Kontoor Closes the Lee Chapter and Raises Its Guidance Anyway

Kontoor Brands closed the books on Lee this quarter, completing its divestiture of the denim brand for $698 million in net proceeds, a sale first confirmed earlier this week when buyer Authentic Brands Group added it to a closet that already includes Reebok and Brooks Brothers. For Kontoor, the sale leaves a tighter, two-brand company, and the third-quarter numbers suggest that is fine by them.

Revenue rose 3% to $685 million, and adjusted earnings per share jumped 40% to $1.50, helped by margin expansion and steady growth at Wrangler, which grew global revenue 3% to $485 million with direct-to-consumer sales up 7%. Helly Hansen, the outdoor brand Kontoor bought in 2023, posted a smaller but sharper win: revenue up 3% to $191 million, with segment profit nearly doubling.

CEO Scott Baxter described the company as more focused now that it is built around two brands instead of three, and backed up the talk with money, raising full-year guidance and committing to roughly $1 billion in capital returns this year, including a $400 million accelerated buyback. Selling off your oldest brand to double down on the other two is either a vote of confidence or an admission you had one brand too many. Kontoor is betting Wall Street reads it as the former.

Source: Kontoor Brands, Inc.

Kyle Duford, Founder & Editor, BRNDWIRE. More from Kyle →