Kontoor Brands raises outlook following Lee brand sale agreement
The company increased its full-year adjusted earnings per share forecast to a range of $6.60 to $6.70
Kontoor Brands (KTB), the apparel company, raised its full-year financial guidance after agreeing to divest one of its primary brands.
The shift follows a definitive agreement reached on May 20, 2026, to sell the Lee business to Authentic Brands Group. The deal includes an initial transaction value of $750 million and a potential earnout opportunity of $250 million, bringing the total possible value to $1 billion.
Continuing operations revenue for the first quarter of fiscal 2026 was $613 million, which represented a 45% increase compared to the prior year. This growth was driven by a 4% increase in Wrangler and a 16% pro-forma increase in Helly Hansen. Gross margin from continuing operations rose 810 basis points to 53.7% on a reported basis and 470 basis points on an adjusted basis over the prior year.
These results follow a period of volatility in the company's cost structure and margins. Adjusted EBITDA margin for continuing operations fluctuated during fiscal 2025, starting at 14.2% in March 2025, peaking at 17.5% in December 2025, and dipping to 16.1% in September 2025. Organic net revenues, excluding Helly Hansen and Musto, grew sequentially throughout that period, rising from $423.0 million in March 2025 to $566.4 million in December 2025.
Restructuring and transformation costs peaked in the September 2025 quarter at $46.0 million, primarily due to the closure of manufacturing facilities. This followed lower spending of $12.5 million in March 2025 and $14.7 million in December 2025.
Kontoor Brands raised its full-year 2026 revenue outlook to a range of $3.41 to $3.46 billion from a previous range of $3.40 to $3.45 billion. The company also increased its adjusted EPS outlook to a range of $6.60 to $6.70 from a prior range of $6.40 to $6.50.
The company shifted the Lee business to discontinued operations in the first quarter of fiscal 2026, which required a recast of fiscal 2025 financial information. In May 2026, the company announced a new $750 million share repurchase authorization.