Loading...
01/11 11:27
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a positive outlook with strong revenue growth, strategic acquisition of Helly Hansen, and effective tariff mitigation strategies. The company expects high single-digit growth for Helly Hansen and improved margins, which are positive indicators. Although there are some uncertainties in management's responses, the strategic initiatives and positive market reception suggest a positive stock price movement, especially given the company's small-cap status.
Global Revenue Increased 8%, including a 4-point benefit from the contribution from Helly Hansen.
Wrangler Global Revenue Increased 7%. In the U.S., revenue increased 9%, driven by 16% growth in DTC and 8% growth in wholesale. Growth was broad-based, including continued market share gains, category expansion, and solid growth in Western.
Wrangler International Revenue Decreased 6%, driven by a 6% decrease in wholesale, partially offset by a 4% increase in brick-and-mortar retail.
Lee Global Revenue Decreased 6%, in line with expectations as the turnaround remains on track. U.S. revenue decreased 5%, driven by a decline in wholesale, partially offset by 9% growth in digital.
Helly Hansen Global Revenue $29 million in June, exceeding the outlook of $20 million to $25 million. Sport and Workwear revenue was $17 million and $9 million, respectively.
Adjusted Gross Margin Expanded 120 basis points to 46.4%, driven by the benefits of Project Jeanius, lower input costs, and mix. Helly Hansen was accretive by about 20 basis points.
Adjusted SG&A Expense $206 million, up 6% compared to prior year. Excluding Helly Hansen, adjusted SG&A expense decreased 5%, driven by prudent management of discretionary expenses, Project Jeanius, and lower distribution and freight, partially offset by investments in demand creation.
Adjusted Earnings Per Share (EPS) $1.21, increasing 23% compared to prior year. Helly Hansen contributed a $0.12 loss per share compared to the outlook of a $0.28 loss per share. Excluding Helly Hansen, adjusted EPS was $1.33 and increased 36% compared to prior year.
Inventory Increased 40% to $686 million. Excluding Helly Hansen, inventory decreased 1% to $482 million as improvements in net working capital were driven.
Net Debt $1.3 billion with $107 million of cash on hand. On a pro forma basis, net leverage ratio was 2.5x. A voluntary $25 million debt repayment was made during the quarter.
Helly Hansen Integration: Integration progressing well with strong product pipeline and accelerating order book. Significant opportunities identified in the U.S. through wholesale and retail expansion, product innovation, category expansion, and demand creation.
Wrangler Growth: Revenue increased 7%, including 9% growth in the U.S. and 16% growth in digital. Female business surpassing expectations, with strong digital growth and market share gains.
Lee Turnaround: Revenue declines sequentially improved. U.S. business grew high single digits, with digital leading growth. Brand equity campaign launching in September to target younger generation.
Geographic Expansion for Helly Hansen: Plans to expand wholesale and retail presence in the U.S. and unlock new distribution channels starting in 2026.
Category Expansion for Helly Hansen: Opportunities in outdoor, construction, high visibility, and footwear categories. Scaling lightweight and cooling platforms for southern climates.
Project Jeanius: Driving operational efficiencies with benefits exceeding expectations. Earlier-than-expected benefits contributed to gross margin expansion.
Synergy Opportunities: Identified opportunities across supply chain, IT, HR, and finance for Helly Hansen, exceeding prior synergy estimates of $15 million.
Value Creation Framework: Focused on accelerating growth, doubling Helly Hansen's operating margins, increasing capital allocation optionality, and establishing Kontoor as an employer of choice.
Tariff Mitigation: Implemented measures to offset higher tariffs, including production transfers, pricing increases, and supplier partnerships.
Tariff Impacts: The company faces higher tariffs, including a 30% reciprocal tariff on China imports and a 20% tariff on other countries (excluding Mexico). This is expected to have a $15 million impact on operating profit in 2025, with mitigation measures taking 12-18 months to offset the impact.
Supply Chain Challenges: The integration of Helly Hansen and the harmonization of processes for planning, procurement, and inventory management are expected to impact near-term revenue and inventory turnover. Additionally, operational transitions within the supply chain related to Project Jeanius may cause temporary disruptions.
Economic Uncertainty: The company acknowledges an uncertain macroeconomic environment, which could impact consumer demand and retail inventory positions for Wrangler and Lee.
Lee Brand Turnaround: The turnaround of the Lee brand is ongoing, with challenges in optimizing distribution in Europe and Asia and repositioning within the U.S. mid-tier market. Progress is expected to be non-linear and will take time.
Debt and Leverage: The company has a net debt of $1.3 billion and is focusing on debt repayment. Share repurchase activity is paused, and achieving pre-acquisition leverage levels is targeted for mid-2026.
Helly Hansen Integration Risks: While the integration of Helly Hansen is progressing, there are risks associated with achieving the expected synergies of over $20 million and managing the brand's working capital and inventory turnover.
Revenue Outlook: Full year revenue is expected to be in the range of $3.09 billion to $3.12 billion, representing growth of 19% to 20%. Helly Hansen is expected to contribute $455 million to full year revenue. For the third quarter, revenue is expected to be approximately $855 million, representing growth of 28%.
Gross Margin: Adjusted gross margin is expected to be approximately 46.1% for the full year, representing an increase of approximately 100 basis points compared to 2024. Third quarter adjusted gross margin is expected to be approximately 45.5%, an increase of approximately 50 basis points compared to prior year.
Adjusted SG&A Expense: Expected to increase approximately 24%, reflecting the contribution from Helly Hansen and an incremental $15 million of demand creation and other investments. Excluding Helly Hansen, SG&A is expected to increase at a low single-digit rate on an adjusted basis.
Adjusted EPS: Expected to be approximately $5.45 for the full year, representing an increase of 11%. Third quarter adjusted EPS is expected to be approximately $1.35. Helly Hansen is expected to be breakeven from an earnings standpoint in Q3.
Cash Flow: Cash from operations is expected to exceed $375 million for the full year, including the contribution from Helly Hansen.
Helly Hansen Integration: The integration is progressing well, with line of sight to greater than $20 million of synergies compared to the prior estimate of more than $15 million. Synergies are not yet included in the outlook.
Tariff Impact: Full year outlook includes the estimated impact of higher tariffs, net of mitigating actions. The anticipated net impact to operating profit in 2025 is approximately $15 million or about $0.20 per share. Measures to mitigate tariff impacts are expected to continue into 2026.
Project Jeanius Savings: Expected to mature to a full run rate in excess of $100 million in 2026.
Quarterly Cash Dividend: The Board declared a regular quarterly cash dividend of $0.52 per share.
Share Repurchase Activity: Share repurchase activity remains on pause near term as the company focuses on paying down acquisition-related debt and reducing leverage. $215 million remains under the current share repurchase authorization.
The earnings call reveals strong financial performance with a positive revenue outlook, margin improvement, and successful Helly Hansen integration. The Q&A highlights robust demand, strategic growth plans, and effective inventory management. The market strategy and shareholder return plan are solid, with no significant red flags on consumer demand. Despite some management vagueness, the overall sentiment is positive, supported by Helly Hansen's contribution and Project Jeanius savings. The company's market cap suggests moderate stock price movement, leading to a positive prediction within the 2% to 8% range.
The earnings call presents a positive outlook with strong revenue growth, strategic acquisition of Helly Hansen, and effective tariff mitigation strategies. The company expects high single-digit growth for Helly Hansen and improved margins, which are positive indicators. Although there are some uncertainties in management's responses, the strategic initiatives and positive market reception suggest a positive stock price movement, especially given the company's small-cap status.
The earnings call highlights strong financial performance, with a 13% increase in EPS and significant gross margin improvement. Despite flat global revenue, Wrangler's growth and digital expansion are promising. The positive outlook for cash flow and resilient U.S. consumer sentiment support a favorable view. However, integration risks with Helly Hansen and competition concerns temper enthusiasm. The Q&A reveals confidence in future growth, particularly for the Lee brand, while acknowledging tariff challenges. Given the market cap, the stock is likely to see a positive movement of 2% to 8% in the next two weeks.
The earnings call reflects a mixed outlook. Financial performance shows strong EPS growth and gross margin expansion, but challenges include Lee's revenue decline and consumer pressure. The Q&A highlighted resilience in the U.S. market and positive guidance, yet concerns remain about Lee's transition and Helly Hansen's 2Q loss. The dividend announcement is neutralized by paused share repurchases. Given the market cap, these factors suggest a neutral stock price movement, with no strong catalysts for significant change in the next two weeks.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
