Kontoor Brands, Inc. reported significant financial results for the third quarter of fiscal year 2025, with net revenues reaching $853.2 million, a 27% increase from $670.2 million in the same period last year. The growth was primarily driven by the acquisition of Helly Hansen, which contributed $192.7 million to the quarter's revenues. However, the company's net income fell by 48% to $36.9 million, down from $70.5 million in the prior year, reflecting increased costs associated with the acquisition and restructuring efforts.
The company's gross margin decreased to 41.3%, down 340 basis points from the previous year, largely due to $38.1 million in restructuring charges related to the closure of manufacturing facilities. Selling, general, and administrative expenses also rose to 33.8% of net revenues, up from 30.0% in the prior year, driven by operating expenses from Helly Hansen and acquisition-related costs. Operating income decreased by 35% to $63.9 million, which included $9.3 million attributable to Helly Hansen.
In terms of operational metrics, Kontoor's U.S. Wholesale revenues increased by 4%, while International Wholesale revenues surged by 109%, reflecting strong performance from Helly Hansen. Direct-to-Consumer revenues also rose by 53%. The company reported a total employee headcount of 5,500 as of September 2025, reflecting ongoing integration efforts following the acquisition.
The acquisition of Helly Hansen, completed on May 31, 2025, has been a strategic focus for Kontoor, aimed at expanding its presence in the outdoor and workwear markets. The company incurred $12 million in acquisition and integration-related costs during the quarter and anticipates further costs as it integrates Helly Hansen into its operations. Looking ahead, Kontoor expects to navigate ongoing macroeconomic challenges, including fluctuating consumer demand and increased tariffs, while continuing to focus on brand growth and operational efficiency. The company remains committed to its capital allocation strategy, which includes investing in its business, paying down debt, and maintaining dividend payments.
About Kontoor Brands, Inc.
Kontoor Brands, Inc. is a global apparel company specializing in iconic denim brands Wrangler and Lee. It designs, manufactures, markets, and sells clothing, footwear, and accessories through wholesale, retail, and e-commerce channels worldwide. The company emphasizes brand heritage, product innovation, supply chain efficiency, and strategic expansion to deliver high-quality, value-driven products to diverse consumer markets.
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