Kontoor Brands Soars on Helly Hansen Acquisition with 27% Sales Surge

Kontoor Brands, a prominent U.S. denim manufacturer, announced a robust performance for its third quarter, with sales surging by an impressive 27 percent to reach $853 million. This significant growth was largely attributed to the company's recent strategic acquisition of Helly Hansen, a Norwegian outdoorwear brand, earlier in February.

Delving into individual brand performances, the Greensboro, North Carolina-based company reported that its iconic Wrangler brand saw revenues climb by 2 percent to $471 million. Wrangler's U.S. revenue demonstrated positive growth, notably driven by an 11 percent increase in its direct-to-consumer (DTC) channel. Internationally, Wrangler's revenue increased by 6 percent, fueled by a 5 percent rise in wholesale and a substantial 12 percent increase in direct-to-consumer sales for the three months ending September 30.

In contrast, the company's Lee brand experienced an 8 percent decline in sales, settling at $187 million. Kontoor Brands indicated that Lee's sales were significantly impacted by a $7 million reduction stemming from inventory management initiatives in China during the period.

The recently acquired Helly Hansen brand made a substantial contribution, generating a total revenue of $193 million. Within this, sport and workwear categories accounted for $143 million and $42 million, respectively, showcasing the diversified strength of the acquisition.

Despite the strong sales growth, Kontoor Brands reported a decrease in net income for the third quarter, which fell to $36.94 million compared to $70.55 million in the prior-year period. Scott Baxter, president, chief executive officer, and chairman of the board of directors at Kontoor Brands, commented on the results: “Our third quarter results exceeded expectations driven by the strength of our expanded brand portfolio, gross margin expansion, and operational execution.”

Baxter further elaborated on the company's performance and strategic achievements. He noted, “While a shift in the timing of shipments impacted revenue growth, Wrangler drove another quarter of broad-based growth and market share gains, Helly Hansen delivered better than expected revenue and profitability, and we launched Lee’s first equity campaign in years while improving the health of the marketplace.” Based on this strong year-to-date performance and enhanced market visibility, the company is confidently raising its full-year outlook, anticipating a record year concluded with significant momentum.

Looking forward, Kontoor Brands now expects its full-year revenue to land at the high end of its previous outlook range of $3.09 to $3.12 billion. This projection represents an impressive increase of 19 to 20 percent compared to the prior year, underscoring the company's optimistic forecast.