<div id="readability-page-1"><ul><li>5 Mid-Caps to Buy Before the Next Broad Market Sell-Off</li></ul><p>Kontoor Brands <span>NYSE: KTB<span></span></span> said it plans to divest its Lee brand, marking a major portfolio shift as the company seeks to focus resources on Wrangler and Helly Hansen following its first-quarter 2026 results.</p><div><p><span></span><span>Get <strong>Kontoor Brands</strong> alerts:</span></p></div><p>President, CEO and Chairman Scott Baxter said the decision reflects Kontoor’s effort to “sharpen our focus on the opportunities with the greatest potential to generate returns for our shareholders.” He said Lee’s fundamentals improved in 2025 after a turnaround effort, but that the brand now sits outside the company’s long-term strategic focus on function- and activity-based brands.  </p><ul><li>Top Three Value Stocks for 2020</li></ul><p>“We believe this will be a great outcome for Kontoor and the Lee business,” Baxter said. He added that Kontoor intends to support Lee through the sale process and thanked the Lee team for its work.  </p><h2>Lee Sale Process Underway</h2>  <p>CFO and Global Head of Operations Joe Alkire said Kontoor initiated a competitive process to divest Lee during the first quarter and has received “strong interest from multiple parties.” The company expects to enter into an agreement to sell the business later this year. Lee is now being reported as discontinued operations.  </p><p>Alkire said the divestiture will reduce operational complexity and allow Kontoor to make more concentrated investments in Wrangler and Helly Hansen. He said the sale is expected to be immaterial to earnings per share over a 12- to 18-month period, as the loss of Lee earnings is expected to be offset by capital deployment and cost mitigation.  </p><p>Kontoor expects Lee revenue to total approximately $750 million for the full year, reported in discontinued operations. The company also said its continuing operations will temporarily include about $40 million of full-year unmitigated expenses previously allocated to Lee.  </p><h2>Wrangler and Helly Hansen Become the Focus</h2>  <p>Baxter said Wrangler has delivered low-single-digit growth over the past three years and posted its strongest year in 2025. He said the brand has gained market share for 16 consecutive quarters in men’s and women’s bottoms, based on Circana data.  </p><p>In the first quarter, Wrangler global revenue rose 2%, including 9% growth in direct-to-consumer sales and 2% growth in wholesale. U.S. revenue increased 1%, while international revenue rose 9%, driven by 24% growth in DTC and 7% growth in wholesale. Alkire said Wrangler gained more than 100 basis points of market share in men’s and women’s bottoms during the quarter.  </p><p>Management highlighted women’s apparel, Western, international markets, digital, and full-price stores as areas of opportunity for Wrangler. Baxter said Wrangler’s female business currently represents about 10% of revenue, while Alkire noted that the women’s denim market is larger than men’s, based on Circana data.  </p><p>Helly Hansen also remains central to Kontoor’s growth plans. The brand generated first-quarter global revenue of $176 million, up 16% on a pro forma reported basis. Alkire said in response to an analyst question that constant-currency growth was in the high-single-digit range. Including the China joint venture, which is not consolidated, Helly Hansen global revenue increased more than 20% on a pro forma basis. The China joint venture’s revenue increased by approximately 100%, according to Alkire.  </p><p>Baxter said Kontoor sees significant opportunity for Helly Hansen in the U.S., where the brand remains underpenetrated. He said the company is preparing for its first distribution with Dick’s Sporting Goods’ House of Sport concept this fall and is close to hiring a general manager for North America.  </p><h2>First-Quarter Profitability Improves</h2>  <p>Kontoor reported adjusted gross margin of 50.6% for the first quarter, up 470 basis points from a year earlier. Alkire said the improvement was driven by Project Genius, the contribution from Helly Hansen and channel mix, partially offset by higher product costs net of pricing actions. Helly Hansen added about 200 basis points to adjusted gross margin.  </p><p>Adjusted SG&amp;A was $224 million, up 60% from the prior year, reflecting the impact of Helly Hansen and increased investments in demand creation, DTC and variable expenses. Adjusted EPS from continuing operations was $1.06, up 67% year over year. Including discontinued operations, adjusted EPS was $1.55. Helly Hansen contributed $0.26 per share, while unmitigated expenses previously allocated to Lee reduced adjusted EPS from continuing operations by $0.11.  </p><p>Kontoor ended the quarter with inventory of $464 million, net debt of $1.1 billion and $56 million in cash. Its $500 million revolver remained undrawn. The company said it has made $250 million in voluntary term-loan payments since closing the Helly Hansen transaction.  </p><h2>Buyback Authorization and Capital Allocation</h2>  <p>Kontoor’s board approved a new $750 million share repurchase authorization, replacing the prior program. Alkire said the company intends to use the majority of expected proceeds from the Lee divestiture to accelerate share repurchases, while also using a portion to strengthen the balance sheet and reduce net interest expense.  </p><p>The company repurchased $25 million of shares during the quarter under its prior authorization and declared a regular quarterly cash dividend of $0.53 per share.  </p><p>Alkire said Kontoor expects to generate more than $400 million of free cash flow in 2026 and has earmarked $225 million for debt repayment. He said the company remains committed to exiting 2026 with net leverage at or below 1.5 times. Baxter said Kontoor is six to nine months ahead of its original debt repayment plan.  </p><h2>Outlook Raised on a Combined Basis</h2>  <p>Kontoor now expects full-year revenue, including discontinued operations, of $3.41 billion to $3.46 billion, compared with its prior outlook of $3.40 billion to $3.45 billion. Revenue from continuing operations is projected at $2.66 billion to $2.71 billion.  </p><p>Full-year adjusted gross margin from continuing operations is expected to be 48.3% to 48.5%, up 180 to 200 basis points from the prior year. Adjusted operating income from continuing operations is expected to be $411 million to $418 million, including about $40 million of unmitigated expenses previously allocated to Lee.  </p><p>On a combined basis, including Lee’s expected contribution now reported in discontinued operations, adjusted operating income is expected to be $516 million to $523 million, above the prior outlook of $506 million to $512 million.  </p><p>Kontoor expects adjusted EPS from continuing operations of $5.15 to $5.25, including a $0.55 impact from unmitigated Lee-related expenses. Before that impact, adjusted EPS from continuing operations is expected to be $5.70 to $5.80. Including discontinued operations, first-half adjusted EPS is expected to be $2.77 to $2.82, compared with the prior outlook of $2.25 to $2.30.  </p><p>Alkire said the company’s outlook assumes a 15% reciprocal tariff rate on applicable inventory receipts for the remainder of 2026. He also said Kontoor recognized a $54 million net receivable related to expected recovery of certain tariff payments and reduced cost of goods sold by approximately $49 million on a GAAP basis during the quarter.  </p><p>Baxter closed the call by saying Kontoor’s portfolio shift is designed to accelerate growth. “We now have two mouths to feed instead of three, and we’re going to be very aggressive there,” he said.</p><h2>About Kontoor Brands <span>NYSE: KTB<span></span></span></h2><p>Kontoor Brands, Inc is a global apparel company best known for its Wrangler and Lee denim and lifestyle brands. Established as an independent, publicly traded company in May 2019 following a spin-off from VF Corporation, Kontoor leverages a legacy that dates back to 1889 with the founding of Lee and to 1947 with the introduction of the Wrangler brand. The company focuses on designing, manufacturing and distributing premium, casual and workwear apparel, including jeans, pants, shorts, shirts, jackets and complementary accessories. </p><p>Kontoor Brands operates a diversified sales model that combines wholesale partnerships with leading retailers, distribution through e-commerce channels and select direct-to-consumer formats.</p><p><em>This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.</em></p><h2>Should You Invest $1,000 in Kontoor Brands Right Now?</h2><p>Before you consider Kontoor Brands, you'll want to hear this.</p><p>MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Kontoor Brands wasn't on the list.</p><p>While Kontoor Brands currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.</p><p>View The Five Stocks Here</p>                  </div>

<p>Kontoor Brands (NYSE:KTB) plans to divest its Lee brand to focus on Wrangler and Helly Hansen after its Q1 2026 results. CEO Scott Baxter stated this decision aims to enhance shareholder returns. CFO Joe Alkire noted strong interest in the Lee sale, expected to be finalized later this year, which will simplify operations. Wrangler and Helly Hansen are prioritized for growth, with Wrangler showing consistent market share gains. Kontoor reported a Q1 adjusted EPS of $1.06, up 67% year-over-year, and announced a $750 million share repurchase authorization.</p>

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