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Kontoor Brands Inc (KTB)
NYSE:KTB
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Kontoor Brands (KTB) AI Stock Analysis

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KTB

Kontoor Brands

(NYSE:KTB)

Rating:71Outperform
Price Target:
$75.00
▲(18.88%Upside)
Kontoor Brands' overall score is driven by strong financial performance and a positive earnings call outlook, despite technical resistance and leverage concerns. The acquisition of Helly Hansen is a significant growth driver, while valuation metrics remain reasonable.
Positive Factors
Acquisition Impact
The acquisition of the Helly Hansen brand diversifies and strengthens Kontoor Brands' portfolio expansion into global markets and new categories.
Financial Strategy
Kontoor Brands plans to pay down debt using free cash flow, indicating financial stability and strategic management.
Synergies and Growth
Kontoor Brands is expected to benefit from new synergies and 2Q upside, providing offsets to the tariff-related headwind.
Negative Factors
Earnings Pressure
Material tariff headwinds are expected to create a significant challenge for the fiscal year earnings per share (EPS).
Synergy Realization
Slower-than-expected synergies from Helly Hansen and weaker organic growth could result in less favorable financial outcomes for Kontoor Brands.
Tariff Impact
Tariffs on goods sourced from Mexico could pose a significant financial challenge for Kontoor Brands if the 25% tariff is reinstated.

Kontoor Brands (KTB) vs. SPDR S&P 500 ETF (SPY)

Kontoor Brands Business Overview & Revenue Model

Company DescriptionKontoor Brands, Inc., a lifestyle apparel company, designs, manufactures, procures, markets, and distributes denim, apparel, and accessories under the Wrangler, Lee, and Rock & Republic brands in the United States and internationally. It operates through two segments, Wrangler and Lee. The company sells its products primarily through mass merchants, specialty stores, mid-tier and traditional department stores, company-operated stores, and online. As of January 1, 2022, it operated 80 retail stores across the Americas, Europe, the Middle East, Africa, and the Asia-Pacific regions. The company was incorporated in 2018 and is headquartered in Greensboro, North Carolina.
How the Company Makes MoneyKontoor Brands generates revenue through the sale of its apparel and accessories under the Wrangler and Lee brands. The company's primary revenue streams include wholesale distribution to major retailers, direct-to-consumer sales through its e-commerce platforms, and owned retail stores. In addition, Kontoor Brands leverages strategic partnerships and licensing agreements to expand its market reach and product offerings. The company focuses on brand strength, operational efficiency, and global market expansion to drive profitability and long-term growth.

Kontoor Brands Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: 0.19%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with significant highlights such as the acquisition of Helly Hansen and strong performance in the Wrangler brand. However, challenges remain with the Lee brand's revenue decline and potential tariff impacts. The overall sentiment is leaning towards optimism due to strategic initiatives and strong financial performance.
Q1-2025 Updates
Positive Updates
Acquisition of Helly Hansen
Kontoor Brands cleared regulatory approval for the acquisition of Helly Hansen, expected to significantly boost revenue growth, earnings, and cash flow. Helly Hansen is anticipated to contribute approximately $425 million to full-year revenue, with expectations of double-digit growth in the second half of the year.
Wrangler Brand Performance
Wrangler's global revenues increased by 3%, with particular strength in the female business, which grew by 40%. The brand gained 70 basis points of market share in men's and women's bottoms.
Improved Gross Margin
Adjusted gross margin expanded by 200 basis points to 47.7%, driven by lower input costs and favorable mix, exceeding expectations by 170 basis points.
Strong Cash Generation
Kontoor Brands finished the quarter with net debt of $379 million and $357 million in cash, with a net leverage ratio of 0.9 times, below the targeted range.
Negative Updates
Lee Brand Revenue Decline
Lee's global revenue decreased by 8%, driven by declines in wholesale, although digital sales grew by 12%.
Tariff Impact Concerns
Potential unmitigated tariff impact could be approximately $50 million, including Helly Hansen, though mitigation efforts are underway.
Company Guidance
During the first quarter of 2025, Kontoor Brands provided optimistic guidance, highlighting several key metrics and strategies to drive future growth. The company anticipates significant revenue contributions from the recent acquisition of Helly Hansen, expecting approximately $425 million in full-year revenue from the brand, contributing $0.20 to full-year earnings per share. Kontoor aims to enhance Helly Hansen's operating margin from high single digits to mid-teens and projects double-digit revenue growth in the U.S. market. Operational targets include a consolidated revenue growth of 17% to 19% for 2025, with organic growth of 1% to 2%, alongside a gross margin expansion of 80 to 100 basis points. The company also plans to leverage Project Jeanius to achieve over $100 million in savings by 2026 and aims to return to pre-acquisition leverage levels within 18 to 24 months, reinforcing their commitment to shareholder value through disciplined capital allocation and strategic growth initiatives.

Kontoor Brands Financial Statement Overview

Summary
Kontoor Brands shows strong profitability with a consistent gross profit margin. While there is effective cost management, revenue growth has stagnated. The high debt-to-equity ratio indicates leverage risk, but positive free cash flow supports business operations.
Income Statement
75
Positive
Kontoor Brands shows strong profitability with a consistent gross profit margin around 45% over the years. The net profit margin has been stable, reflecting effective cost management. However, revenue growth has stagnated, with a slight decline in the TTM period compared to previous years, indicating potential market challenges or saturation.
Balance Sheet
68
Positive
The company's debt-to-equity ratio is relatively high, suggesting leverage risk, but there has been improvement in equity levels over recent periods. Return on equity is strong due to solid net income figures, enhancing investor confidence. However, the equity ratio indicates a moderate level of asset financing through equity.
Cash Flow
72
Positive
Kontoor Brands has demonstrated positive free cash flow growth, supporting business operations and potential reinvestment opportunities. The ratio of operating cash flow to net income is favorable, ensuring operational efficiency. However, the free cash flow to net income ratio indicates room for improvement in converting profits into cash.
BreakdownDec 2024Dec 2023Dec 2022Mar 2022Mar 2021
Income Statement
Total Revenue2.61B2.61B2.63B2.48B2.10B
Gross Profit1.16B1.09B1.13B1.11B863.69M
EBITDA342.29M350.35M407.48M320.57M183.77M
Net Income245.80M230.99M245.49M195.42M67.92M
Balance Sheet
Total Assets1.65B1.65B1.58B1.53B1.55B
Cash, Cash Equivalents and Short-Term Investments334.07M215.05M59.18M185.32M248.14M
Total Debt791.16M841.68M851.30M848.75M981.21M
Total Liabilities1.25B1.27B1.33B1.38B1.46B
Stockholders Equity400.06M371.91M250.76M148.14M84.64M
Cash Flow
Free Cash Flow346.11M319.17M55.19M246.99M179.58M
Operating Cash Flow368.23M356.55M83.58M283.86M241.97M
Investing Cash Flow-22.26M-39.14M-30.12M-39.37M-49.07M
Financing Cash Flow-240.35M-155.70M-170.91M-304.07M-57.69M

Kontoor Brands Technical Analysis

Technical Analysis Sentiment
Negative
Last Price63.09
Price Trends
50DMA
67.59
Negative
100DMA
64.28
Negative
200DMA
74.25
Negative
Market Momentum
MACD
-0.91
Positive
RSI
40.11
Neutral
STOCH
12.62
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KTB, the sentiment is Negative. The current price of 63.09 is below the 20-day moving average (MA) of 66.97, below the 50-day MA of 67.59, and below the 200-day MA of 74.25, indicating a bearish trend. The MACD of -0.91 indicates Positive momentum. The RSI at 40.11 is Neutral, neither overbought nor oversold. The STOCH value of 12.62 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KTB.

Kontoor Brands Risk Analysis

Kontoor Brands disclosed 41 risk factors in its most recent earnings report. Kontoor Brands reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Kontoor Brands Peers Comparison

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$3.87B28.668.89%0.16%2.26%-37.52%
71
Outperform
$3.59B15.8256.32%3.19%1.19%3.19%
67
Neutral
$3.42B15.9512.34%1.92%-1.69%-4.01%
62
Neutral
$3.05B-9.95%-7.47%-131.70%
57
Neutral
HK$26.32B4.03-2.03%5.52%-0.23%-68.02%
51
Neutral
$5.07B-2.39%2.84%-7.52%94.28%
49
Neutral
$1.64B-23.24%-33.72%-892.32%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
KTB
Kontoor Brands
63.09
-2.05
-3.15%
COLM
Columbia Sportswear
60.44
-15.58
-20.49%
HBI
Hanesbrands
4.73
-0.94
-16.58%
UA
Under Armour
6.78
0.19
2.88%
VFC
VF
12.68
-3.06
-19.44%
ZGN
Ermenegildo Zegna
9.19
-1.74
-15.92%

Kontoor Brands Corporate Events

Executive/Board Changes
Andrew E. Page Resigns from Kontoor Brands Board
Neutral
Jun 2, 2025

On June 2, 2025, Andrew E. Page resigned from Kontoor Brands‘ Board of Directors, including all committees, due to a conflict of interest with Helly Hansen, a competitor to a brand where he serves as CFO. His resignation was voluntary and not due to any disagreements with the company’s operations or policies.

The most recent analyst rating on (KTB) stock is a Buy with a $108.00 price target. To see the full list of analyst forecasts on Kontoor Brands stock, see the KTB Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 12, 2025