10-Q · August 12, 2026
Kontoor delivered strong year-over-year operating performance in Q2, with revenue up 19% to $584.3 million, gross margin up 970 basis points to 56.2% and operating income up 59% to $90.5 million. Wrangler generated…
Earnings analysis · 10-Q
KTB earnings analysis
Filed November 5, 2026 · Our reading of the company's report
The latest report
Kontoor delivered solid operating performance in Q3, with revenue up 3% year over year to $685.3 million, gross margin up 830 basis points to 48.3% and operating income up 106% to $77.1 million. However, GAAP diluted…
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Kontoor delivered solid operating performance in Q3, with revenue up 3% year over year to $685.3 million, gross margin up 830 basis points to 48.3% and operating income up 106% to $77.1 million. However, GAAP diluted EPS from continuing operations fell to $(0.62) from $0.29 because of a $95.0 million non-cash discrete tax expense, and revenue missed the $693.8 million consensus estimate. The Lee divestiture provided approximately $698.2 million of net cash proceeds, supporting planned debt repayment and share repurchases, but integration, tariff and macroeconomic risks remain.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.62
What stood out
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Revenue grew 3% year over year
Q3 net revenue was $685.3 million, up 3% or $18.9 million year over year, but down from $1.02 billion in Q4 2025 and up from $584 million in Q2 2026. Revenue was below the $693.8 million consensus estimate.
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Gross margin expanded 830 basis points
Gross margin expanded to 48.3% from 40.0% year over year, an 830-basis-point improvement. Management cited a 530-basis-point benefit from lower restructuring costs, 120 basis points from Project Jeanius and 170 basis points from mix and pricing.
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Operating leverage improved materially
Operating income increased 106% to $77.1 million from $37.4 million, while operating margin rose to 11.2% from 5.6%. Versus Q2 2026, however, operating margin declined from 15.5% and gross margin declined from 56.2%.
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Both primary segments grew
Wrangler revenue increased 2.9% to $485.1 million and segment profit rose 5.6% to $123.0 million. Helly Hansen revenue increased 2.9% to $191.3 million, while segment profit increased 91.1% to $15.3 million.
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Lee sale generated $698.2 million
The company completed the Lee divestiture on November 2, 2026, receiving approximately $698.2 million of net cash proceeds. Management intends to use the proceeds for share repurchases and debt repayments.
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Liquidity supported capital returns
Cash provided by operating activities from continuing operations was $83.0 million for the first nine months, versus $109.8 million in the prior-year period. Investing activities provided $28.6 million, while financing activities used $198.1 million, including $95.5 million of share repurchases.
What to watch
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New divestiture and stranded-cost risk
The newly added risk factor states that divestitures may cause impairments, losses, stranded liabilities and ongoing financial involvement. The Lee transaction included approximately $698.2 million of net proceeds and transition services extending up to 12 months, creating potential execution and stranded-cost exposure.
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Helly Hansen integration costs remain
Management incurred $23.2 million of Helly Hansen integration-related costs in Q3 and expects additional costs, primarily for information-technology integration. A prolonged integration challenge could pressure operating results, cash flows and debt covenant compliance.
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Tariff and supply-chain volatility
Tariff and supply-chain uncertainty remains material: the company recognized a $53.7 million IEEPA tariff refund receivable in Q1 and collected substantially all related refunds in Q3, while current tariff regimes and related legal challenges remain unsettled. Management also cited shipping disruptions, higher freight and energy costs, and supplier delays.
Management's outlook
The 10-Q does not provide new quantitative revenue or EPS guidance. Management expects 2026 capital expenditures of approximately $25.0 million, anticipates entering into $400 million of accelerated share repurchase agreements in Q4 2026, and expects final ASR settlement in the first half of 2027. The company stated it expects sufficient operating cash flow and borrowing capacity to fund investments, dividends, debt repayment and share repurchases.
Earlier filings 4
10-Q · May 14, 2026
Kontoor Brands reported Q1 2026 revenue of $613.3 million, an increase of 45% year-over-year, driven primarily by the Helly Hansen acquisition. Gross margin improved significantly to 53.7%, up 810 basis points, while…
10-K · March 4, 2026
Kontoor completed the strategic acquisition of Helly Hansen on May 31, 2025 for CAD 1.3 billion (USD $957.5 million) and integrated the brand into results for the back half of 2025. Net revenues show a clear step-up in…
10-Q · August 7, 2025
Kontoor reported Q2 net revenues of $658,259,000 and diluted EPS of $1.32, both up versus the year-ago quarter. Gross margin expanded to 46.3% (from 44.7% in Q2 2024) while operating margin was essentially flat at…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.