Kontoor Brands Reports Flat Revenues of $2.6 Billion, Plans Acquisition of Helly Hansen

Kontoor Brands, Inc. reported flat net revenues of $2.6 billion for the fiscal year ending December 28, 2024, compared to $2.6 billion in the previous year. The U.S. Wholesale segment saw a slight increase of 1%, accounting for 73% of total revenues, while Non-U.S. Wholesale revenues decreased by 7%. The Direct-to-Consumer channel experienced a 4% growth, driven by e-commerce sales, although retail store sales declined. Gross margin improved by 280 basis points to 44.5%, attributed to favorable product costs and channel mix, despite challenges in pricing and proactive inventory management.

The company's operating income rose by 7% to $342.3 million, with net income increasing by 6% to $245.8 million. Diluted earnings per share were reported at $4.36, up from $4.06 in the prior year. Cash provided by operating activities also increased to $368.2 million from $356.5 million in 2023. However, selling, general, and administrative expenses as a percentage of revenues increased to 31.4%, reflecting higher incentive compensation and restructuring costs.

Strategically, Kontoor announced its intent to acquire Helly Hansen for approximately $900 million, with the transaction expected to close in the second fiscal quarter of 2025, pending regulatory approval. The company is also in the execution phase of Project Jeanius, a multi-year initiative aimed at transforming its business model and enhancing operational efficiencies. This project incurred $25.2 million in charges during 2024, contributing to the overall restructuring costs of $38.3 million.

Operationally, Kontoor sold approximately 147 million units of apparel in 2024, with a workforce of approximately 13,200 employees globally. The company continues to focus on expanding its core U.S. Wholesale business, diversifying its product mix, and enhancing its direct-to-consumer channels. Despite facing macroeconomic challenges such as elevated interest rates and fluctuating consumer demand, Kontoor remains optimistic about its ability to navigate these conditions and drive future growth.

Looking ahead, Kontoor anticipates continued uncertainty in the macroeconomic environment, particularly regarding consumer behavior and potential tariff impacts. The company plans to maintain its focus on cash flow management, strategic investments, and operational improvements to support long-term growth and shareholder value.