Kontoor Brands, the parent company of well-known labels such as Wrangler and Lee, recently announced a 5% rise in net profit for the first half of the year, along with an uptick in revenue.
For the six-month period ending in June, the company’s net revenues increased by 3%, reaching $1.28 billion. However, operating income saw a decline of 5%, totaling $151.8 million, while net income increased to $116.8 million, also up by 5%. In the second quarter alone, net revenues rose by 8%, amounting to $658 million.
Operating income for this quarter was reported at $79 million, with earnings per share (EPS) recorded at $1.32. The adjusted EPS of $1.21 reflects a significant increase of 23% compared to the previous year.
Scott Baxter, the president, CEO, and chairman of the board, commented, “Our strong second quarter results were driven by better-than-expected organic revenue growth, gross margin expansion, operating efficiency and cash generation, as well as a stronger-than-expected contribution from Helly Hansen.” He noted the positive integration of Helly Hansen, which joined the Kontoor family in June, stating that the integration is progressing well. He also indicated an optimistic revision of their full-year outlook, which now accounts for increased investments and the impact of higher tariffs, showcasing the resilience of their operational model and the strong execution across their portfolio as they move into the latter half of the year.
Regarding the challenges posed by tariffs, Kontoor Brands updated its full-year forecast to reflect potential impacts from recent tariff increases. The outlook now anticipates a 30% reciprocal tariff on products sourced from China and a 20% reciprocal tariff on items from all other countries, excluding Mexico.
“The company continues to expect to substantially offset the impact from recently enacted increases in tariffs over a 12 to 18-month period through a combination of targeted price increases, sourcing and production optimization within our global supply chain, inventory management, supplier partnerships, and other initiatives,” the company stated.
Baxter added, “We are raising our full-year outlook to reflect stronger first-half results, greater visibility into our tariff mitigation initiatives, and the confidence we have in the outlook for our business for the balance of the year. Our ability to largely offset the impact from higher tariffs reflects the strength of our brands, the agility of our supply chain, and the benefits from Project Jeanius. To support our momentum, we are making incremental demand creation investments to fuel accelerating revenue growth and continued market share gains. While we will continue to manage the business prudently in light of the environment, the third quarter is off to an encouraging start, and we enter the second half of the year from a position of strength.”
Kontoor Brands now expects revenue to fall within the range of $3.09 billion to $3.12 billion, representing a growth of approximately 19% to 20%, which includes about 18% contributed by Helly Hansen. Adjusted operating income is projected to reach roughly $443 million, reflecting a 16% increase compared to last year, an adjustment from earlier forecasts of $437 million to $445 million. The updated full-year 2025 adjusted operating income now accounts for an estimated $30 million impact from new tariffs and additional demand creation investments.
The company anticipates adjusted EPS will be approximately $5.45, an 11% increase from the previous year, compared to the earlier forecast of $5.40 to $5.50. Excluding the contributions from Helly Hansen, the adjusted EPS is expected to be around $5.25, marking a 7% increase from the prior year, compared to the previous range of $5.20 to $5.30.
