Kontoor Brands, Inc.

Previous wording

Kontoor Brands, Inc. (collectively with its subsidiaries, "Kontoor," the "Company," "we," "us" or "our") is a global lifestyle apparel company, with a portfolio led by three of the world's most iconic consumer brands: Wrangler®, Lee® and Helly Hansen®. The Company designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under our brand names. Our products are sold in the United States ("U.S.") and internationally, primarily in the Europe, Middle East and Africa ("EMEA"), Asia-Pacific (“APAC”) and Non-U.S. Americas regions. We also license the use of our brands in certain regions.

Current wording

Kontoor Brands, Inc. (collectively with its subsidiaries, "Kontoor," the "Company," "we," "us" or "our") is a global apparel company, with deep authority in the denim, outdoor and workwear categories. Wrangler®and Helly Hansen®are iconic brands that empower consumers to pursue their passions with confidence and authenticity through innovative design, exceptional products and compelling performance. The Company designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under our brand names. Our products are sold in the United States ("U.S.") and internationally, primarily in the Europe, Middle East and Africa ("EMEA"), Asia-Pacific (“APAC”) and Non-U.S. Americas regions. We also license the use of our brands in certain regions.

Previous wording

Planned Divestiture of the Lee® Business

Current wording

Divestiture of the Lee® Business

Previous wording

On May 31, 2025, we completed the acquisition of Helly Hansen (the "Acquisition"), and the results of operations have been included in the Company's financial statements since that date. The three-month period ended June 2026 includes the operating results of the Acquisition for the entire quarter compared to one month of operating results included in the three-month period ended June 2025. The six-month period ended June 2026 includes the operating results of the Acquisition for the entire six months compared to one month of operating results included in the six-month period ended June 2025. Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

Current wording

On May 31, 2025, we completed the acquisition of Helly Hansen (the "Acquisition"), and the results of operations have been included in the Company's financial statements since that date. The three-month periods ended September 2026 and September 2025 include the operating results of the Acquisition for the entire quarter. The nine-month period ended September 2026 includes the operating results of the Acquisition for the entire nine months compared to four months of operating results included in the nine-month period ended September 2025. Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

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 second quarter of the Company's fiscal year ending January 2, 2027 ("fiscal 2026"), which is a 52-week fiscal year. For presentation purposes herein, all references to periods ended June 2026, December 2025 and June 2025 correspond to the fiscal periods ended July 4, 2026, January 3, 2026, and June 28, 2025, 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 third quarter of the Company's fiscal year ending January 2, 2027 ("fiscal 2026"), which is a 52-week fiscal year. For presentation purposes herein, all references to periods ended September 2026, December 2025 and September 2025 correspond to the fiscal periods ended October 3, 2026, January 3, 2026, and September 27, 2025, respectively.

Previous wording

References to fiscal 2026 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 the Norwegian krone, the euro, the Chinese yuan and the Mexican peso.

Current wording

References to fiscal 2026 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

Previous wording

Global macroeconomic conditions that continued to impact the Company during the second quarter of 2026 included geopolitical impacts, global supply chain issues, inconsistent consumer demand and ongoing fluctuations in foreign currency exchange rates, interest rates and inflation. Broader macroeconomic impacts also continued to influence consumer demand.

Current wording

Global macroeconomic conditions that continued to impact the Company during the third quarter of 2026 included geopolitical impacts, global supply chain issues, inconsistent consumer demand, ongoing fluctuations in foreign currency exchange rates, increasing interest rates and persistent inflation. Broader macroeconomic impacts also continued to influence consumer demand.

Previous wording

Geopolitical tensions in the Middle East arising from the U.S. - Iran conflict have increased uncertainty in global trade and transportation. Although we do not operate directly in the region of conflict, our supply chain and product availability are impacted by disruptions to commercial shipping routes, higher freight, fuel and energy costs and delays at our suppliers in the production or movement of goods.

Current wording

Continuing geopolitical tensions in the Middle East arising from the U.S. and Iran conflict have increased uncertainty in global trade and transportation. Although we do not operate directly in the region of conflict, our supply chain and product availability are impacted by disruptions to commercial shipping routes, higher freight, fuel and energy costs and delays at our suppliers in the production or movement of goods.

Previous wording

As discussed below, the U.S. government tariff regime remains fluid. The ongoing impact of tariff rate changes and uncertainty regarding the outcomes of trade negotiations is contributing to macroeconomic volatility. Interest rate pressures have moderated in recent quarters and inflationary pressures remained elevated during the second quarter of 2026, primarily due to energy costs and ongoing tariffs. Retailers continued to conservatively manage inventory levels as a result of this uncertain macroeconomic environment.

Current wording

As discussed below, the U.S. government tariff regime remains fluid. The ongoing impact of tariff rate changes and uncertainty regarding the outcomes of trade negotiations is contributing to macroeconomic volatility. Interest rate pressures increasedand inflationary pressures remained elevated during the third quarter of 2026, primarily due to energy costs and ongoing tariffs. Retailers continued to conservatively manage inventory levels as a result of this uncertain macroeconomic environment. Interest rate pressures increasedand inflationary pressures remained elevated during the third quarter of 2026, primarily due to energy costs and ongoing tariffs. Retailers continued to conservatively manage inventory levels as a result of this uncertain macroeconomic environment.

Previous wording

In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs. In April 2026, the CBP released a new system to process IEEPA tariff refunds, allowing importers to submit refund claims. In the first quarter of 2026, we concluded it was probable that we would recover the IEEPA tariffs previously paid and recognized a net receivable under the loss recovery accounting model of $53.7 million, on a consolidated basis. During the first quarter of 2026, we reduced cost of goods sold by approximately $49.0 million, representing the expense for IEEPA tariffs on inventory sold to customers since the tariffs were enacted in the second quarter of 2025, including $29.0 million relating to 2025 tariff payments. During the third quarter of 2026, the Company began to receive refunds and expects to collect all remaining amounts by the end of fiscal 2026. There continues to be uncertainty and legal challenges to current and prior tariff regimes, including a ruling in May 2026 by the CIT that the Section 122 tariffs are also invalid, which is under appeal by the U.S. government, along with an appeal of certain CIT orders related to the refund process for IEEPA tariffs. We continue to monitor U.S. tariff-related developments and ongoing legal proceedings.

Current wording

In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs. In April 2026, the CBP released a new system to process IEEPA tariff refunds, allowing importers to submit refund claims. In the first quarter of 2026, we concluded it was probable that we would recover the IEEPA tariffs previously paid and recognized a net receivable under the loss recovery accounting model of $53.7 million, on a consolidated basis. During the first quarter of 2026, we reduced cost of goods sold by approximately $49.0 million, representing the expense for IEEPA tariffs on inventory sold to customers since the tariffs were enacted in the second quarter of 2025, including$29.0 million relating to 2025 tariff expense. During the third quarter of 2026, the Company collected substantially all of the IEEPA-related tariff refunds due to the Company. There continues to be uncertainty and legal challenges to current and prior tariff regimes, including a ruling in May 2026 by the CIT that the Section 122 tariffs are also invalid, which is under appeal by the U.S. government, along with an appeal of certain CIT orders related to the refund process for IEEPA tariffs. We continue to monitor U.S. tariff-related developments and ongoing legal proceedings.

Previous wording

We are focused on delivering long-term value to our stakeholders, including our consumers, customers, shareholders, suppliers and communities around the world, by accelerating growth, expanding operating margin, increasing capital allocation optionality and establishing the Company as the employer of choice in the industry. Additionally, the integration of Helly Hansen provides focus towards our growth-oriented brands, with an emphasis on geographic and category expansion. The planned sale of the Lee® business further emphasizes our focus on functional and activity-based brands. The Company continues to execute on Project Jeanius, a multi-year 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. 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

We are focused on delivering long-term value to our stakeholders, including our consumers, customers, shareholders, suppliers and communities around the world, by leveraging our multi-brand platform with a focus on our core addressable markets to accelerate growth, managing capital allocation in a disciplined manner, and establishing the Company as the employer of choice in the industry. Additionally, the integration of Helly Hansen provides growth-oriented opportunities, with an emphasis on geographic and category expansion. The sale of the Lee® business further emphasizes our focus on functional and activity-based brands. In addition, our capital allocation discipline 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.

Previous wording

During the second quarter of 2026, the Company incurred integration-related costs of $12.7 million related to Helly Hansen, comprised primarily of professional and other fees, which are reported in "selling, general and administrative expenses". We expect to incur additional costs in future periods primarily related to the information technology integration of Helly Hansen.

Current wording

During the third quarter of 2026, the Company incurred integration-related costs of $23.2 million related to Helly Hansen, comprised primarily of professional and other fees, which are reported in "selling, general and administrative expenses". We expect to incur additional costs in future periods primarily related to the information technology integration of Helly Hansen.

Previous wording

The Company continued to execute on Project Jeanius during the second quarter of 2026. The Company incurred restructuring and transformation charges of $6.6 million, of which $2.3 million relates to costs associated with restructuring activities as disclosed in Note 17 to the Company's financial statements in this Form 10-Q and primarily relates to business optimization activities and professional services as well as costs from the closure of one of our manufacturing facilities. Additionally, during the second quarter of 2026, the Company sold the manufacturing facility for a gain of $15.4 million which is reported in "cost of goods sold". We expect to incur additional costs related to Project Jeanius as we continue to execute on this multi-year initiative.

Current wording

The Company completed its execution of Project Jeanius during the third quarter of 2026. The Company incurred restructuring and transformation charges of $3.8 million, of which $1.8 million relates to costs associated with restructuring activities as disclosed in Note 17 to the Company's financial statements in this Form 10-Q and primarily relates to business optimization activities and professional services as well as costs from the closure of one of our manufacturing facilities. We expect to incur additional costs related to our ongoing transformation in future periods.

Previous wording

SECOND QUARTER OF FISCAL 2026 SUMMARY

Current wording

THIRD QUARTER OF FISCAL 2026 SUMMARY

Previous wording

•Gross margin increased 970 basis points to 56.2% compared to the three months ended June 2025 and includes benefits from product and channel mix, Project Jeanius, Helly Hansen's higher margin business and a 260 basis point benefit from a $15.4 million gain on the sale of a manufacturing facility.

Current wording

•Gross margin increased 830 basis points to 48.3% compared to the three months ended September 2025 and includes benefits from the impact of favorable business mix and pricing, net of changes in product costs, Project Jeanius, Helly Hansen's higher margin business and lower restructuring charges compared to the three months ended September 2025.

Previous wording

•Selling, general and administrative expenses increased to 40.7% as a percentage of net revenues compared to 35.0% for the three months ended June 2025, a $65.5 million increase, primarily attributable to $42.3 million of increased Helly Hansen operating expenses, the incremental costs previously allocated to the Lee® business and the integration-related charges incurred during the period.

Current wording

•Selling, general and administrative expenses increased to 37.1% as a percentage of net revenues compared to 34.4% for the three months ended September 2025, a $25.1 million increase, primarily attributable to higher investments in direct-to-consumer, demand creation and technology, the integration-related charges incurred during the period and the incremental costs previously allocated to the Lee® business, partially offset by the benefits from Project Jeanius.

Previous wording

•Operating income increased 59% to $90.5 million, a $33.6 million increase compared to the three months ended June 2025, primarily attributable to the Acquisition and a $15.4 million gain on the sale of a manufacturing facility, partially offset by the incremental costs previously allocated to the Lee® business.

Current wording

•Operating income increased 106% to $77.1 million, a $39.6 million increase compared to the three months ended September 2025, primarily attributable to the operating earnings growth in both the Wrangler and Helly Hansen businesses and lower restructuring charges, partially offset by the incremental costs previously allocated to the Lee® business.

Previous wording

Kontoor Brands, Inc. Q2 FY26 Form 10-Q 32

Current wording

Kontoor Brands, Inc. Q3 FY26 Form 10-Q 32 transactions to facilitate the integration of the Helly Hansen business.

Previous wording

•Cash provided by operating activities from continuing operations was $39.6 million as compared to $68.8 million in the same period last year.

Current wording

•Cash provided by operating activities from continuing operations was $83.0 million for the nine months ended September 2026, as compared to $109.8 million in the same period last year which was impacted by the incremental costs previously allocated to the Lee® business.

Previous wording

Additionally, the following table presents a summary of the changes in net revenues for the three and six months ended June 2026 as compared to June 2025:

Current wording

Additionally, the following table presents a summary of the changes in net revenues for the three and nine months ended September 2026 as compared to September 2025:

Previous wording

Selling, general and administrative expenses increased $65.5 million, from 35.0% to 40.7% of net revenues, primarily attributable to $42.3 million of increased operating expenses due to the inclusion of Helly Hansen for the entire three-month period ended June 2026, $10.4 million from higher investments in our direct-to-consumer business, demand creation and technology and $4.7 million of incremental costs previously allocated to the Lee® business, which were partially offset by benefits from Project Jeanius and lower restructuring and transformation costs.

Current wording

Selling, general and administrative expenses increased $25.1 million, from 34.4% to 37.1% of net revenues, primarily attributable to$16.4 million from higher investments in direct-to-consumer, demand creation and technology and $4.9 million of incremental costs previously allocated to the Lee® business partially offset by lower restructuring and integration-related costs compared to the prior year and the benefits from Project Jeanius.

Previous wording

Net revenues increased 31%, primarily attributable to the inclusion of Helly Hansen for the entire six-month period ended June 2026 and growth in Wrangler, which was driven by a 12% increase in international wholesale revenues and a 1% increase in U.S wholesale revenues with category growth in Western and female. Wrangler global direct-to-consumer revenues increased 12% driven by higher retail store and e-commerce sales.

Current wording

Net revenues increased 19%, primarily attributable to the inclusion of Helly Hansen®for the entire nine-month period ended September 2026 and growth in Wrangler®. Wrangler® growth was driven bya 9% increase in international wholesale revenues and an 11% increase in direct-to-consumer revenues driven by higher retail store and e-commerce sales. Wrangler® U.S wholesale revenues grew 1%with category growth in Western and female.

Previous wording

Additional details on changes in net revenues for the six months ended June 2026 as compared to June 2025 are provided in the section titled “Information by Business Segment.”

Current wording

Additional details on changes in net revenues for the nine months ended September 2026 as compared to September 2025 are provided in the section titled “Information by Business Segment.”

Previous wording

Selling, general and administrative expenses increased $143.4 million, from 36.4% to 39.8% of net revenues, primarily attributable to $124.4 million of increased operating expenses due to the inclusion of Helly Hansen for the entire six-month period ended June 2026, $16.6 million from higher investments in our direct-to-consumer business, demand creation and technology and $6.8 million of incremental costs previously allocated to the Lee® business, which were partially offset by benefits from Project Jeanius and lower restructuring and transformation costs.

Current wording

Selling, general and administrative expenses increased $168.5 million, from 35.6% to 38.8% of net revenues, primarily attributable to $124.4 million of increased operating expenses due to the inclusion of Helly Hansen for the entire nine-month period ended September 2026, $33.0 million from higher investments in our direct-to-consumer business, demand creation and technology and $11.8 million of incremental costs previously allocated to the Lee® business, which were partially offset by benefits from Project Jeanius.

Previous wording

Other (expense) income, net reflected an unfavorable change of $26.6 million, primarily driven by a $24.1 million gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition during the six months ended June 2025 that did not recur during the six months ended June 2026.

Current wording

Other income (expense), net reflected an unfavorable change of $18.8 million, primarily driven by a $24.1 million gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition during the nine months ended September 2025 that did not recur during the nine months ended September 2026.

Previous wording

The effective income tax rate for the six months ended June 2026 was 24.9%. The six months ended June 2026 included a net discrete tax benefit primarily related to stock-based compensation, partially offset by an increase in tax expense related to the finalization of U.S. federal tax return filings, the net impact of which decreased the effective income tax rate by 0.3%. The six months ended June 2025 included a net discrete tax expense 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 tax rate by 1.3%. The effective tax rate without discrete items for the six months ended June 2026 was 25.2% compared to 23.6% in the 2025 period. The increase was primarily due to changes in our jurisdictional mix of earnings.

Current wording

The effective income tax rate for the nine months ended September 2026 was 65.4% compared to 22.5% in the 2025 period. The nine months ended September 2026 included a net discrete tax expense primarily related to the one-time tax impact arising from an intercompany transfer of certain intellectual property rights. The tax expense was primarily recorded as a deferred tax liability in the period of the transaction and reflects the difference between the book and tax basis of the transferred intellectual property, measured using applicable enacted tax rates. The net impact of discrete tax items increased the effective income tax rate by 45.8% for the nine months ended September 2026. The nine months ended September 2025 included a net discrete tax benefit primarily related to stock-based compensation, one-time benefits related to the release of tax reserves and the remeasurement of deferred tax assets, partially offset by an increase in valuation allowances in a foreign jurisdiction, the net impact of which decreased the effective income tax rate by 0.7%. The effective tax rate without discrete items for the nine months ended September 2026 was 19.6% compared to 23.2% in the 2025 period. The decrease was primarily due to changes in our jurisdictional mix of earnings and an increase in foreign tax credits.

Previous wording

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 continues to evaluate the future provisions of the OBBBA and has not identified any material impacts to its consolidated financial statements.

Current wording

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 continues to evaluate the future provisions of the OBBBA and has not currently identified any material impacts to its consolidated financial statements.

Previous wording

The following tables present a summary of the changes in segment revenues and segment profit for the three and six months ended June 2026 as compared to the three and six months ended June 2025:

Current wording

The following tables present a summary of the changes in segment revenues and segment profit for the three and nine months ended September 2026 as compared to the three and nine months ended September 2025:

Previous wording

Global revenues for the Wrangler® brand increased 3%, due to growth in the U.S. wholesale, international wholesale and direct-to-consumer channels.

Current wording

Global revenues for the Wrangler® brand increased 3%, due to growth in each of the U.S. wholesale, international wholesale and direct-to-consumer channels.

Previous wording

•International revenues increased 10%, primarily due to growth in non-U.S. Americas wholesale revenues due to higher sales in Canada, growth in EMEA's retail store and e-commerce businesses and a 3% favorable impact from foreign currency.

Current wording

•International revenues increased 6%, primarily due to growth in non-U.S. Americas wholesale revenues due to higher sales in Canada along with growth in EMEA's retail store and e-commerce businesses.

Previous wording

Operating margin increased to 29.6%, compared to 23.4% for the 2025 period, due to the benefits of Project Jeanius and favorable channel mix, product mix and pricing, partially offset by other operating cost increases driven by higher investments in demand creation and our direct-to-consumer business.

Current wording

Operating margin increased to 25.3%, compared to 24.7% for the 2025 period, due to the benefits of Project Jeanius and favorable business mix and pricing, net of changes in product costs, partially offset by other operating cost increases driven by higher investments in demand creation, technology and our direct-to-consumer businesses.

Previous wording

Global revenues for the Wrangler® brand increased 2%, due to growth in the international wholesale and direct-to-consumer channels.

Current wording

Global revenues for the Wrangler® brand increased 3%, due to growth in each of the U.S. wholesale, international wholesale and direct-to-consumer channels.

Previous wording

•U.S. revenues increased 1%, primarily due to growth in the U.S. direct-to-consumer and U.S. wholesale businesses. Growth in our U.S. direct-to-consumer business was driven by higher e-commerce and retail store sales. Growth in wholesale was driven by category growth in Western and female products.

Current wording

•U.S. revenues increased 2%, primarily due to growth in the direct-to-consumer and wholesale businesses. Growth in our direct-to-consumer business was driven by both higher e-commerce and retail store sales. Growth in wholesale was driven by category growth in Western and female products and new points of distribution.

Previous wording

•International revenues increased 15%, primarily due to growth in non-U.S. Americas wholesale revenues, growth in EMEA's retail store and e-commerce businesses and a 5% favorable impact from foreign currency.

Current wording

•International revenues increased 12%, primarily due to growth in non-U.S. Americas wholesale revenues and growth in EMEA's retail store and e-commerce businesses.

Previous wording

Operating margin increased to 28.8%, compared to 22.1% for the 2025 period, due to the benefits of Project Jeanius, the U.S. tariff receivable recorded in the first quarter of 2026 and favorable channel mix, product mix and pricing, partially offset by other operating cost increases driven by higher investments in demand creation and our direct-to-consumer business.

Current wording

Operating margin increased to 27.6%, compared to 23.0% for the 2025 period, driven by the benefits of Project Jeanius, the U.S. tariff receivable recorded in the first quarter of 2026 and favorable business and pricing, net of changes in product costs, partially offset by other operating cost increases driven by higher investments in demand creation, technology and our direct-to-consumer business.

Previous wording

(1) Results for the three and six months ended June 2025 include one month of operations.

Current wording

(1) Results for the nine months ended September 2025 include four months of operations.

Previous wording

Global revenues for the Helly Hansen® brand increased $80.1 million to $106.8 million, reflecting growth in the U.S. wholesale, international wholesale and direct-to-consumer channels.

Current wording

Global revenues for the Helly Hansen® brand increased 3%, reflecting growth in the international wholesale channel.

Previous wording

•U.S. revenues increased 1%, primarily due to growth in our direct-to-consumer business, driven by higher e-commerce and retail store sales. U.S. Wholesale revenues were flat for the period.

Current wording

•U.S. revenues increased 0.2%, reflecting growth in the direct-to-consumer business, driven by higher e-commerce and retail store sales. U.S. wholesale revenues were impacted by product delays due to longer lead times in the supply chain.

Previous wording

Operating margin increased to 1.8%, compared to (18.0)% for the 2025 period, primarily driven by gross margin expansion, operating expense leverage and expense synergies. Improvements in our gross margin were supported by better inventory management, reduced promotional activity and a higher mix of full-price selling.

Current wording

Operating margin increased to 8.0%, compared to 4.3% for the 2025 period, primarily driven by gross margin expansion, operating expense leverage and expense synergies. Improvements in our gross margin reflected better inventory management, reduced promotional activity and improved product and channel mix.

Previous wording

Operating margin increased to 7.9%, compared to (18.0)% for the 2025 period, primarily driven by gross margin expansion, operating expense leverage and expense synergies. Improvements in our gross margin were supported by better inventory management, reduced promotional activity and a higher mix of full-price selling.

Current wording

Operating margin increased to 7.9%, compared to 1.5% for the 2025 period, primarily driven by gross margin expansion, operating expense leverage and expense synergies. Improvements in our gross margin reflected better inventory management, reduced promotional activity and improved product and channel mix.

Previous wording

Corporate and other expenses increased $25.1 million, primarily due to incremental costs previously allocated to the Lee segment and higher investments in technology, partially offset by lower restructuring and transformation costs and a $24.1 million gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition during the six months ended June 2025 that did not recur during the six months ended June 2026.

Current wording

Corporate and other expenses decreased $32.8 million, primarily due to lower restructuring and transformation costs recorded in the three months ended September 2026, partially offset by incremental costs previously allocated to the Lee segment and higher investments in technology.