Kontoor Brands, Inc. raised its full year 2026 adjusted earnings per share guidance to a range of $5.25 to $5.35, beating the analyst consensus estimate of $5.22. The company also affirmed its full year 2026 sales outlook of $2.660 billion to $2.710 billion, aligning with the analyst estimate of $2.702 billion. This update follows second quarter results where adjusted EPS of $1.06 beat estimates, although quarterly sales missed expectations.

Updated Full Year 2026 Outlook

The company updated its full year 2026 financial assumptions, reflecting increased confidence in profitability despite the ongoing Lee divestiture. The table below compares the prior and updated outlooks:

Key assumptions embedded in the updated full year 2026 outlook include:

• Revenue expected in the range of $2.66 to $2.71 billion, representing growth of approximately 12 to 13 percent compared to the prior year
• Adjusted gross margin now expected in the range of 49.8 to 50.0 percent, an increase of 330 to 350 basis points compared to the prior year
• Adjusted SG&A expenses expected to increase approximately 23 percent compared to the prior year, including approximately $25 million of incremental brand-building and other growth-enabling investments
• Adjusted operating income expected in the range of $413 to $420 million, representing an increase of 15 to 17 percent compared to the prior year
• Adjusted EPS of $5.25 to $5.35 includes the impact of approximately $0.55 of unmitigated overhead and approximately $0.36 per share of incremental investments
• Capital expenditures expected to be approximately $30 million
• Effective tax rate of approximately 20 percent on adjusted pre-tax earnings
• Interest expense expected to be approximately $56 million
• Other expense expected to be approximately $14 million
• Average shares outstanding expected to be approximately 55.5 million
• Total cash from operations of approximately $450 million
• Voluntary term loan payments of $225 million; net leverage ratio expected below 1.5 times by year-end

Joe Alkire, President and Chief Financial Officer, stated: "We are raising our full year outlook based on the strength we have seen in our year-to-date results, and our confidence and visibility as we enter the second half of the year. With the Lee divestiture on track to close in the fourth quarter, we intend to deploy $400 million of the expected proceeds into an Accelerated Share Repurchase agreement based on the confidence we have in our long-term strategy and value creation potential."

Second Quarter Financial Highlights

Revenue from continuing operations reached $584 million in the second quarter. The following table summarizes key second quarter performance metrics:

Selling, General & Administrative (SG&A) expenses were $238 million, or 40.7 percent of revenue on a reported basis. On an adjusted basis, SG&A expenses were $221 million, or 37.8 percent of revenue. Adjusted operating margin was 16 percent, reflecting a 10 basis point increase compared to the prior year.

Brand Performance

Wrangler global revenue was $469 million, up 2 percent compared to the prior year. Wrangler U.S. revenue increased 1 percent, driven by a 9 percent increase in direct-to-consumer. U.S. wholesale was flat compared to the prior year. Wrangler international revenue increased 10 percent, driven by a 31 percent increase in direct-to-consumer and a 7 percent increase in wholesale.

Helly Hansen global revenue was $114 million in the quarter. Within Helly Hansen, Sport revenue was $70 million, Workwear revenue was $37 million, and Musto brand revenue was $7 million. Helly Hansen contributed a $0.06 loss per share, which significantly exceeded expectations.

"Our second quarter results were driven by growth from Wrangler, a stronger-than-expected contribution from Helly Hansen and robust gross margin expansion," said Scott Baxter, Chief Executive Officer and Chairman of the Board of Directors. "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. Helly Hansen delivered a better-than-expected quarter and for the first half of 2026, delivered double-digit revenue growth on a pro-forma basis and significant profitability improvement fueled in part by the benefits of our multi-brand platform."

Balance Sheet and Capital Returns

The company ended the second quarter with $58 million in cash and cash equivalents and $1.1 billion in long-term debt. The company had no outstanding borrowings under the Revolving Credit Facility and $493 million available for borrowing. Inventory at the end of the second quarter was $526 million, down 3 percent compared to the prior year, driven primarily by a reduction in Helly Hansen inventory.

The company returned $80 million to shareholders through dividends and share repurchases during the second quarter, including the repurchase of $50 million of common stock at an average price per share of $74. Year-to-date, the company repurchased $75 million of common stock at an average price per share of $75. At the end of the quarter, $700 million remained under the existing share repurchase authorization. The Board of Directors declared a regular quarterly cash dividend of $0.53 per share, payable on September 18, 2026, to shareholders of record at the close of business on September 8, 2026.

Lee Divestiture and Capital Deployment

The Lee business divestiture is on track to close in the fourth quarter. Upon closing, the company intends to deploy the expected proceeds into a $400 million Accelerated Share Repurchase agreement, with remaining proceeds allocated towards voluntary debt payments. In total, the company expects to return more than $900 million of capital in 2026 through share repurchases, dividends, and voluntary debt payments, including the proceeds from the Lee divestiture. The company continues to expect the divestiture of Lee to be immaterial to earnings per share over a 12-to-18-month period.

Tariff Update

Following the U.S. Supreme Court's ruling that the International Emergency Economic Powers Act (IEEPA) does not authorize tariffs, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to refund all IEEPA duties previously paid. During the first quarter of 2026, the company recognized a net receivable of $54 million based on the probability of recovery of IEEPA tariffs previously paid. In July 2026, the company began to receive IEEPA refunds and has received $23 million thus far in the third quarter of 2026. The company expects to receive the remaining IEEPA refunds by the end of fiscal 2026.

In May 2026, the U.S. Court of International Trade ruled that Section 122 tariffs were also invalid, and these tariffs expired on July 24, 2026. The company has not recorded a receivable related to Section 122 tariffs and continues to monitor ongoing litigation related to the potential recovery of these tariffs. In July 2026, the Office of the U.S. Trade Representative implemented new Section 301 tariff rates of between 10 percent and 12.5 percent on products imported from the majority of the company's current trading partners. The company's imports from Mexico to the U.S. remain exempt under USMCA. The company's outlook continues to assume a 15 percent reciprocal tariff rate for the second half of 2026.

Kontoor Brands, Inc. (NYSE: KTB) has appointed Joseph Alkire as President and Chief Financial Officer, effective immediately. This strategic leadership change consolidates operational control by adding the Wrangler brand to Alkire’s existing global responsibilities for Helly Hansen, while he retains full oversight of the company’s global financial operations. The move aims to streamline decision-making and accelerate value creation across the portfolio under a single executive with dual financial and operational expertise.

Alkire has been a member of Kontoor’s Executive Leadership Team since joining in 2023, previously serving as Vice President and Global Head of Finance & Operations for Helly Hansen. He will continue to report directly to Scott Baxter, who remains the Chief Executive Officer and Chairman of the Board of Directors. The appointment reflects the Board’s confidence in Alkire’s ability to drive the company’s next phase of growth through integrated management.

Expanded Operational Scope

The new role merges executive leadership with direct brand management duties. Alkire now oversees two major lifestyle brands within Kontoor’s portfolio. The table below outlines the changes to his responsibilities.

Strategic Rationale

Scott Baxter emphasized that the company is at an inflection point in its value creation journey. By placing Alkire in charge of both Helly Hansen and Wrangler, Kontoor seeks to leverage his experience in finance and operations to enhance execution. Baxter noted that Alkire has been instrumental in shaping the company’s strategic direction since 2023. The consolidation is intended to reduce silos between financial strategy and operational execution.

Joseph Alkire expressed enthusiasm for the expanded mandate, citing the organization’s talent as key to competing effectively. He stated that he looks forward to partnering with Baxter and the Executive Leadership Team to pursue future growth horizons. The appointment does not involve changes to the broader board structure or other executive roles.

What the Numbers Show

While no financial figures were disclosed in the announcement, the structural change indicates a shift toward integrated brand management. By combining the CFO role with direct oversight of two major revenue-generating brands, Kontoor is aligning capital allocation efficiency with operational responsiveness. This alignment may improve agility for these specific portfolios, which are central to the company’s long-term value proposition.