Dive Brief:
- Thanks in part to $114 million from its Helly Hansen outdoor brand, acquired last year, Kontoor Brands’ Q2 revenue rose 19% year over year to $584 million, the apparel maker said Wednesday.
- Wrangler global revenue rose 2% to $469 million. The results don’t include Lee, whose sale to Authentic Brands Group is expected to close in Q4, or tariff refunds. Gross margin expanded by 970 basis points to 56.2%, and net income declined 12% to $64.8 million.
- Both Kontoor brands were flattered by foreign currency exchange rates, according to BNP Paribas Equity Research senior analyst Laurent Vasilescu. In constant currency, Wrangler rose 1% and Helly Hansen fell 1%, per BNP Paribas calculations.
Dive Insight:
Add Kontoor’s Wrangler to the apparel brands looking to boost direct-to-consumer sales.
Early next year, Wrangler will open two more stores in Texas, based on the success of what CEO Scott Baxter called a “full-price store in the stockyards of Fort Worth.”
“We are beginning to develop a focused retail fleet in the heartland of Wrangler Country,” he told analysts Wednesday morning.
More generally at Wrangler, Baxter identified “incredible opportunities” in women’s, DTC and non-denim categories, but said, “we will not lose sight of Wrangler’s identity.” Women’s clothing grew 20% in the first half of the year, accelerating in Q2. Also in the period, the denim brand’s core bottoms business expanded its market share by more than 100 basis points, he said, citing Circana.
Companies like Nike and Levi’s have followed a similar path in DTC, with mixed results. Nike pulled back its effort after executives realized the tactic went too far. Companies like Crocs and Levi’s continue with their work to boost DTC but have also maintained strong wholesale operations.
Regardless of the channel, questions are emerging about just how much Kontoor will grow once the Helly Hansen acquisition, completed in late May 2025, laps its first full year of quarterly results. Wrangler has been a low-single-digit growth brand since before the pandemic, and Helly Hansen’s financial filings demonstrate that it is “also a no growth brand,” Vasilescu said in a Wednesday client note.
That's not how Kontoor sees it. Revenue is projected to increase in the mid-single digit range during the second half of the year for both Helly Hanson and Wrangler, excluding the impact of the 53rd week. For the full year, Kontoor maintained its revenue outlook, expecting year-over-year growth between 12% and 13%.
Baxter called Helly Hansen the company's "growth engine," but sales there could suffer from a warmer winter due to El Niño, Vasilescu warned.
In addition to its Q2 results, Kontoor reported that it has expanded Chief Financial Officer Joseph Alkire duties, and he has been named president of the company as well. Alkire, who has been CFO for three years, will maintain global responsibilities for Helly Hansen and will add oversight of the Wrangler brand, according to a press release.
