Kontoor Raises 2026 Adjusted EPS Outlook After Lee Sale

The Tip Desk · November 11, 2026 · 3 min read

The apparel company now expects full-year adjusted EPS of $5.40, about 31% growth, and plans a $450 million fourth-quarter buyback after closing the Lee sale for $698 million of net proceeds.

Kontoor Brands, Inc. (KTB) raised its full-year 2026 adjusted earnings outlook to $5.40 a share, reflecting about 31 percent growth, after completing the sale of Lee and lifting its planned fourth-quarter share repurchases to $450 million.

The global apparel company, which now anchors its portfolio around Wrangler and Helly Hansen, said the update reflected year-to-date results, the final terms of the Lee divestiture, and stronger gross-margin expansion. It received $698 million of net proceeds from the Lee sale.

Continuing-operations revenue for the third quarter ended October 3, 2026, was $685 million, up 3 percent from a year earlier. That pace slowed from 19 percent growth in the second quarter, when the Helly Hansen acquisition contribution had lifted the comparison. Both Wrangler and Helly Hansen grew 3 percent year over year in the third quarter.

Wrangler global revenue was $485 million. U.S. revenue rose 2 percent, with direct-to-consumer up 7 percent and wholesale up 2 percent. International revenue increased 6 percent, led by a 25 percent rise in direct-to-consumer and a 4 percent increase in wholesale. Helly Hansen global revenue was $191 million, with sport at $147 million and workwear at $44 million.

Reported gross margin from continuing operations was 48.3 percent. Adjusted gross margin was 48.1 percent, up 230 basis points from a year earlier, which the company attributed to Project Jeanius and favorable mix and pricing, net of product-cost changes. Adjusted operating income was $101 million, up 6 percent, for an adjusted operating margin of 14.7 percent.

Reported diluted EPS from continuing operations was a loss of $0.62 a share, including a $1.73 non-cash tax charge related to the migration of Helly Hansen intellectual property. Adjusted EPS was $1.50, up 40 percent from a year earlier.

The company said it expects to enter accelerated share repurchase agreements in early November to buy $400 million of stock under its existing $750 million authorization, with initial delivery of about 80 percent of expected shares. It is funding the repurchases with a portion of the Lee proceeds and expects about $230 million remaining under the authorization after the planned fourth-quarter buybacks. Final ASR settlement is expected in the first half of 2027.

Full-year 2026 revenue is now expected to approximate $2.68 billion, including the 53rd week in 2025. Adjusted gross margin is now expected at 50.0 to 50.2 percent. Adjusted operating income is now expected to approximate $400 million. The company now expects an effective tax rate of about 18.5 percent on adjusted pre-tax earnings and average shares outstanding of about 54.8 million, including the planned fourth-quarter buybacks.

It also issued an initial 2027 outlook of adjusted EPS of at least $6.60, representing more than 20 percent growth, and cash from operations of at least $325 million. The company continues to expect the Lee divestiture to be immaterial to earnings per share over a 12-to-18-month period.

At quarter-end, cash and cash equivalents were $56 million and long-term debt was $1.1 billion. Inventory was $570 million, down 6 percent from a year earlier, which the company tied to a reduction in Helly Hansen inventory. The company said it has received essentially all outstanding IEEPA tariff refunds and that its outlook assumes a 12.5 percent reciprocal tariff rate in the fourth quarter.