Kontoor Brands raises full-year EPS forecast after strong Q2

US-based apparel group Kontoor Brands has released its financial results for the second quarter ended July 4, 2026, reporting a 19 percent increase in revenue to 584 million dollars. The performance was supported by sustained growth from Wrangler, expanded direct-to-consumer (D2C) channels, and an above-expectation contribution from Helly Hansen, which was acquired during the second quarter of 2025.

Driven by first-half operational momentum, the company raised its full-year 2026 adjusted earnings per share (EPS) forecast to a range of 5.25 dollars to 5.35 dollars, up from its previous guidance of 5.15 dollars to 5.25 dollars.

Chief executive officer and chairman of the board of directors Scott Baxter commented: “Our second quarter results were driven by growth from Wrangler, a stronger-than-expected contribution from Helly Hansen and robust gross margin expansion. Wrangler delivered another quarter of diversified growth led by strong performance in female, direct-to-consumer and international, coupled with exceptional profitability and cash generation.”

Revenue and operational performance

Wrangler brand global turnover rose 2 percent year-over-year (YoY) to 469 million dollars during the quarter. In the US market, Wrangler revenue edged up 1 percent, propelled by a 9 percent increase in D2C sales, while US wholesale remained flat. International performance for Wrangler delivered a 10 percent revenue increase, led by a 31 percent expansion in D2C and a 7 percent gain in wholesale turnover.

Helly Hansen generated 114 million dollars in global turnover during the second quarter. Within the brand's division, sport and workwear segments generated 70 million dollars and 37 million dollars, respectively. Technical sailing brand Musto contributed 7 million dollars to total revenue.

On a reported basis, gross margin expanded by 970 basis points to 56.2 percent. Adjusted gross margin rose 710 basis points to 53.8 percent, supported by operational gains under Project Jeanius, favorable channel and product mix, disciplined pricing, and the incorporation of Helly Hansen.

Reported operating income reached 91 million dollars. Adjusted operating income rose 19 percent YoY to 94 million dollars, with the adjusted operating margin expanding 10 basis points to 16 percent. Diluted EPS stood at 1.03 dollars on a reported basis and 1.06 dollars on an adjusted basis, marking a 13% increase YoY.

Capital allocation and Lee divestiture

During the second quarter, Kontoor Brands returned 80 million dollars to shareholders through cash dividends and share buybacks. The business repurchased 50 million dollars of common stock at an average price of 74 dollars per share, bringing year-to-date share repurchases to 75 million dollars. A regular quarterly cash dividend of 0.53 dollars per share was declared, payable on September 18, 2026, to shareholders of record as of September 8, 2026.

The planned divestiture of Lee remains on track to close in the fourth quarter of 2026. Kontoor Brands expects the transaction to be neutral to EPS over a 12-to-18-month period, as overheads previously allocated to Lee are mitigated through restructuring and cost actions.

Following the completion of the sale, the group intends to deploy 400 million dollars of the transaction proceeds into an Accelerated Share Repurchase agreement. As of the end of the second quarter, 700 million dollars remained under the company’s existing share repurchase authorization.

Raises full-year 2026 guidance

Kontoor Brands reaffirmed its full-year 2026 revenue projections while updating profitability targets:

Revenue: 2.66 billion dollars to 2.71 billion dollars, representing growth of 12 percent to 13 percent YoY.

Adjusted gross margin: 49.8 percent to 50 percent, reflecting an expansion of 330 to 350 basis points YoY (raised from 48.3 percent to 48.5 percent).

Adjusted operating income: 413 million dollars to 420 million dollars, reflecting an increase of 15 percent to 17 percent YoY.

Adjusted EPS: 5.25 dollars to 5.35 dollars, incorporating approximately 0.55 dollars per share of unmitigated Lee overhead expenses and 0.36 dollars per share in incremental strategic investments (raised from 5.15 dollars to 5.25 dollars).

For the second half of fiscal 2026, turnover for both Wrangler and Helly Hansen is expected to grow in the mid-single digit range, excluding the impact of the 53rd week in fiscal 2025.