Kontoor Brands (KTB) Q2 2025 earnings summary

Executive summary

• Second quarter revenue rose 8% year-over-year to $658.3 million, driven by strong Wrangler growth, a progressing Lee turnaround, and the Helly Hansen acquisition, which contributed $29 million in June revenue.

• Adjusted operating income increased 25% to $100 million, with adjusted EPS up 23% to $1.21; diluted EPS was $1.32, including a $0.12 loss per share from Helly Hansen.

• Expanded brand portfolio and Helly Hansen integration have increased consumer, geographic, and channel diversification, positioning the company for continued momentum.

• Net income increased 43% to $73.9 million, aided by $33 million in FX hedge gains related to the acquisition.

• Full-year 2025 outlook raised, reflecting strong first half, tariff mitigation, and incremental investments.

Financial highlights

• Q2 net revenues: $658.3 million, up 8% year-over-year; six-month net revenues: $1.28 billion, up 3%.

• Adjusted gross margin expanded 120 basis points to 46.4%, exceeding plan due to Project Genius/Jeanius, lower input costs, and Helly Hansen's contribution.

• Q2 net income: $73.9 million, up 43% year-over-year; adjusted EPS: $1.21, up 23%; diluted EPS: $1.32.

• Inventory including Helly Hansen was $686 million, up 40%; organic inventory down 1% year-over-year.

• Long-term debt at quarter-end was $1.37 billion, with a net leverage ratio of 2.5x trailing 12-month adjusted EBITDA.

Outlook and guidance

• Full-year 2025 revenue outlook raised to $3.09–$3.12 billion, representing 19%–20% growth; Helly Hansen expected to contribute $455 million.

• Adjusted gross margin forecast at 46.1%, up 100 basis points; adjusted EPS expected to be approximately $5.45, up 11% year-over-year, including a $0.20 impact from higher tariffs and $0.20 of incremental investments.

• Cash from operations expected to exceed $375 million for the year; capex to be ~$40 million.

• Third quarter revenue expected at $855 million, up 28% year-over-year.

• Management anticipates continued macroeconomic uncertainty, including tariff impacts and consumer demand volatility.