Kontoor Brands Q3 2026: Big EPS Beat, $450M Buyback Incoming

Kontoor Brands reported adjusted EPS of $1.50 for the third quarter of 2026, beating the consensus estimate of $1.31. That marks six consecutive quarters of topping EPS expectations, with the Q3 beat driven in large part by adjusted gross margin expansion fueled by Project Jeanius savings, favorable product mix, and pricing gains.

Revenue of $685.35 million came in missing expectations and fell roughly 19.7% year over year, but the decline is almost entirely a function of the completed divestiture of the Lee brand. On a continuing-operations basis, both Wrangler and Helly Hansen each grew 3%.

The Lee sale netted $698 million in proceeds, and management is deploying $450 million of that back to shareholders in the fourth quarter. The centerpiece is a $400 million accelerated share repurchase agreement expected to be entered in early November 2026, with final settlement anticipated in the first half of 2027. The company also plans $280 million in voluntary term loan repayments in Q4, targeting net leverage below 1.5 times by year-end.

GAAP results were weighed down by a $94.7 million non-cash tax charge tied to the Helly Hansen legal entity restructuring and IP migration, which pushed GAAP diluted EPS from continuing operations to a loss of $0.62. Investors focused on the adjusted figures will note that operating income rose 20.69% year over year to $77.1 million on a reported basis.

Looking ahead, management raised full-year 2026 adjusted EPS guidance to $5.40, up from a prior range of $5.25 to $5.35, and set an initial 2027 target of at least $6.60 in adjusted EPS, representing more than 20% growth. Full-year 2026 revenue guidance is centered around $2.68 billion, and adjusted gross margin is now expected in a range of 50.0% to 50.2%, up 350 to 370 basis points for the year. The outlook assumes a 12.5% reciprocal tariff rate in the fourth quarter.