Key Highlights

  • Revenue from continuing operations rose 3% to $685 million in the third quarter of 2026.
  • Adjusted gross Margin increased 230 basis points to 48.1%.
  • Adjusted Operating Income grew 6% to $101 million.
  • The company expects to repurchase $450 million of shares and provided an initial 2027 outlook.

Kontoor Brands (NYSE:KTB), the owner of the Wrangler and Helly Hansen apparel brands, reported third-quarter 2026 results on November 5, 2026. Revenue from continuing operations rose 3% to $685 million, with both Wrangler and Helly Hansen growing 3% in the period. The company completed its divestiture of the Lee brand, updated its full-year 2026 outlook and provided initial expectations for 2027. The release focuses on margin gains and a portfolio that now centers on two brands.

Kontoor's two remaining brands serve different customers and price points. Wrangler is a denim and western-wear Brand with a long history in the United States, while Helly Hansen sells technical apparel and outdoor products. Growth of 3% in both brands suggests that the company's portfolio is growing at a consistent rate across its two main businesses, rather than relying on one brand to carry the total.

Revenue and Brand Performance

Third-quarter revenue from continuing operations totaled $685 million, an increase of 3% from the prior-year period. Wrangler and Helly Hansen each contributed 3% growth, which means the company's two remaining brands expanded at the same pace. Because the Lee brand is now divested, the continuing operations figure provides the cleanest basis for comparing the Business across periods.

The release does not break out revenue by region or product category in its highlights. Readers interested in the relative performance of denim, outdoor and other categories will need to consult the full tables in the Earnings package.

Gross margin is a useful lens for an apparel company because it reflects pricing, sourcing costs and the mix of products sold. An adjusted gross margin of 48.1% that rose 230 basis points means the company charged more for, or spent less to make, each item it sold relative to a year earlier. The release does not isolate how much of the improvement came from each source.

Gross Margin and Operating Income

The reported gross margin from continuing operations was 48.3%, while the adjusted gross margin was 48.1%, an increase of 230 basis points from the prior year. A gain of that size indicates that the company retained a larger share of each sales dollar after the cost of goods sold, which is the most visible margin improvement in the release.

Reported operating income from continuing operations was $77 million. Adjusted operating income reached $101 million, up 6% from the prior year. The difference between the reported and adjusted figures reflects the items the company excludes from its adjusted measures, and the reconciliation tables show each adjustment.

Tax Charge and Per-Share Results

Reported Diluted Earnings per Share from continuing operations were a loss of $0.62. That figure includes a non-cash tax charge of $1.73 per share related to the migration of Helly Hansen intellectual property. The charge drives the difference between the reported loss and the company's operating earnings growth, and it is not an operating cost in the usual sense.

Because the tax charge is large relative to the per-share result, readers comparing the quarter with prior periods should look at the adjusted operating income and margin figures rather than the reported per-share loss. The release presents both to allow that comparison.

Selling a brand changes a company's scale, its customer base and its cost structure at the same time. The remaining businesses are the company's focus going forward, and the release signals management's confidence in them through its plan to return Capital to shareholders. Readers will want to compare the post-divestiture revenue base with the prior year to understand the true underlying growth rate.

Lee Divestiture and Share Repurchases

The company said the divestiture of Lee was successfully completed, and the release refers to final terms that were reflected in the updated outlook. Divestitures can alter revenue, margin and share count, so the completed sale will shape how the company's results compare with those of prior years.

Kontoor expects to repurchase $450 million of its shares following the divestiture. The buyback is the most significant capital action highlighted in the headline, and it will reduce the number of shares outstanding, which increases per-share earnings for a given level of net income.

Investors comparing the initial 2027 outlook with the revised 2026 expectations will need to account for the Lee divestiture, because the year-over-year figures will reflect a smaller revenue base. The release does not restate the full ranges in its highlights, so readers should consult the outlook tables to measure the change precisely.

Updated 2026 and Initial 2027 Outlook

Chief financial officer Joe Alkire said the company updated its full-year 2026 outlook to reflect year-to-date results, the final terms of the Lee divestiture and greater gross margin expansion and earnings growth. He added that the operating environment remains dynamic. The release therefore presents the revised 2026 figures as a response to both the quarter and the transaction.

The company also provided its initial 2027 outlook. The release places that guidance alongside the repurchase plan, which suggests management is linking its forward expectations to both operating improvement and capital returns.

Outlook

Kontoor Brands' third-quarter report combines modest revenue growth, a 230-basis-point adjusted gross margin gain, a tax-driven reported loss and a large planned buyback. The company's ability to hold margins while operating with two brands, and to deliver on the 2027 outlook, will be the key questions for upcoming quarters.