apparel assortment, supported by further development of the brand’s lightweight and cooling platforms to drive growth in warmer climates. “Outside the U.S., we see opportunities entering new markets in Asia and increasing penetration in key markets within Europe, including Germany, Austria and Switzerland,” he said.

China, which is operated through a joint venture, is said to be on track for over 70 percent revenue growth while double operating margin this year, according to Baxter’s comments.

“We expect to increase operating margin from high-single digits today to mid-teens through a combination of gross margin expansion and SG&A benefits,” the CEO detailed. “We are leveraging our global operating model, supply chain and technology platforms as well as Project Jeanius. This will create greater back-end efficiency and increased investment capacity to support our growth initiatives.”

Lastly, Baxter said Helly is headed into the fourth quarter with “incredible momentum,” suggesting a high level of confidence in the opportunities ahead.

Wrangler Brand
Wrangler brand global revenue increased 2 percent to $471.2 million in Q3. On a constant-currency (cc) basis, revenues rose 1 percent y/y, including 12 percent growth in digital. Wholesale growth was also reportedly impacted by the timing shift into the fourth quarter. Excluding this shift, global revenue increased at a mid-single-digit rate.

Revenue in the quarter included a 3-point impact from a shift in the timing of shipments from the third quarter to the fourth quarter.

Wrangler U.S. revenue increased 1 percent, driven by an 11 percent increase in the DTC business.  U.S. Wholesale was said to be flat compared to the prior-year Q3 period as a result of the timing shift. Wrangler international revenue increased 6 percent y/y, reportedly driven by a 5 percent increase in Wholesale and a 12 percent increase in DTC.

The third quarter marked Wrangler’s 14th consecutive quarter of share gains, according to Circana data cited by Baxter. “In our core men’s and women’s bottoms business, we gained 80 basis points of market share,” he said.

“Our female business had another strong quarter with growth of 20 percent,” Baxter elaborated. “Our collaboration with Lainey Wilson continues to exceed expectations. Her latest collection is performing very well while supporting more premium AURs (average unit retail) and increase penetration with younger consumers, and Bespoke is now the No.1 female style at select specialty retailers. This has been a banner year for our female business, and we expect double-digit growth for the year.”

Western reportedly grew high single digits in the quarter.  As the No. 1 Western apparel brand, we have never been stronger,” Baxter added.

Wrangler segment profit jumped 19 percent in the third quarter, to $116.3 million, compared to $97.8 million in the 2024 third quarter.

Lee Brand Summary
Baxter said Lee brand revenue declined 9 percent in constant-currency terms as the company took proactive steps to improve the health of the marketplace in China, including a $7 million impact from proactive inventory management actions in the region. Excluding these actions, the CEO said revenue declined 4 percent in constant-currency terms year-over-year.

Reported revenues declined 8.6 percent to $186.7 million, compared to $202.3 million in Q3 2024.

  • U.S. revenue decreased 9 percent, driven by an 11 percent decrease in Wholesale, partially offset by a 15 percent increase in digital.
  • Lee international revenue decreased 5 percent, including an 8-percentage point impact from proactive inventory management actions in China. A 7 percent decrease in Wholesale was partially offset by an 8 percent increase in brick-and-mortar.

“We are encouraged by the progress we are making against our brand realignment,” Baxter said. “Digital is leading the way with growth of 15 percent in the U.S.

Baxter reiterated the launch of the Built Like Lee equity campaign in September, said to be the “first of this scale” in years.

“While early days, we are encouraged by the reaction in the marketplace and have seen improvements in both brand equity and perception,” the CEO said. “We are also making progress in aligning products to our refreshed brand position. In addition to activating our iconic platforms, we are seeing success with new introductions such as Velocity Pant and collaborations with Crayola and Buck Mason. Crayola will be Lee’s strongest collaboration ever and our second collaboration with Buck Mason is outperforming the initial launch.”

Importantly, our 2025 collabs are attracting 3x more millennial purchasers. While the lead turnaround will not be linear, we will do this the right way. We expect sequential improvement in the fourth quarter.

Lee segment profit fell 28.0 percent y/y in the third quarter, to $16.7 million, compared to $23.4 million in the 2024 third quarter.

Profitability and Expenses
Gross margin decreased 340 basis points to 41.3 percent on a reported basis and increased 80 basis points to 45.8 percent on an adjusted basis compared to the prior year, including a 60-basis point impact from the acquisition of Helly Hansen. Excluding Helly Hansen, the adjusted gross margin increased by 140 basis points, driven by the benefits from Project Jeanius, channel and product mix, and targeted pricing actions, partially offset by increased product costs and the impact of recently enacted tariff increases.

Selling, General & Administrative (SG&A) expenses were $288 million, or 33.8 percent of revenue on a reported basis. On an adjusted basis, SG&A expenses totaled $269 million, representing 31.5 percent of revenue. Excluding Helly Hansen, adjusted SG&A expenses were $195 million, consistent with the prior year, driven by lower distribution and freight expenses, as well as the benefits of Project Jeanius.

Operating income was $64 million on a reported basis. On an adjusted basis, operating income was $122 million, representing a 14 percent increase compared to the prior year. Adjusted operating margin of 14.3 percent decreased 160 basis points compared to the prior-year quarter. Excluding Helly Hansen, adjusted operating income was $112 million, representing a 4 percent increase compared to the prior year, resulting in a 100-basis point increase in adjusted operating margin to 16.9 percent of revenue.

Earnings per share (EPS) were 66 cents on a reported basis. On an adjusted basis, EPS was $1.44, representing an increase of 5 percent, including a $0.03 contribution from Helly Hansen.

Balance Sheet and Liquidity Summary
The company ended the third quarter with $82 million in cash and cash equivalents and $1.34 billion in long-term debt. During the quarter, the company made a $25 million voluntary debt repayment.

At the end of the third quarter, the company had no outstanding borrowings under the Revolving Credit Facility and $494 million available for borrowing against this facility.

Inventory at the end of the third quarter was $765 million, including inventory from the acquisition of Helly Hansen. Excluding Helly Hansen, inventory of $560 million increased 21 percent compared to the prior-year quarter-end, reportedly driven by a temporary increase in inventory to support the company’s Project Jeanius-related supply chain transformation, earlier than expected receipts of inventory as a result of improved lead times across the supply chain, and the impact of tariffs. The company expects total inventory in the fourth quarter of approximately $645 million, representing a decrease of approximately $120 million from the third quarter.

As previously announced, the company’s Board of Directors declared a regular quarterly cash dividend of 53 cents per share, a 2 percent increase, payable on December 18, 2025, to shareholders of record at the close of business on December 8, 2025.

The company returned $29 million to shareholders through dividends during the third quarter. Kontoor Brands, Inc. has $215 million remaining under its authorized share repurchase program.

Updated Full Year 2025 Outlook
Based on stronger year-to-date performance in the third quarter and increased visibility, Kontoor Brands is raising its full-year outlook.

“We are raising our full-year outlook to reflect stronger revenue and earnings growth, accelerating cash generation, and the scaling benefits from Project Jeanius,” added Baxter. “We expect the near-term environment to remain dynamic, but I am confident our strong fundamentals, operational execution, and increasing capital allocation optionality will continue to drive strong value creation for our shareholders.”

The company’s outlook continues to include the impact of recently enacted tariff increases, net of mitigating actions. The company’s outlook continues to assume a 30 percent reciprocal tariff on China and a 20 percent reciprocal tariff on all other countries from which the company sources products, except for Mexico, consistent with the prior outlook. Based on currently available information, the company’s imports from Mexico to the U.S. remain exempt under USMCA.

The company continues to expect to substantially offset the impact of recently enacted tariff increases over a 12- to 18-month period through a combination of targeted price increases, sourcing and production optimization within our global supply chain, inventory management, supplier partnerships, and other initiatives.

The company’s updated full-year 2025 outlook includes the following assumptions:

  • Revenue is now expected to be at the high end of the company’s prior outlook range of $3.09 billion to $3.12 billion, representing growth of approximately 19 percent to 20 percent compared to the prior year.
    • The company expects Helly Hansen to contribute approximately $460 million to 2025 revenue, compared to the prior outlook of ~$455 million.
    • Excluding the impact of Helly Hansen, the company expects full-year 2025 revenue growth of ~2 percent.
  • Adjusted gross margin is now expected to be ~46.4 percent, representing a 130-basis-point increase compared to the prior year. This compares to the prior outlook of 100 basis points of gross margin expansion.
  • Adjusted SG&A is expected to increase approximately 24 percent compared to the prior year, consistent with the prior outlook.
  • Adjusted operating income is now expected to be approximately $449 million, representing an 18 percent increase compared to the prior year. This compares to the prior outlook of $443 million.
  • Adjusted EPS is now expected to be approximately $5.50, representing an increase of 12 percent compared to the prior year. This compares to the prior outlook of approximately $5.45.
    • Helly Hansen is expected to contribute 20 cents to full-year adjusted earnings per share, consistent with the prior outlook.
  • Capital expenditures are expected to be approximately $25 million.
  • The company expects an effective tax rate of approximately 21 percent for the full year.
  • Interest expense is expected to approximate $50 million.
  • Adjusted other expense is expected to approximate $11 million.
  • Average shares outstanding are expected to be approximately 56 million.
  • The company now expects cash flow from operations to approximate $400 million. This compares to the prior outlook to exceed $375 million.

Fourth Quarter Outlook
The company expects:

  • Fourth quarter revenue to be in the range of $970 million to $980 million, representing growth of approximately 39 percent to 40 percent, including an approximate 4 point benefit from a 53rd week.
  • Fourth quarter adjusted EPS of approximately $1.64 compared to adjusted EPS of $1.38 in the prior year.

Image courtesy Helly Hansen/Kontoor Brands, Inc.