Kontoor Brands, Inc.
For the period ended Jun 28, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
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.
Jun 28, 2025 · Filed Aug 7, 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 2025-03-29; filed 2025-05-06.
0001760965-25-000047
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-28; filed 2025-08-07.
0001760965-25-000080
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 118 previous paragraphs and 145 current paragraphs.
46 unchanged; 48 reworded; 44 added; 23 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 10 previous and 11 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 (44)
Current report
Acquisition of Helly Hansen
Current report
On May 31, 2025, we completed the acquisition of Helly Hansen, and the results of operations have been included in the Company's consolidated financial statements since that date. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional information related to the acquisition of Helly Hansen.
Current report
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. Through our three global brands, we are focused on accelerating growth, increasing capital allocation optionality and establishing the Company as the employer of choice in the industry. Additionally, the integration of the recently completed acquisition of Helly Hansen is a strategic focus for the Company, with an emphasis on operating margin growth.
Current report
On February 18, 2025, the Company entered into a definitive agreement to acquire all of the issued and outstanding share capital of CTC Triangle B.V., a Netherlands private limited liability company, which is the parent of a group of companies that operates the Helly Hansen®and Musto® brands, collectively referred to as "Helly Hansen." During the first and second quarters of 2025, the Company entered into foreign currency exchange contracts totaling $1.3 billion Canadian dollars ("CAD") to hedge the purchase price of the acquisition.
Current report
The acquisition of Helly Hansen (the "Acquisition") was completed on May 31, 2025, with cash consideration paid of $1.3 billion CAD (approximately $960.0 million U.S. dollars), subject to adjustments for finalization of working capital and other closing adjustments. The purchase price was funded by indebtedness and cash on hand.
Current report
•The Helly Hansen acquisition was completed on May 31, 2025, and the results of operations have been included since that date. Helly Hansen operating results were driven by seasonality of the business and the impact of purchase accounting adjustments.
Current report
•Net revenues increased 8% to$658.3 million compared to the three months ended June 2024, and included $29.2 million attributable to Helly Hansen.
Current report
•U.S. Wholesale revenues increased 6% compared to the three months ended June 2024, and represented 73% of total revenues in the current period. Helly Hansen U.S. Wholesale revenues were $2.9 million.
Current report
•International Wholesale revenues increased 14% compared to the three months ended June 2024, and represented 14% of total revenues in the current period. Helly Hansen International Wholesale revenues were $17.9 million.
Current report
•Direct-to-Consumer revenues increased 20% compared to the three months ended June 2024, and represented 13% of total revenues in the current period. Helly Hansen Direct-to-Consumer revenues were $8.4 million.
Current report
•Gross margin increased 160 basis points to 46.3% compared to the three months ended June 2024, and included 20 basis points of favorability attributable to Helly Hansen.
Current report
•Operating income increased 4% to $78.5 million compared to the three months ended June 2024, and included a $5.3 million operating loss attributable to Helly Hansen.
Current report
•Net income increased 43% to $73.9 million compared to the three months ended June 2024, and included $33.0 million of gains related to the purchase price hedges for the Acquisition and a $6.9 million net loss attributable to Helly Hansen.
Current report
Net revenues increased 8%, including a 4% increase attributable to Helly Hansen. The increase in net revenues was driven by a 6% increase in U.S. Wholesale revenues due to category growth and a timing shift in revenue, partially offset by a decrease in our digital wholesale business. Global Direct-to-Consumer revenues increased 20% attributable to Helly Hansen and higher e-commerce and retail store sales for the Wrangler® and Lee®brands. International Wholesale revenues increased 14%, primarily attributable to Helly Hansen.
Current report
Gross margin increased 160 basis points, primarily related to 90 basis points of favorability due to the benefits of Project Jeanius and lower product costs, 30 basis points of favorability from a decrease in restructuring and transformation charges and 20 basis points of favorability attributable to Helly Hansen.
Current report
Selling, general and administrative expenses increased $30.2 million, from 32.3% to 34.4% of net revenues, driven by $20.4 million of Helly Hansen operating expenses, $14.0 million of acquisition and integration-related costs and a $5.2 million increase in restructuring and transformation charges, partially offset by declines in discretionary spending and benefits of Project Jeanius.
Current report
Net revenues increased 3%, including a 2% increase attributable to Helly Hansen. The increase in net revenues was driven by a 3% increase in U.S. Wholesale revenues due to category growth and an increase in our digital wholesale business. Global Direct-to-Consumer revenues increased 12%, attributable to Helly Hansen and higher e-commerce and retail store sales. International Wholesale revenues increased 1%, primarily attributable to Helly Hansen revenues, partially offset by lower sales in Mexico.
Current report
Other income (expense), net reflected a favorable change of $24.7 million, driven by $24.1 million of gains related to foreign currency exchange contracts to hedge the purchase price of the Acquisition.
Current report
The One Big Beautiful Bill Act (“OBBBA”) was signed into law by President Trump on July 4, 2025. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework including changes to global intangible low-tax income (“GILTI”), foreign derived intangible income (“FDII”) and the base erosion and anti-abuse tax (“BEAT”). The legislation also includes the restoration of favorable tax treatment for certain business provisions such as bonus depreciation and Section 174 expensing. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently evaluating the impact of the OBBBA on our consolidated financial statements.
Current report
Segment Profit (Loss):
Current report
Kontoor Brands, Inc. Q2 FY25 Form 10-Q 30
Current report
Global revenues for the Wrangler® brand increased 7%, due to growth in the U.S. Wholesale and Direct-to-Consumer channels, partially offset by a decline in the International Wholesale channel.
Current report
•Revenues in the EMEA region increased 6%, driven by a 6% favorable impact from foreign currency, growth in our wholesale business and higher retail store sales.
Current report
•Revenues in the APAC region decreased slightly.
Current report
Global revenues for the Wrangler® brand increased 5%, due to growth in the U.S. Wholesale and Direct-to-Consumer channels, partially offset by a decline in the International Wholesale channel.
Current report
•Revenues in the EMEA region increased 2%, due to growth in our wholesale business.
Current report
•Revenues in the APAC region decreased slightly.
Current report
31 Kontoor Brands, Inc. Q2 FY25 Form 10-Q
Current report
•Revenues in the Americas region decreased 6%, driven by a decline in the U.S. Wholesale channel, partially offset by growth in our U.S. direct-to-consumer business. The decrease in the U.S. Wholesale channel was driven by a decrease in shipments. Growth in our U.S. direct-to-consumer business was due to higher e-commerce sales.
Current report
•Revenues in the EMEA region decreased 6%, attributable to a decline in our wholesale business, partially offset by growth in retail store sales.
Current report
Operating margin remained flat at 12.3%. Lower distribution and product costs and benefits from Project Jeanius were offset by deleverage of fixed expenses on lower revenues and unfavorable product and channel mix.
Current report
Helly Hansen
Current report
*Calculation not meaningful.
Current report
The Acquisition was completed on May 31, 2025, so there is no comparative prior period and results for the three and six months ended June 2025 include one month of operations.
Current report
Kontoor Brands, Inc. Q2 FY25 Form 10-Q 32
Current report
*Calculation not meaningful.
Current report
Interest expense increased $3.1 million during the three months ended June 2025 compared to the three months ended June 2024, primarily due to higher debt outstanding to fund the Acquisition.
Current report
Corporate and other expenses increased $6.7 million, primarily due to acquisition and integration-related costs during the six months ended June 2025 and increases in restructuring and transformation charges compared to the prior period, partially offset by gains related to the purchase price hedges for the Acquisition.
Current report
33 Kontoor Brands, Inc. Q2 FY25 Form 10-Q
Current report
Kontoor Brands, Inc. Q2 FY25 Form 10-Q 34
Showing the first 40 of 44 passages. Open the source sections for the rest.
Removed paragraphs (23)
Previous report
Kontoor Brands, Inc. Q1 FY25 Form 10-Q 22
Previous report
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 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.
Previous report
•Net revenues decreased 1% to$622.9 million compared to the three months ended March 2024.
Previous report
•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 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.
Previous report
•Direct-to-Consumer revenues increased 5% compared to the three months ended March 2024, and represented 12% of total revenues in the current period.
Previous report
•Gross margin increased 230 basis points to 47.5% compared to the three months ended March 2024.
Previous report
•Operating income decreased 13% to $73.3 million compared to the three months ended March 2024.
Previous report
•Net income decreased 28% to $42.9 million compared to the three months ended March 2024.
Previous report
23 Kontoor Brands, Inc. Q1 FY25 Form 10-Q
Previous report
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 report
Kontoor Brands, Inc. Q1 FY25 Form 10-Q 24
Previous report
Segment Profit:
Previous report
Global revenues for the Wrangler® brand increased 3%, due to growth in all channels.
Previous report
•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 report
•Revenues in the APAC region increased slightly.
Previous report
25 Kontoor Brands, Inc. Q1 FY25 Form 10-Q
Previous report
Refinancing of Credit Facilities Subsequent to Quarter-End
Previous 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.
Previous report
As discussed above, the Company refinanced its Credit Facility on April 8, 2025, in anticipation of the Helly Hansen Acquisition.
Previous report
During the three months ended March 2025, cash used by financing activities was $37.9 million as compared to $54.6 million in the prior year period. The decrease was primarily due to $20.0 million of Common Stock repurchases made by the Company during the three months ended March 2024 compared to no Common Stock repurchases during the three months ended March 2025.
Previous report
•Definitive agreement related to the Helly Hansen Acquisition for $1.276 billion CAD or approximately $900 million as of the agreement date.
Reworded paragraphs (48)
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 stores, specialty stores, company-operated stores, concession retail stores, 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®, Lee® and Helly Hansen®. The Company's products are sold in the U.S. through mass merchants, outdoor and sporting goods stores, 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, outdoor and sporting goods 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 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.
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 second 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 June 2025, December 2024 and June 2024 correspond to the fiscal periods ended June 28, 2025, December 28, 2024, and June 29, 2024, respectively.
Previous 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.
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, the Norwegian krone, the Canadian dollar 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 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.
Current wording
Global macroeconomic conditions that continued to impact the Company during the second quarter of 2025 included ongoing elevated interest rates, moderating inflation, fluctuating foreign currency exchange rates, global supply chain issues and inconsistent consumer demand.
Previous wording
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 wording
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. The ongoing uncertainty of tariff rates, potential retaliatory measures and outcomes of trade negotiations is contributing to macroeconomic volatility. These factors continued to contribute to uncertain global economic conditions and consumer spending patterns, which impacted retailers' and the Company's operations (which now include additional jurisdictions through the Helly Hansen acquisition).
Previous wording
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 wording
Inflationary pressures have continued to moderate in recent quarters, and although these pressures continue to impact us, current period results reflect continued favorability from lower product costs compared to the second quarter of 2024. Retailers continued to conservatively manage inventory levels as a result of this uncertain macroeconomic environment, which impacted our results during the second quarter of 2025. The Company has responded to ongoing macroeconomic conditions by controlling expenses and proactively managing our global supply chain.
Previous 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.
Current wording
Kontoor Brands, Inc. Q2 FY25 Form 10-Q 26 adjustments, supplier partnership initiatives and other proactive mitigating actions. While we anticipate continued uncertainty related to the macroeconomic environment during 2025, including the potential impacts of further 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
In addition, our capital allocation strategy allows us the option to (i) invest in our business, (ii) pay down debt, (iii) provide for a superior dividend payout, (iv) effectively manage our share repurchase authorization and (v) act on strategic acquisition opportunities that may arise.
Current wording
Our capital allocation strategy allows us the option to (i) invest in our business, (ii) pay down debt, (iii) provide for a superior dividend payout, (iv) repurchase shares under our existing authorization and (v) act on strategic acquisition opportunities that may arise.
Previous wording
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 wording
During the second quarter of 2025, the Company incurred acquisition and integration-related costs of $14.0 million comprised of professional and other fees, offset by a gain of $33.0 million related to the foreign currency exchange contracts to hedge the purchase price of the Acquisition. We expect to incur additional acquisition and integration-related costs associated with the Acquisition in future periods.
Previous 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.
Current wording
During the second quarter of 2025, the Company incurred restructuring and transformation charges of $7.4 million, of which $3.3 million relates to costs associated with restructuring activities as disclosed in Note 16 to the Company's financial statements in this Form 10-Q. Restructuring and transformation charges included $6.9 million related to business optimization activities associated with the continued execution of Project Jeanius and $0.5 million related to streamlining and transferring select production within our internal manufacturing network. Project Jeanius is a comprehensive end-to-end business transformation focused on simplifying processes, optimizing systems and enhancing our global operating model with the goal of creating significant investment capacity through gross and operating margin expansion. We anticipate continued transformation costs associated with Project Jeanius as we execute on this multi-year initiative.
Previous wording
FIRST QUARTER OF FISCAL 2025 SUMMARY
Current wording
SECOND QUARTER OF FISCAL 2025 SUMMARY
Previous 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.
Current wording
•Selling, general and administrative expenses as a percentage of net revenues increased to 34.4% compared to 32.3% for the three months ended June 2024, and included $20.5 million of acquisition and integration-related, restructuring and transformation charges and $20.4 million of operating expenses attributable to Helly Hansen.
Previous wording
•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 wording
•Other income, netwas $29.8 million in the second quarter, compared to other expense, net of $3.0 million in the same period last year, and included $33.0 million of gains related to the purchase price hedges for the Acquisition.
Previous wording
•Diluted earnings per share was $0.76 in the first quarter, compared to $1.05 in the same period last year.
Current wording
•Diluted earnings per share was $1.32 in the second quarter, compared to $0.92 in the same period last year, and included a $0.12 diluted loss per share attributable to Helly Hansen.
Previous wording
•Cash provided by operating activities was $77.6 million as compared to $56.5 million in the same period last year.
Current wording
•Cash provided by operating activities was $103.3 million as compared to $152.7 million in the same period last year.
Previous 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:
Current wording
Additionally, the following table presents a summary of the changes in net revenues for the three and six months ended June 2025 as compared to June 2024:
Previous wording
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 wording
Other income (expense), net reflected a favorable change of $32.8 million, driven by $33.0 million of gains related to foreign currency exchange contracts to hedge the purchase price of the Acquisition.
Previous 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.
Current wording
Gross margin increased 200 basis points, primarily related to 100 basis points from lower product costs and favorable product and channel mix, 60 basis points of favorability due to the benefits of Project Jeanius, 30 basis points of favorability from a decrease in restructuring and transformation charges and 10 basis points of favorability attributable to Helly Hansen. These benefits were partially offset by a 20 basis point impact from pricing reductions.
Previous 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.
Current wording
Selling, general and administrative expenses increased $51.8 million, from 32.1% to 35.0% of net revenues, driven by $24.4 million of acquisition and integration-related costs, $20.4 million of Helly Hansen operating expenses, an $11.3 million increase in restructuring and transformation charges, a $6.3 million increase in incentive compensation expense and a $3.1 million increase in demand creation investments, partially offset by declines in discretionary spending and benefits of Project Jeanius.
Previous 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.
Current wording
The effective income tax rate for the six months ended June 2025 was 24.2% compared to 20.0% in the 2024 period. The six months ended June 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 0.7%. The six months ended June 2024 included a net discrete tax benefit primarily related to stock-based compensation which decreased the effective income tax rate by 1.2%. The effective tax rate without discrete items for the six months ended June 2025 was 23.5% compared to 21.2% in the 2024 period. The increase was primarily due to changes in our jurisdictional mix of earnings and estimated non-deductible transaction costs incurred in conjunction with the Acquisition.
Previous wording
The Company's two reportable segments are Wrangler® and Lee®. Refer to Note 4 to the Company's financial statements in this Form 10-Q for additional information.
Current wording
The Company's three reportable segments are Wrangler®, Lee®and Helly Hansen®. Refer to Note 4 to the Company's financial statements in this Form 10-Q for additional information.
Previous 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:
Current wording
The following tables present a summary of the changes in segment revenues and segment profit for the three and six months ended June 2025 as compared to the three and six months ended June 2024:
Previous 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.
Current wording
•Revenues in the Americas region increased 8%, primarily due to growth in the U.S. Wholesale channel and our U.S. direct-to-consumer business. Growth in U.S. Wholesale was driven by category growth and a timing shift in revenue, partially offset by a decrease in our digital wholesale business. Growth in our U.S. direct-to-consumer business was primarily driven by higher e-commerce sales.
Previous 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.
Current wording
Operating margin increased to 22.1%, compared to 19.4% for the 2024 period, primarily attributable to 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 information technology and pricing actions.
Previous 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.
Current wording
Global revenues for the Lee® brand decreased 6%, due to declines in the U.S. Wholesale and International Wholesale channels, partially offset by growth in the Direct-to-Consumer channel.
Previous wording
•Revenues in the EMEA region decreased 7%, attributable to a decline in our wholesale business and a 2% unfavorable impact from foreign currency.
Current wording
•Revenues in the EMEA region decreased 3%, attributable to a decline in our wholesale business, partially offset by a 5% favorable impact from foreign currency and growth in retail store sales.
Previous 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.
Current wording
Operating margin decreased to 7.5%, compared to 7.6% for the 2024 period, primarily attributable to deleverage of fixed expenses on lower revenues and unfavorable channel and product mix, partially offset by lower distribution costs and benefits from Project Jeanius.
Previous 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.
Current wording
•Revenues in the Americas region decreased 8%, driven by a decline in the U.S. Wholesale channel and lower sales in Mexico, partially offset by growth in our U.S. direct-to-consumer business. The decrease in the U.S. Wholesale channel was due to lower wholesale shipments. Growth in our U.S. direct-to-consumer business was due to higher e-commerce sales.
Previous 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.
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. Other includes sales and licensing of the Musto®, Chic® and Rock & Republic® brands, as well as other company-owned brands and private label apparel, and the associated costs. The businesses within the Other category, either individually or in the aggregate, do not meet the criteria to be considered reportable segments.
Previous 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.
Current wording
The costs below are necessary to reconcile segment profit to income before income taxes. Corporate and other expenses, including certain acquisition and integration-related costs and restructuring and transformation costs, as well as interest expense and interest income, are not controlled by segment management and therefore are excluded from the measurement of segment profit.
Previous 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.
Current wording
Corporate and other expenses decreased $22.0 million, primarily due to gains related to the purchase price hedges for the Acquisition, partially offset by acquisition and integration-related costs during the three months ended June 2025 and increases in restructuring and transformation charges compared to the prior period.
Previous 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.
Current wording
Interest expense increased $3.6 million during the six months ended June 2025 compared to the six months ended June 2024, driven by higher effective interest rates due to lower notional amounts of swap agreements and higher debt outstanding to fund the Acquisition.
Previous 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.
Current wording
At June 2025, the Company had availability of $19.5 million under its previously existing international line of credit which is uncommitted and may be terminated at any time by either the Company or the financial institution. In addition, the Company had $17.4 million available at June 2025 under a committed international line of credit as a result of the Acquisition. There were no outstanding balances under these arrangements at June 2025.
Previous 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.
Current wording
The Company was previously party to an amended and restated senior secured Credit Agreement dated November 18, 2021 (the "2021 Credit Agreement") to provide for (i) a five-year $400.0 million term loan A facility ("2021 Term Loan A”) and (ii) a five-year $500.0 million revolving credit facility with the lenders and agents party thereto.
Previous wording
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 wording
On April 8, 2025, the Company completed a refinancing pursuant to which it amended and restated the 2021 Credit Agreement to provide for (i) a five-year $700.0 million term loan facility ("Term Loan A-1") consisting of a $340.0 million initial term loan ("Initial Term Loan") and a $360.0 million delayed draw term loan ("Delayed Draw Term Loan"), (ii) a three-year $300.0 million delayed draw term loan facility ("Term Loan A-2") and (iii) a five-year $500.0 million revolving credit facility (the "Revolving Credit Facility"), collectively referred to as the "Credit Facilities," with the lenders and agents party thereto. Upon closing of the Credit Agreement (the "2025 Credit Agreement"), the net proceeds from the Initial Term Loan were used to repay all of the $340.0 million principal amount outstanding under the 2021 Term Loan A. On May 30, 2025, the Delayed Draw Term Loan and Term Loan A-2 were fully drawn and used to fund the Acquisition, along with approximately $300 million of cash on hand.
Previous wording
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 wording
Term Loan A-1 is scheduled to be repaid in quarterly installments of $4.4 million beginning in September 2026 which increases to quarterly installments of $8.8 million beginning in September 2027, with the remaining principal due at maturity. Term Loan A-2 is scheduled to be repaid in full at maturity. During the three months ended June 2025, the Company made a $25.0 million voluntary early repayment of the principal outstanding on Term Loan A-2.
Previous 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.
Current wording
As of June 2025, the Company was in compliance with all applicable covenants under the 2025 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, or the Company experiences long-term challenges integrating and operating Helly Hansen, 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 2025 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
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.
Current 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 June 2025.
Previous wording
(1)Available borrowing capacity under the Revolving Credit Facility is net of $6.5 million of outstanding standby letters of credit issued on behalf of the Company under this facility.
Current wording
(1)Available borrowing capacity under the Revolving Credit Facility is net of $6.3 million of outstanding standby letters of credit issued on behalf of the Company under this facility.
Previous wording
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.
Current wording
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.
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Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
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, managing our internal manufacturing operations, pricing
Current report — wording carried from elsewhere
Additional details on changes in net revenues for the six months ended June 2025 as compared to June 2024 are provided in the section titled “Information by Business Segment.”
Current report — wording carried from elsewhere
Operating margin increased to 23.4%, compared to 20.6% for the 2024 period, driven by lower product costs, favorable channel and product mix, benefits from Project Jeanius and a decrease in restructuring and transformation charges, partially offset by higher investments in information technology and our direct-to-consumer business.
Current report — wording carried from elsewhere
•Revenues in the Americas region increased 5%, primarily due to growth in the U.S. Wholesale channel and our U.S. direct-to-consumer business. Growth in wholesale was driven by category growth and an increase in our U.S. digital wholesale business. Growth in our U.S. direct-to-consumer business was primarily driven by higher e-commerce sales.
Current report — wording carried from elsewhere
•Revenues in the APAC region decreased 6%, due to a decrease in wholesale revenues in China.
Current report — wording carried from elsewhere
Global revenues for the Lee® brand decreased 7%, due to declines in the U.S. Wholesale and International Wholesale channels, partially offset by growth in the Direct-to-Consumer channel.
Current report — wording carried from elsewhere
Kontoor Brands, Inc. Q2 FY25 Form 10-Q 36 performance; ability to properly collect, use, manage and secure consumer and employee data; legal, regulatory, political and economic risks; the impact of climate change and related legislative and regulatory responses; stakeholder response to sustainability issues, including those related to climate change; compliance with anti-bribery, anti-corruption and anti-money laundering laws by the Company and third-party suppliers and manufacturers; changes in tax laws and liabilities; the costs of compliance with or the violation of national, state and local laws and regulations for environmental, consumer protection, employment, privacy, safety and other matters; continuity of members of management; labor relations; the ability to protect trademarks and other intellectual property rights; the ability of the Company's licensees to generate expected sales and maintain the value of the Company's brands; volatility in the price and trading volume of the Company's common stock; anti-takeover provisions in the Company's organizational documents; and fluctuations in the amount and frequency of our share repurchases. Many of the foregoing risks and uncertainties will be exacerbated by any worsening of the global business and economic environment.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Kontoor Brands, Inc. Q1 FY25 Form 10-Q 26