Kontoor Brands Reports 8% Revenue Growth to $658.3 Million in Q2 2025

Kontoor Brands, Inc. reported a notable increase in financial performance for the second quarter of fiscal year 2025, with net revenues reaching $658.3 million, an 8% rise from $606.9 million in the same period last year. The growth was bolstered by the recent acquisition of Helly Hansen, which contributed $29.2 million to the revenue figures. The company's operating income also saw a modest increase of 4%, totaling $78.5 million, while net income surged 43% to $73.9 million, reflecting the impact of favorable foreign currency exchange gains related to the acquisition.

In comparison to the previous fiscal period, Kontoor's financials showed significant changes. The gross margin improved by 160 basis points to 46.3%, aided by lower product costs and operational efficiencies from the ongoing Project Jeanius initiative. However, selling, general, and administrative expenses increased to 34.4% of net revenues, up from 32.3% a year earlier, primarily due to acquisition-related costs and operational expenses associated with Helly Hansen. The diluted earnings per share rose to $1.32, compared to $0.92 in the prior year.

Strategically, the acquisition of Helly Hansen on May 31, 2025, marked a significant development for Kontoor, expanding its portfolio in the outdoor and workwear markets. The acquisition was financed through a combination of cash and debt, resulting in a substantial increase in long-term debt, which stood at $1.37 billion as of June 2025. The integration of Helly Hansen is expected to enhance Kontoor's market presence and operational capabilities, although it also introduced a net loss of $6.9 million from the new segment in its first month of operations.

Operationally, Kontoor's customer engagement metrics reflected positive trends, with U.S. Wholesale revenues increasing by 6% and Direct-to-Consumer revenues rising by 20%. The company reported a total of $685.5 million in inventories, which included $204 million related to Helly Hansen. The overall employee headcount remained stable, with no significant changes reported in staffing levels. The company continues to navigate macroeconomic challenges, including fluctuating foreign currency rates and supply chain issues, while maintaining a focus on cost control and strategic growth initiatives.

Looking ahead, Kontoor Brands anticipates continued revenue growth driven by the integration of Helly Hansen and ongoing improvements in operational efficiency. The company remains cautious about external economic factors, including potential impacts from tariff changes and consumer demand fluctuations. Management expressed confidence in their ability to adapt to these challenges while pursuing long-term value creation for stakeholders.