Kontoor announces plans to sell off Lee jeanswear business; first-quarter profit up 116%

Kontoor Brands Inc. disclosed Thursday it is in an "advanced state with interest from multiple parties" to sell off its Lee jeanswear business as part of going all-in on its Helly Hansen and Wranger brands.

The Greensboro jeans manufacturer has about 2,800 of 13,200 employees in the U.S., including about 700 at its headquarters and about 350 at its Mocksville distribution center.

"The company anticipates entering into a definitive agreement to divest the Lee business in 2026," according to a news release. "As a result, the company has reported the results of the Lee business in discontinued operations."

Investors responded to the Lee divestiture news with boosting the share price by up to 13.1% Thursday.

Lee was founded in 1891. It currently has distribution in more than 100 countries and more than 900-branded retail locations.

Lee was acquired by VF Corp. in 1969 and was retained by Kontoor in its spinoff from VF in 2019.

The decision to sell off Lee is surprising given Kontoor has ramped up its marketing and licensing partnerships in recent years, including with J.Crew in March, Goody Hair in January, Crayola in August, a global advertising campaign that launched in September and a men's golf apparel collection in May 2024.

"Our decision to divest Lee enables sharper focus on the opportunities with greatest potential to maximize shareholder returns as we align the Kontoor brand portfolio to a higher growth profile," said Scott Baxter, Kontoor's chairman, president and chief executive.

Kontoor declared its intentions as part of its first-quarter earnings report in which it had a 116% spike in net income to $92.44 million.

Diluted earnings were $1.65 a share, while adjusted earnings when excluding Lee sales was $1.05 a share.

There was a $1.17 earnings projection by one analyst surveyed by Zacks Investment Research. Analysts typically do not include one-time gains and charges in their forecasts.

Lee sales represented $194.2 million of its $807.6 million, or 24%, of first-quarter revenue.

By comparison, Wrangler represented just under 54% at $435.8 million. Helly Hansen accounted for 20.5%, or $165.5 million.

Kontoor completed in May 2025 its $900 million purchase of the Norwegian outdoor and workwear brand. Helly Hansen focuses on mid- to high-end outdoor and skiing apparel, whereas Kontoor focuses on a camping and hiking product line.

"When you think about those two brands and the powerful combination of them both, it was just leaning into our strengths, and giving Lee a chance to be important to someone else in their portfolio," Baxter said.

The manufacturer also reported Thursday several other key financial and operational updates that include:

• The board of directors authorizing a new share-repurchase program of $750 million. The company repurchased $25 million worth of shares during the first quarter.

The new program ends a previous share-repurchase program that still had $165 million remaining.

Joe Alkire, Kontoor Brands' chief financial officer and global head of operations, said much of the share repurchase program will be paid for from the sale proceeds of Lee.

"Our $750 million share repurchase program reflects the confidence we have in our business moving forward and the opportunities to generate significant value from our sharper brand portfolio," Baxter said.

• Kontoor projects receiving a recovery of $54 million following the U.S. Supreme Court's decision that the International Emergency Economic Powers Act does not authorize tariffs.

During the first quarter, Kontoor reduced its cost of goods by $49 million that represented the reversal of expense for IEEPA tariffs on inventory previously sold. About $29 million was related to tariffs expensed in 2025.

Kontoor projects a 15% reciprocal tariff rate on applicable inventory receipts for the remainder of 2026.

Kontoor said it "is evaluating the impact of the United States and Bangladesh reciprocal trade framework. The company utilizes U.S. grown cotton in more than 80% of products sourced from Bangladesh which may qualify for a duty exemption under the trade framework."

• The company updated its fiscal 2026 financial guidance with a slight increase in revenue and adjusted earnings projections.

The range of full-year revenue, not including Lee sales, has been raised from $3.4 to $3.45 billion to $3.41 billion to $3.46 billion. Lee is projected to produce $75 million in sales before the potential sale.

The range of adjusted earnings is raised from $6.40 to $6.50, to $6.60 to $6.70. The range when excluding Lee sales is $5.15 to $5.25.

• The board declared a quarterly cash dividend of 53 cents, payable June 18 to shareholders registered as of June 8.

"Our strong first quarter results reflect the power of our operating model combined with strong execution," Baxter said.

"Wrangler drove another quarter of broad-based growth and market share gains, and Helly Hansen delivered better-than-expected revenue and profitability."

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This story was originally published May 8, 2026 at 4:15 AM.