Kontoor Brands, Inc.
For the period ended Mar 29, 2025. Filed May 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 29, 2025 · Filed May 6, 2025
KTB$77.06-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-28; filed 2024-10-31.
0001760965-24-000051
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-29; filed 2025-05-06.
0001760965-25-000047
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 118 current paragraphs.
50 unchanged; 43 reworded; 21 added; 24 removed; 3 previous and 4 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
During 2025, the U.S. government enacted significant changes to its tariff regime which increased rates on virtually all imports. Certain foreign jurisdictions have responded with reciprocal tariffs which resulted in corresponding actions by the U.S. government. Certain of these tariffs have been paused or modified, and the uncertainty of tariff rates between jurisdictions is contributing to overall macroeconomic volatility and increasing recessionary concerns. The potential for additional tariff increases may continue to result in increased reciprocal tariffs or other restrictive trade measures by the U.S. or foreign jurisdictions. These factors continued to contribute to uncertain global economic conditions and consumer spending patterns, which impacted retailers' and the Company's operations.
Current report
Inflationary pressures have moderated in recent quarters, and although these pressures continue to impact us, current period results reflect continued favorability from lower product costs compared to the first quarter of 2024. Retailers continued to conservatively manage inventory levels as a result of this uncertain macroeconomic environment, which impacted our results during the first quarter of 2025. The Company has responded to ongoing macroeconomic conditions by controlling expenses and proactively managing our global supply chain.
Current report
On February 18, 2025, the Company entered into a definitive agreement to acquire the global outdoor and workwear brand Helly Hansen (the "Helly Hansen Acquisition"), for a purchase price of $1.276 billion Canadian dollars ("CAD") (or approximately $900 million based on the foreign currency exchange rate in effect as of the agreement date), subject to working capital and other closing adjustments. On February 19, 2025, the Company entered into foreign currency exchange contracts totaling $1.275 billion CAD to hedge the purchase price. The Company anticipates funding the purchase price using excess cash on hand and borrowings under the Company's Credit Facility, which was refinanced on April 8, 2025, in anticipation of the Helly Hansen Acquisition (as discussed further in Note 8 to the Company's financial statements in this Form 10-Q). The Company has received all required regulatory approvals related to the Helly Hansen Acquisition, which is expected to close in the second quarter of 2025, subject to customary closing conditions.
Current report
During the first quarter of 2025, the Company incurred acquisition-related costs of $19.2 million associated with the Helly Hansen Acquisition, comprised of $10.3 million of professional and other fees and $8.9 million of losses related to foreign currency exchange contracts to hedge the purchase price, which are reflected in the Company's statements of operations within "selling, general and administrative expenses" and "other expense, net," respectively. We expect to incur additional acquisition-related costs associated with the Helly Hansen Acquisition in future periods.
Current report
•Net revenues decreased 1% to$622.9 million compared to the three months ended March 2024.
Current report
•Non-U.S. Wholesale revenues decreased 8% compared to the three months ended March 2024, and represented 16% of total revenues in the current period.
Current report
•Gross margin increased 230 basis points to 47.5% compared to the three months ended March 2024.
Current report
•Operating income decreased 13% to $73.3 million compared to the three months ended March 2024.
Current report
•Other expense, netwas $11.0 million in the first quarter, compared to $2.9 million in the same period last year, and included $8.9 million of losses related to the purchase price hedge for the Helly Hansen Acquisition.
Current report
•Net income decreased 28% to $42.9 million compared to the three months ended March 2024.
Current report
Other expense, net increased $8.1 million, driven by $8.9 million of losses related to foreign currency exchange contracts to hedge the purchase price of the Helly Hansen Acquisition.
Current report
Global revenues for the Wrangler® brand increased 3%, due to growth in all channels.
Current report
Credit Availability
Current report
Refinancing of Credit Facilities Subsequent to Quarter-End
Current report
On April 8, 2025, the Company completed a refinancing pursuant to which it amended and restated its Credit Agreement to provide for (i) a five-year $700.0 million term loan A facility (the "2025 Term Loan A-1") consisting of a $340.0 million initial term loan (the "2025 Initial Term Loan") and a $360.0 million delayed draw term loan (the "Delayed Draw Term Loan"), (ii) a three-year $300.0 million delayed draw term loan A facility (the "2025 Term Loan A-2") and (iii) a five-year $500.0 million revolving credit facility (the "2025 Revolving Credit Facility"), collectively referred to as the "2025 Credit Facilities," with the lenders and agents party thereto. Upon closing, the net proceeds from the 2025 Initial Term Loan were used to repay all of the $340.0 million principal amount outstanding under Term Loan A. The Delayed Draw Term Loan and the 2025 Term Loan A-2 may be drawn on or before September 18, 2025, to fund the Helly Hansen Acquisition.
Current report
The 2025 Term Loan A-1 is scheduled to be repaid in quarterly installments beginning in September 2026 at a rate of 0.625% of the total loan amount and increasing to a rate of 1.25% of the total loan amount beginning in September 2027, with the remaining principal due at maturity. The 2025 Term Loan A-2 is scheduled to be repaid in full at maturity.
Current report
Senior Notes
Current report
Other Liquidity Considerations
Current report
The Company expects to complete the Helly Hansen Acquisition in the second quarter of 2025. The Company anticipates funding the $1.276 billion CAD purchase price using excess cash on hand and borrowings under the Company's Credit Facility, and will also settle the associated purchase price hedge at closing.
Current report
As discussed above, the Company refinanced its Credit Facility on April 8, 2025, in anticipation of the Helly Hansen Acquisition.
Current report
•Definitive agreement related to the Helly Hansen Acquisition for $1.276 billion CAD or approximately $900 million as of the agreement date.
Removed paragraphs (24)
Previous report
The macroeconomic factors discussed above, primarily interest rates and inflation, contributed to retailer actions to manage inventory levels, which impacted our results during the nine months ended September 2024.
Previous report
Ongoing disruptions to key trade routes such as the Red Sea and Panama Canal, as well as political unrest in Bangladesh, affected our global supply chain during the third quarter of 2024 but did not have a significant impact on results. Additionally, we do not anticipate that these disruptions, as well as recent port strikes on the East and Gulf Coasts of the U.S., will have a significant impact on freight costs or operations in the fourth quarter of 2024.
Previous report
Out-of-Period Duty Expense Recorded in 2023
Previous report
During the three months ended September 2023, management identified inaccuracies in processing certain transactions with U.S. Customs and Border Protection ("U.S. Customs") arising from the implementation of the Company's enterprise resource planning system, which resulted in an underpayment of duties owed to U.S. Customs for the 2021 to 2023 periods. Accordingly, the Company recorded $13.1 million in adjustments in the third quarter of 2023 within "cost of goods sold" to accrue for this underpayment of duty expense. The out-of-period duty expense recorded in 2023 results in a lack of comparability between periods in the statements of operations, primarily in cost of goods sold.
Previous report
•Net revenues increased 2% to$670.2 million compared to the three months ended September 2023.
Previous report
•Non-U.S. Wholesale revenues decreased 7% compared to the three months ended September 2023, and represented 17% of total revenues in the current period.
Previous report
•Direct-to-Consumer revenues increased 3% compared to the three months ended September 2023, and represented 11% of total revenues in the current period.
Previous report
•Gross margin increased 320 basis points to 44.7% compared to the three months ended September 2023.
Previous report
•Net income increased 19% to $70.5 million compared to the three months ended September 2023.
Previous report
Net revenues increased 2%, driven by a 5% increase in U.S. Wholesale revenues primarily attributable to growth in our digital wholesale business, expanded distribution and category growth, partially offset by retailer actions to manage inventory levels. Non-U.S. Wholesale revenues decreased 7%, driven predominantly by lower sales in EMEA and Mexico. Global Direct-to-Consumer revenues increased 3% with growth in e-commerce sales partially offset by declines in retail store sales.
Previous report
Gross margin increased 320 basis points, primarily related to 380 basis points of favorability from product costs and 70 basis points due to the out-of-period duty expense recorded in 2023. These benefits were partially offset by 110 basis points from lower pricing and restructuring and transformation charges.
Previous report
Selling, general and administrative expenses increased $33.4 million, from 29.1% to 31.3% of net revenues, driven by a $14.4 million increase in incentive compensation expense, $10.2 million of higher investments in our direct-to-consumer business, demand creation and information technology and a $6.6 million increase in restructuring and transformation charges, partially offset by a $2.1 million reduction in distribution and freight costs.
Previous report
Global revenues for the Wrangler® brand increased 4%, due to growth in the U.S. Wholesale and Direct-to-Consumer channels, partially offset by a decline in the Non-U.S. Wholesale channel.
Previous report
•Revenues in the Americas region increased 5%, primarily due to growth in our wholesale and direct-to-consumer businesses. Growth in wholesale was driven by an increase in our U.S. digital wholesale business, expanded distribution and category growth, partially offset by retailer actions to manage inventory levels. Growth in our direct-to-consumer business was primarily driven by higher e-commerce sales.
Previous report
•Revenues in the EMEA region decreased 4%, attributable to a decline in our wholesale business, partially offset by growth in our direct-to-consumer business and a 2% favorable impact from foreign currency.
Previous report
Global revenues for the Wrangler® brand increased 1%, due to growth in the Direct-to-Consumer and U.S. Wholesale channels, partially offset by a decline in the Non-U.S. Wholesale channel.
Previous report
•Revenues in the EMEA region decreased 6%, due to a decline in our wholesale business, partially offset by growth in our direct-to-consumer business and a 2% favorable impact from foreign currency.
Previous report
Operating margin increased to 20.0%, compared to 17.3% for the 2023 period, primarily attributable to favorability from lower product costs, the out-of-period duty expense recorded in 2023, product mix and downtime in our manufacturing plants taken in the prior year. These improvements were partially offset by higher investments in our direct-to-consumer business, demand creation and information technology, as well as lower pricing, increases in restructuring and transformation charges and higher incentive compensation expense.
Previous report
•Revenues in the Americas region decreased 6%, driven by declines in our wholesale and direct-to-consumer businesses. The decrease in wholesale revenues was due to a decline in the U.S. Wholesale channel, as well as our non-U.S. wholesale business, primarily due to lower sales in Mexico. The decline in the U.S. Wholesale channel was primarily due to retailer actions to manage inventory levels and a decrease in seasonal product sales, partially offset by growth in digital wholesale. The decline in our direct-to-consumer business was due to lower retail store and e-commerce sales.
Previous report
•Revenues in the APAC region decreased 7%, primarily resulting from declines in wholesale revenue and retail store sales in China and a 2% unfavorable impact from foreign currency, partially offset by growth in e-commerce sales.
Previous report
•Revenues in the EMEA region decreased 8%, attributable to a decline in our wholesale business, partially offset by growth in our digital wholesale business and e-commerce sales.
Previous report
Operating margin decreased to 12.0%, compared to 12.2% for the 2023 period. Benefits from lower product costs and the out-of-period duty expense recorded in 2023 were more than offset by unfavorable product mix, lower pricing, higher investments in our direct-to-consumer business and deleverage of fixed expenses on lower revenues.
Previous report
Interest expense increased $0.5 million, primarily due to the maturity of the 2019 Swap Agreements in April 2024, partially offset by the effect of lower average debt outstanding during the nine months ended September 2024 compared to the nine months ended September 2023. In addition, the nine months ended September 2023 included interest attributable to the out-of-period duty expense recorded in 2023.
Previous report
Kontoor Brands, Inc. Q3 FY24 Form 10-Q 30
Reworded paragraphs (43)
Previous wording
Kontoor Brands, Inc. ("Kontoor," the "Company," "we," "us" or "our") is a global lifestyle apparel company headquartered in the United States ("U.S."). The Company designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the brand names Wrangler®and Lee®. The Company's products are sold in the U.S. through mass merchants, specialty stores, department stores, company-operated stores and online, including digital marketplaces. The Company's products are also sold internationally, primarily in the Europe, Middle East and Africa ("EMEA"), Asia-Pacific ("APAC") and Non-U.S. Americas regions, through department, specialty, company-operated, concession retail and independently-operated partnership stores and online, including digital marketplaces.
Current wording
Kontoor Brands, Inc. ("Kontoor," the "Company," "we," "us" or "our") is a global lifestyle apparel company headquartered in the United States ("U.S."). The Company designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the brand names Wrangler®and Lee®. The Company's products are sold in the U.S. through mass merchants, specialty stores, department stores, company-operated stores and online, including digital marketplaces. The Company's products are also sold internationally, primarily in the Europe, Middle East and Africa ("EMEA"), Asia-Pacific ("APAC") and Non-U.S. Americas regions, through department stores, specialty stores, company-operated stores, concession retail stores, independently-operated partnership stores and online, including digital marketplaces.
Previous wording
The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each year. Accordingly, this Form 10-Q presents the third quarter of the Company's fiscal year ending December 28, 2024 ("fiscal 2024"), which is a 52-week fiscal year. For presentation purposes herein, all references to periods ended September 2024, December 2023 and September 2023 correspond to the fiscal periods ended September 28, 2024, December 30, 2023 and September 30, 2023, respectively.
Current wording
The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each year. Accordingly, this Form 10-Q presents the first quarter of the Company's fiscal year ending January 3, 2026 ("fiscal 2025"), which is a 53-week fiscal year. For presentation purposes herein, all references to periods ended March 2025, December 2024 and March 2024 correspond to the fiscal periods ended March 29, 2025, December 28, 2024 and March 30, 2024, respectively.
Previous wording
References to fiscal 2024 foreign currency amounts herein reflect the impact of changes in foreign exchange rates from the prior year comparable period and the corresponding impact on translating foreign currencies into U.S. dollars and on foreign currency-denominated transactions. The Company's most significant foreign currency translation exposure is typically driven by business conducted in euro-based countries, the Chinese yuan and the Mexican peso. However, the Company conducts business in other developed and emerging markets around the world with exposure to other foreign currencies.
Current wording
References to fiscal 2025 foreign currency amounts herein reflect the impact of changes in foreign exchange rates from the prior year comparable period when translating foreign currencies into U.S. dollars. The Company's most significant foreign currency translation exposure is typically driven by business conducted in euro-based countries, the Chinese yuan and the Mexican peso. However, the Company conducts business in other developed and emerging markets around the world with exposure to other foreign currencies.
Previous wording
Global macroeconomic conditions that continued to impact the Company include ongoing elevated interest rates, moderating inflation, fluctuating foreign currency exchange rates, supply chain issues and inconsistent consumer demand. These factors continue to contribute to uncertain global economic conditions and consumer spending patterns, which are impacting retailers' and the Company's operations. Additionally, the conflicts in Ukraine and the Middle East are causing disruption in the surrounding areas and greater uncertainty in the global economy. Inflationary pressures have moderated in recent quarters, and although these pressures continue to impact us, current period results reflect continued favorability from lower product costs compared to the third quarter of 2023.
Current wording
Global macroeconomic conditions that continued to impact the Company during the first quarter of 2025 included ongoing elevated interest rates, moderating inflation, fluctuating foreign currency exchange rates, supply chain issues and inconsistent consumer demand.
Previous wording
The Company has responded to ongoing macroeconomic conditions by controlling expenses, adjusting pricing and proactively managing our global supply chain where possible. While we anticipate continued uncertainty related to the macroeconomic environment during 2024, we believe we are appropriately positioned to successfully manage through known operational challenges. We continue to closely monitor macroeconomic conditions, including consumer behavior and the impact of these factors on consumer demand.
Current wording
In connection with the recently enacted U.S. tariff regime discussed above, the Company continues to evaluate potential mitigating actions including transferring production within our global supply chain, proactively managing our mix of internally manufactured versus sourced goods, pricing adjustments and other initiatives. While we anticipate continued uncertainty related to the macroeconomic environment during 2025, including the impact of tariff increases on product costs, we believe we are appropriately positioned to successfully manage through operational challenges that may arise. We continue to closely monitor macroeconomic conditions, including consumer behavior and the impact of these factors on consumer demand.
Previous wording
We continue to execute on our strategic vision which focuses on four growth catalysts: (i) expansion of our core U.S. Wholesale business, (ii) category extensions such as outdoor, workwear and t-shirts, (iii) geographic expansion of our Wrangler®and Lee® brands, and (iv) channel expansion focused on the digital platforms in our U.S. Wholesale and Direct-to-Consumer channels. We are focused on driving brand growth and delivering long-term value to our stakeholders including our consumers, customers, shareholders, suppliers and communities around the world.
Current wording
We continue to execute on our strategic vision which focuses on four growth vectors: (i) expansion of our core U.S. Wholesale business, (ii) category extensions such as outdoor, workwear and tops, (iii) geographic expansion of our Wrangler®and Lee® brands and (iv) channel expansion focused on the digital platforms in our U.S. Wholesale and Direct-to-Consumer channels. We are focused on driving brand growth and delivering long-term value to our stakeholders including our consumers, customers, shareholders, suppliers and communities around the world.
Previous wording
During the third quarter of 2024, the Company incurred total restructuring and transformation charges of $8.4 million, of which $2.1 million related to actions to streamline and transfer select production within our internal manufacturing network and $6.3 million related to business optimization activities associated with the detailed planning and initial execution phases of Project Jeanius. This comprehensive end-to-end business model transformation is focused on simplifying the organization and creating significant investment capacity to accelerate growth and increase profitability. We anticipate additional costs and benefits in future periods as we continue to execute on this multi-year initiative. Refer to Note 14 to the Company's financial statements in this Form 10-Q for additional information related to restructuring charges.
Current wording
During the first quarter of 2025, the Company incurred restructuring and transformation charges of $12.5 million, of which $3.3 million relates to costs associated with exit or disposal activities as disclosed in Note 15 to the Company's financial statements in this Form 10-Q. Restructuring and transformation charges included $11.6 million related to business optimization activities associated with the continued execution of Project Jeanius and $0.9 million related to streamlining and transferring select production within our internal manufacturing network. Project Jeanius is a comprehensive end-to-end business model transformation with the goal of creating significant investment capacity through gross and operating margin expansion, and we anticipate continued transformation costs associated with Project Jeanius as we execute on this multi-year initiative, which is expected to drive benefits in cost of goods sold and selling, general and administrative expenses.
Previous wording
THIRD QUARTER OF FISCAL 2024 SUMMARY
Current wording
FIRST QUARTER OF FISCAL 2025 SUMMARY
Previous wording
•U.S. Wholesale revenues increased 5% compared to the three months ended September 2023, and represented 72% of total revenues in the current period.
Current wording
•U.S. Wholesale revenues decreased 1% compared to the three months ended March 2024, and represented 72% of total revenues in the current period.
Previous wording
•Selling, general and administrative expenses as a percentage of net revenues increased to 30.0% compared to 28.4% for the three months ended September 2023.
Current wording
•Selling, general and administrative expenses as a percentage of net revenues increased to 35.7% compared to 31.8% for the three months ended March 2024, and included $21.5 million of acquisition-related, restructuring and transformation charges.
Previous wording
•Diluted earnings per share was $1.26 in the third quarter, compared to $1.05 in the same period last year.
Current wording
•Diluted earnings per share was $0.76 in the first quarter, compared to $1.05 in the same period last year.
Previous wording
Additionally, the following table presents a summary of the changes in net revenues for the three and nine months ended September 2024 as compared to September 2023:
Current wording
Additionally, the following table presents a summary of the changes in net revenues for the three months ended March 2025 as compared to March 2024:
Previous wording
Net revenues decreased 2%, driven by an 8% decrease in the Non-U.S. Wholesale channel due to lower sales in EMEA and China. U.S. Wholesale revenues decreased 1%, primarily attributable to retailer actions to manage inventory levels and a decrease in revenue from seasonal product, partially offset by an increase in our digital wholesale business and category growth. Global Direct-to-Consumer revenues increased 2% with growth in e-commerce sales partially offset by declines in retail store sales.
Current wording
Net revenues decreased 1%, driven by an 8% decrease in Non-U.S. Wholesale revenues including a 4% unfavorable impact from foreign currency and lower sales in Mexico and EMEA. U.S. Wholesale revenues decreased 1%, driven predominantly by a timing shift in revenue from seasonal product, partially offset by category growth and an increase in our digital wholesale business. Global Direct-to-Consumer revenues increased 5% due to growth in e-commerce sales in the U.S.
Previous wording
Gross margin increased 320 basis points, primarily related to 290 basis points of favorability from product costs and channel mix and 200 basis points due to the out-of-period duty expense recorded in 2023. These benefits were partially offset by 120 basis points from lower pricing, proactive inventory management actions and product mix and 30 basis points from restructuring and transformation charges.
Current wording
Gross margin increased 230 basis points, primarily related to 150 basis points from lower product costs and favorable product and channel mix, 80 basis points of favorability due to the benefits of Project Jeanius and 30 basis points of favorability from a decrease in restructuring and transformation charges. These benefits were partially offset by 30 basis points from lower pricing.
Previous wording
Selling, general and administrative expenses increased $15.2 million, from 28.4% to 30.0% of net revenues, driven by $6.4 million of restructuring and other transformation charges in the third quarter of 2024, a $3.6 million increase in incentive compensation expense and a $2.3 million increase in demand creation investments.
Current wording
Selling, general and administrative expenses increased $21.6 million, from 31.8% to 35.7% of net revenues, driven by $10.3 million of acquisition-related costs, an $8.7 million increase in incentive compensation expense, a $6.1 million increase in restructuring and transformation charges and a $2.2 million increase in demand creation investments.
Previous wording
The effective income tax rate for the nine months ended September 2024 was 19.5% compared to 21.4% in the 2023 period. The nine months ended September 2024 included a net discrete tax benefit primarily related to stock-based compensation which decreased the effective income tax rate by 0.7%. The nine months ended September 2023 included a net discrete tax expense primarily related to a remeasurement of deferred tax assets associated with a tax holiday granted from local income taxes in a foreign jurisdiction which increased the effective income tax rate by 2.4%. The effective tax rate without discrete items for the nine months ended September 2024 was 20.2% compared to 19.0% in the 2023 period. The increase was primarily due to changes in our jurisdictional mix of earnings.
Current wording
The effective income tax rate for the three months ended March 2025 was 23.3% compared to 20.3% in the 2024 period. The three months ended March 2025 included a net discrete tax expense primarily related to an increase in valuation allowances in a foreign jurisdiction, partially offset by a discrete tax benefit related to stock-based compensation, the net impact of which increased the effective income tax rate by 1.9%. The three months ended March 2024 included a net discrete tax benefit primarily related to stock-based compensation which decreased the effective income tax rate by 1.0%. The effective tax rate without discrete items for the three months ended March 2025 was 21.4% compared to 21.3% in the 2024 period. The increase was primarily due to changes in our jurisdictional mix of earnings.
Previous wording
The following tables present a summary of the changes in segment revenues and segment profit for the three and nine months ended September 2024 as compared to the three and nine months ended September 2023:
Current wording
The following tables present a summary of the changes in segment revenues and segment profit for the three months ended March 2025 as compared to the three months ended March 2024:
Previous wording
•Revenues in the Americas region increased 1%, primarily due to growth in our wholesale and direct-to-consumer businesses. Growth in wholesale was driven by an increase in our U.S. digital wholesale business and category growth, partially offset by retailer actions to manage inventory levels. Growth in our direct-to-consumer business was primarily driven by higher e-commerce sales.
Current wording
•Revenues in the Americas region increased 3%, primarily due to growth in the U.S. Wholesale channel and our U.S. direct-to-consumer business, partially offset by lower sales in Mexico. Growth in U.S. Wholesale was driven by category growth and an increase in our digital wholesale business, partially offset by a decrease in wholesale shipments. Growth in our U.S. direct-to-consumer business was primarily driven by higher e-commerce sales.
Previous wording
•Revenues in the APAC region were flat.
Current wording
•Revenues in the EMEA region were flat, with growth in our wholesale business offset by a 2% unfavorable impact from foreign currency and a decline in our direct-to-consumer business.
Previous wording
Operating margin increased to 21.1%, compared to 18.3% for the 2023 period, driven by lower product costs and the out-of-period duty expense recorded in 2023, partially offset by lower pricing, higher investments in our direct-to-consumer business, demand creation and information technology and increases in restructuring and transformation charges.
Current wording
Operating margin increased to 20.7%, compared to 18.2% for the 2024 period, driven by lower product costs, favorable product and channel mix, benefits from Project Jeanius and a decrease in restructuring and transformation charges, partially offset by higher investments in demand creation and lower pricing.
Previous wording
Global revenues for the Lee® brand decreased 3%, due to declines in the Non-U.S. Wholesale and Direct-to-Consumer channels, partially offset by growth in the U.S. Wholesale channel.
Current wording
Global revenues for the Lee® brand decreased 9%, due to declines in the U.S. Wholesale and Non-U.S. Wholesale channels, partially offset by growth in the Direct-to-Consumer channel.
Previous wording
•Revenues in the Americas region decreased 3%, driven by declines in our wholesale and direct-to-consumer businesses. The decrease in wholesale revenues was due to a decline in our non-U.S. wholesale business, primarily due to lower sales in Mexico. The U.S. Wholesale channel grew, reflecting an increase in digital wholesale, partially offset by lower wholesale shipments. The decline in our direct-to-consumer business was due to lower retail store sales.
Current wording
•Revenues in the Americas region decreased 10%, driven by a decline in the U.S. Wholesale channel and our non-U.S. wholesale business. The decrease in the U.S. Wholesale channel was due to lower wholesale shipments, partially offset by an increase in our digital wholesale business. The decline in our non-U.S. wholesale business was due to lower sales in Mexico.
Previous wording
•Revenues in the APAC region increased 2%, due to growth in wholesale revenues in China, partially offset by a decrease in China retail store sales.
Current wording
•Revenues in the APAC region decreased 5%, due to a decrease in wholesale revenues in China.
Previous wording
•Revenues in the EMEA region decreased 7%, attributable to a decline in our wholesale business, partially offset by growth in e-commerce sales and a 3% favorable impact from foreign currency.
Current wording
•Revenues in the EMEA region decreased 7%, attributable to a decline in our wholesale business and a 2% unfavorable impact from foreign currency.
Previous wording
Operating margin increased to 11.5%, compared to 10.0% for the 2023 period, primarily attributable to lower product costs and the out-of-period duty expense recorded in 2023, partially offset by lower pricing and unfavorable product and channel mix.
Current wording
Operating margin increased to 16.2%, compared to 16.0% for the 2024 period, primarily attributable to lower product costs and benefits from Project Jeanius, partially offset by deleverage of fixed expenses on lower revenues.
Previous wording
In addition, we report an "Other" category to reconcile segment revenues and segment profit to the Company's operating results, but the Other category does not meet the criteria to be considered a reportable segment. Other includes sales and licensing of Rock & Republic®, other company-owned brands and private label apparel.
Current wording
In addition, we report an "Other" category to reconcile the Company's segment revenues to total revenues and segment profit to income before income taxes, but the Other category does not meet the criteria to be considered a reportable segment. Other includes sales and licensing of Chic®, Rock & Republic®, other company-owned brands and private label apparel, and the associated costs.
Previous wording
The costs below are necessary to reconcile total reportable segment profit to income before taxes. Corporate and other expenses, including certain restructuring and transformation costs, and interest income and expense are not controlled by segment management and therefore are excluded from the measurement of segment profit.
Current wording
The costs below are necessary to reconcile segment profit to income before income taxes. Corporate and other expenses, including certain acquisition-related costs, restructuring and transformation costs and interest income and expense are not controlled by segment management and therefore are excluded from the measurement of segment profit.
Previous wording
Corporate and other expenses increased $16.9 million, primarily due to increases in incentive compensation expense and restructuring and transformation charges compared to the prior period.
Current wording
Corporate and other expenses increased $28.7 million, primarily due to acquisition-related costs during the three months ended March 2025 and increases in incentive compensation expense and restructuring and transformation charges compared to the prior period.
Previous wording
Interest expense increased $0.7 million, primarily due to the maturity of the 2019 Swap Agreements in April 2024, partially offset by the effect of lower average debt outstanding during the three months ended September 2024 compared to the three months ended September 2023. In addition, the three months ended September 2023 included interest attributable to the out-of-period duty expense recorded in 2023.
Current wording
Interest expense increased $0.5 million during the three months ended March 2025 compared to the three months ended March 2024, driven by higher effective interest rates due to lower notional amounts of swap agreements, partially offset by the effect of lower average borrowing rates and lower debt outstanding.
Previous wording
The Company's ability to fund our operating needs is dependent upon our ability to generate positive long-term cash flow from operations and maintain our debt financing on acceptable terms. The Company has historically generated strong positive cash flows from operations and continues to take proactive measures to manage working capital. During the nine months ended September 2024, the Company repaid a total of $40.0 million of the principal outstanding on Term Loan A, including $25.0 million of voluntary early repayments which reduced future required quarterly repayments. We believe cash flows from operations will support our short-term liquidity needs as well as any future liquidity and capital requirements, in combination with available cash balances and borrowing capacity from our revolving credit facility.
Current wording
The Company's ability to fund our operating needs is dependent upon our ability to generate positive long-term cash flows from operations and maintain our debt financing on acceptable terms. The Company has historically generated strong positive cash flows from operations and continues to take proactive measures to manage working capital. We believe cash flows from operations will support our short-term liquidity needs as well as any future liquidity and capital requirements, in combination with available cash balances and borrowing capacity from our revolving credit facility.
Previous wording
At September 2024, the Company had $20.0 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either the Company or the banks. There were no outstanding balances under these arrangements at September 2024.
Current wording
At March 2025, the Company had $19.3 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either the Company or the banks. There were no outstanding balances under these arrangements at March 2025.
Previous wording
The Company is party to a senior secured Credit Agreement, as amended and restated on November 18, 2021 (the “Credit Agreement”), which provides for (i) a five-year $400.0 million term loan A facility (“Term Loan A”) and (ii) a five-year $500.0 million revolving credit facility (the “Revolving Credit Facility”), collectively referred to as “Credit Facilities,” with the lenders and agents party thereto. Term Loan A requires quarterly repayments of $5.0 million through September 2026, and the remaining principal of $335.0 million is due at maturity in November 2026. Additionally, the Company has outstanding $400.0 million of unsecured 4.125% senior notes due 2029. The Company has "floating to fixed" interest rate swap agreements to mitigate exposure to volatility in reference rates on the Company's future interest payments. Refer to Note 11 in the Company's 2023 Annual Report on Form 10-K and Note 7 to the Company's financial statements in this Form 10-Q for additional information regarding the Company’s debt obligations, and refer to Note 9 to the Company's financial statements in this Form 10-Q for additional information regarding the Company's interest rate swap agreements.
Current wording
At March 2025, the Company was party to a senior secured Credit Agreement, as amended and restated on November 18, 2021 (the “Credit Agreement”), which provided for (i) a five-year $400.0 million term loan A facility (“Term Loan A”) and (ii) a five-year $500.0 million revolving credit facility (the “Revolving Credit Facility”), collectively referred to as “Credit Facilities,” with the lenders and agents party thereto.
Previous wording
The Revolving Credit Facility may be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and has a maximum borrowing capacity of $500.0 million with a $75.0 million letter of credit sublimit. There were no outstanding borrowings under the Revolving Credit Facility as of September 2024.
Current wording
The Revolving Credit Facility could be used to borrow funds in both U.S. dollar and certain non-U.S. dollar currencies, and had a maximum borrowing capacity of $500.0 million with a $75.0 million letter of credit sublimit. There were no outstanding borrowings under the Revolving Credit Facility as of March 2025.
Previous wording
As of September 2024, the Company was in compliance with all applicable covenants under the Credit Agreement and expects to maintain compliance with the applicable covenants for at least one year from the issuance of these financial statements. If economic conditions significantly deteriorate for a prolonged period, this could impact the Company’s operating results and cash flows and thus our ability to maintain compliance with the applicable covenants. As a result, the Company could be required to seek new amendments to the Credit Agreement or secure other sources of liquidity, such as refinancing of existing borrowings, the issuance of debt or equity securities, or sales of assets. However, there can be no assurance that the Company would be able to obtain such additional financing on commercially reasonable terms or at all.
Current wording
As of March 2025, the Company was in compliance with all applicable covenants under the Credit Agreement and expects to maintain compliance with the applicable 2025 Credit Agreement covenants for at least one year from the issuance of these financial statements. If economic conditions significantly deteriorate for a prolonged period, or the Company experiences long-term challenges integrating and operating the Helly Hansen Acquisition, or meeting the resulting incremental debt service requirements, this could impact the Company’s operating results and cash flows and thus our ability to maintain compliance with the applicable covenants. As a result, the Company could be required to seek new amendments to the Credit Agreement or secure other sources of liquidity, such as refinancing of existing borrowings, the issuance of debt or equity securities, or sales of assets. However, there can be no assurance that the Company would be able to obtain such additional financing on commercially reasonable terms or at all.
Previous wording
During the nine months ended September 2024, the Company repurchased 1.2 million shares of Common Stock for $85.0 million, including commissions, under its $300.0 million share repurchase program authorized by the Company's Board of Directors. All shares reacquired in connection with the repurchase program are treated as authorized and unissued shares upon repurchase. As of September 2024, $215.0 million remained available for repurchase under the program.
Current wording
During the three months ended March 2025, the Company did not repurchase any shares of Common Stock under its share repurchase program authorized by the Company's Board of Directors. Of the $300.0 million authorized for repurchase under the share repurchase program, $215.0 million remained available for repurchase as of March 2025.
Previous wording
During the nine months ended September 2024, the Company paid $83.3 million of dividends to its shareholders. On October 24, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.52 per share of the Company's Common Stock. The cash dividend will be payable on December 19, 2024, to shareholders of record at the close of business on December 9, 2024.
Current wording
During the three months ended March 2025, the Company paid $28.8 million of dividends to its shareholders. On April 16, 2025, the Board of Directors declared a regular quarterly cash dividend of $0.52 per share of the Company's Common Stock. The cash dividend will be payable on June 20, 2025, to shareholders of record at the close of business on June 10, 2025.
Previous wording
We anticipate that we will have sufficient cash flows from operations, along with existing borrowing capacity, to support continued investments in our brands, infrastructure, talent and capabilities, dividend payments to shareholders, repayment of our debt obligations when due and repurchases of Common Stock. In addition, we would use current liquidity as well as access to capital markets to fund any strategic acquisition opportunities that may arise.
Current wording
We anticipate that we will have sufficient cash flows from operations, along with existing borrowing capacity, to support continued investments in our brands, infrastructure, talent and capabilities, dividend payments to shareholders, repayment of our debt obligations when due and repurchases of Common Stock. In addition, we would use current liquidity as well as access to capital markets to fund any additional strategic acquisition opportunities that may arise.
Previous wording
We currently expect capital expenditures to be approximately $25.0 million in 2024, primarily to support manufacturing, distribution, facility improvement, information technology and owned retail store investments.
Current wording
We currently expect capital expenditures to be approximately $30.0 million in 2025, primarily to support manufacturing, distribution, facility improvement, information technology and owned retail store investments.
Previous wording
During the nine months ended September 2024, cash provided by operating activities was $286.3 million as compared to $147.5 million in the prior year period. The increase was primarily due to higher net income as well as favorable changes in working capital, which included accounts payable, inventory, accrued and other current liabilities and income taxes.
Current wording
During the three months ended March 2025, cash provided by operating activities was $77.6 million as compared to $56.5 million in the prior year period. The increase was primarily due to favorable changes in accounts receivable and accounts payable, partially offset by unfavorable changes in inventories, net income and accrued and other current liabilities.
Previous wording
During the nine months ended September 2024, cash used by investing activities was $16.5 million as compared to $31.3 million in the prior year period, primarily due to decreases in expenditures of property, plant and equipment and capitalized computer software in the current year period.
Current wording
During the three months ended March 2025, cash used by investing activities was $4.8 million as compared to $6.4 million in the prior year period, primarily due to decreases in property, plant and equipment expenditures in the current year period.
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Current report — wording carried from elsewhere
•Direct-to-Consumer revenues increased 5% compared to the three months ended March 2024, and represented 12% of total revenues in the current period.
Current report — wording carried from elsewhere
•Cash provided by operating activities was $77.6 million as compared to $56.5 million in the same period last year.
Current report — wording carried from elsewhere
Additionally, the Company has outstanding $400.0 million of unsecured 4.125% senior notes due 2029.
Current report — wording carried from elsewhere
Refer to Note 10 to the Company's financial statements in this Form 10-Q for additional information related to the Company's "floating to fixed" interest rate swap agreements. Refer to Note 11 in the Company's 2024 Annual Report on Form 10-K and Note 8 to the Company's financial statements in this Form 10-Q for additional information regarding the Company’s debt obligations.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Additional details on changes in net revenues for the nine months ended September 2024 as compared to September 2023 are provided in the section titled “Information by Business Segment.”
Previous report — wording carried elsewhere
Global revenues for the Lee® brand decreased 6%, due to declines in all regions and channels.
Previous report — wording carried elsewhere
Corporate and other expenses increased $6.2 million, primarily due to an increase in restructuring and transformation charges compared to the prior period.