Kontoor Brands’ first quarter results were well received by the market, despite revenue falling slightly short of Wall Street expectations. Management attributed the quarter’s performance to robust momentum in the Wrangler brand—particularly in women’s and Western categories—and digital expansion. CEO Scott Baxter highlighted, “Wrangler delivered another quarter of share gains, and our investments in the female segment are delivering excellent results.” Project Jeanius, the company’s supply chain and SKU rationalization initiative, also contributed to higher gross margins and helped offset mid-quarter softness in point-of-sale trends.
Is now the time to buy KTB? Find out in our full research report (it’s free).
Kontoor Brands (KTB) Q1 CY2025 Highlights:
- Revenue: $622.9 million vs analyst estimates of $626.3 million (1.3% year-on-year decline, 0.5% miss)
- Adjusted EPS: $1.20 vs analyst estimates of $1.16 (3.1% beat)
- Adjusted EBITDA: $103.6 million vs analyst estimates of $100.3 million (16.6% margin, 3.3% beat)
- The company lifted its revenue guidance for the full year to $3.08 billion at the midpoint from $2.66 billion, a 15.6% increase
- Management raised its full-year Adjusted EPS guidance to $5.45 at the midpoint, a 3.8% increase
- Operating Margin: 11.8%, down from 13.4% in the same quarter last year
- Constant Currency Revenue fell 1% year on year (-6% in the same quarter last year)
- Market Capitalization: $3.53 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Kontoor Brands’s Q1 Earnings Call
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Ike Boruchow (Wells Fargo) asked about the current state of the U.S. consumer. CEO Scott Baxter described consumers as “incredibly resilient” and cited a positive inflection in demand since early March.
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Brooke Roach (Goldman Sachs) requested details on Lee’s transition timeline and brand recovery. Baxter shared optimism based on product improvements and digital momentum, projecting a potential return to growth for Lee in 2026.
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Brooke Roach (Goldman Sachs) also inquired about gross margin drivers. CFO Joe Alkire attributed the outperformance to favorable sales mix, lower input costs, and early benefits from Project Jeanius, while cautioning that input cost benefits will moderate later in the year.
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Paul Kearney (Barclays) pressed for details on tariff impact assumptions and mitigation strategies. Alkire explained the reduction in expected tariff impact, largely due to Mexico’s exemption, and detailed ongoing supply chain adjustments.
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Peter McGoldrick (Stifel) questioned the pace and sustainability of Helly Hansen’s contribution. Alkire confirmed expectations for double-digit growth and margin expansion, emphasizing the steady workwear component as a stabilizing factor.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will be monitoring (1) the pace of Helly Hansen integration and its impact on revenue diversification, (2) the trajectory of Lee’s digital and brand recovery efforts, and (3) the effectiveness of Project Jeanius in driving further margin gains. We will also watch how quickly tariff mitigation actions translate into sustained profitability and how consumer demand trends evolve in key markets.
Kontoor Brands currently trades at $65.11, up from $63.44 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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