Kontoor Brands completes $1 billion Lee jeans sale, lifts profit outlook

Kontoor Brands, the North Carolina-based owner of Wrangler and Helly Hansen, has completed the sale of its Lee jeans business to Authentic Brands Group and used the proceeds to fund a new $400 million stock buyback, the company said this week, as it also reported third-quarter results that beat Wall Street's profit estimates and raised its full-year earnings outlook.

The divestiture, which Kontoor announced had closed on Nov. 2, hands the 136-year-old Lee brand to Authentic Brands Group, the licensing conglomerate that already controls names such as Reebok and Brooks Brothers. Kontoor said it received approximately $698.2 million in cash from the sale (about $588.4 million after estimated taxes), according to pro forma financial statements filed with the Securities and Exchange Commission, and is eligible for up to $250 million more in earnout payments tied to Lee's performance over a five-year period.

A Beat-and-Raise Quarter

The Lee sale closed just as Kontoor was preparing to report third-quarter earnings. For the quarter ended Oct. 3, revenue from continuing operations rose 3 percent to $685 million, with both remaining brands contributing roughly evenly: Wrangler revenue grew 3 percent to $485 million and Helly Hansen grew 3 percent to $191 million, the company said in results published on Nov. 5 and detailed in an accompanying SEC filing. Adjusted earnings per share came in at $1.50, up 40 percent from a year earlier and well above the $1.36 analysts had expected, while adjusted gross margin expanded 230 basis points to 48.1 percent.

On a reported basis, Kontoor posted a diluted loss from continuing operations of 62 cents a share, which the company attributed to a one-time $1.73 non-cash tax charge tied to moving Helly Hansen's intellectual property onto a new corporate structure — a move it described as supporting longer-term integration savings. Kontoor shares rose 3.3 percent in the session following the earnings release.

Buoyed by the results, Kontoor raised its full-year adjusted earnings guidance to $5.40 a share, up from a prior range of $5.25 to $5.35 and representing roughly 31 percent growth over the previous year. It now expects full-year revenue of about $2.68 billion. For the first time, the company also gave preliminary 2027 guidance, projecting adjusted earnings per share of at least $6.60, implying growth of more than 20 percent.

Exiting a Century-Old Brand

The Lee sale, first disclosed in May, had an initial transaction value of $750 million plus the contingent earnout. Lee, founded in 1889, generates roughly $1.5 billion in annual retail-equivalent sales across 73 countries, according to Authentic Brands Group's own account of the deal, reported by Retail Dive. Authentic plans to operate Lee primarily through regional licensing partners rather than running it directly, naming groups including One Jeanswear Group for the U.S. and Canada and Experience Group for Europe, according to FashionUnited's reporting on the completed transaction.

For Kontoor, which was spun off from VF Corporation in 2019 with Wrangler and Lee as its two flagship denim brands, the sale marks a deliberate narrowing of its portfolio around Wrangler's workwear-rooted jeans business and Helly Hansen, the Norwegian outdoor and workwear brand it acquired in 2025. Chief Executive Scott Baxter framed the move as a strategic pivot rather than a retreat.

"I want to thank the Kontoor team for the tremendous effort that drove the successful completion of this transaction," said Scott Baxter, Kontoor's chief executive and chairman. "We now have a more focused, growth-oriented portfolio positioned to deliver stronger returns for our shareholders."

Who Is Affected

The split has distinct consequences for different groups. Lee's roughly global workforce, retail partners and licensees now answer to Authentic Brands Group's licensing model rather than Kontoor's own supply chain and design teams. Kontoor's remaining employees are tied more tightly to Wrangler and Helly Hansen, with management citing an internal cost program, which it calls Project Jeanius, as a contributor to the quarter's gross-margin gains. Kontoor shareholders are the most immediate beneficiaries of the transaction structure: company President and Chief Financial Officer Joe Alkire said the business is "building a more growth-oriented business through our transformation efforts," pointing to the decision to lift planned share repurchases to $450 million for the fourth quarter based on confidence in the company's long-term strategy.

Retail partners carrying Wrangler and Helly Hansen should see continuity, since neither brand changed hands. Consumers of Lee products are unlikely to notice an immediate shift either, since Authentic's licensing partners typically continue sourcing and distribution arrangements already in place, though the brand's design and marketing direction now sits with a different corporate parent.

What Comes Next

Kontoor said it expects to enter into accelerated share repurchase, or ASR, agreements with financial institutions in early November to buy back $400 million of common stock, funded largely by the Lee sale proceeds, with final settlement expected in the first half of 2027. Combined with dividends and voluntary debt paydowns, the company said it expects to return approximately $1 billion of capital to shareholders in 2026. After the fourth-quarter repurchases are completed, Kontoor said roughly $230 million would remain under its existing $750 million buyback authorization.

Management's attention now turns to integrating Helly Hansen further and executing against the newly issued 2027 targets, with the next test coming when Kontoor reports fourth-quarter and full-year results early next year — the first full annual report since Lee's exit reshaped the company's financial profile.