Core Viewpoint - Kontoor Brands (KTB) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ended June 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected to be released on August 7, with a consensus EPS estimate of $0.86, reflecting a year-over-year decrease of 12.2%. Revenues are projected to be $627.5 million, which is a 3.4% increase from the previous year [3][2]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial estimates during this period [4]. Earnings Surprise Prediction - The Zacks Earnings ESP (Expected Surprise Prediction) model compares the Most Accurate Estimate to the Zacks Consensus Estimate, suggesting that recent analyst revisions may provide more accurate predictions for earnings [8][7]. Earnings ESP and Zacks Rank - For Kontoor, the Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%. The stock currently holds a Zacks Rank of 4, making it challenging to predict an earnings beat [12]. Historical Performance - In the last reported quarter, Kontoor exceeded the expected earnings of $1.16 per share by delivering $1.20, resulting in a surprise of +3.45%. The company has beaten consensus EPS estimates in the last four quarters [13][14]. Market Reaction Factors - An earnings beat or miss may not solely dictate stock price movements, as other factors can influence investor sentiment. Stocks may decline despite an earnings beat or rise despite a miss due to unforeseen catalysts [15]. Investment Considerations - While Kontoor does not appear to be a strong candidate for an earnings beat, investors should consider additional factors before making investment decisions related to this stock ahead of its earnings release [17].

Economic Overview - Inflation is showing signs of cooling, with the personal consumption expenditure (PCE) index rising only 0.1% month-over-month in April and 2.1% year-over-year, down from 2.3% in March [4][5] - Core PCE, excluding food and energy, also rose 0.1% month-over-month and 2.5% year-over-year, marking the smallest advance since March 2021 [5] - Consumer spending increased by 0.2% month-over-month, while personal income rose by 0.8% in April, indicating economic resilience [5][11] Trade and Tariffs - President Trump's tariffs announced in early April have been put on hold as trade negotiations are ongoing, alleviating concerns about inflation and recession [2][6] - The temporary pause in tariffs and the initiation of trade talks, including a deal with the UK, have boosted market optimism [7] Consumer Discretionary Stocks - Positive sentiment in the economy suggests investing in consumer discretionary stocks is prudent [2][8] - Selected stocks include: - **Interface, Inc. (TILE)**: Expected earnings growth rate of 8.2%, with a Zacks Consensus Estimate improvement of 2.6% over the past 60 days [9] - **Kontoor Brands, Inc. (KTB)**: Expected earnings growth rate of 9.6%, with a Zacks Consensus Estimate improvement of 2.9% over the past 60 days [12] - **GDEV Inc. (GDEV)**: Expected earnings growth rate of 58%, with a Zacks Consensus Estimate improvement of 21.8% over the past 60 days [13] - **Netflix, Inc. (NFLX)**: Expected earnings growth rate of 27.7%, with a Zacks Consensus Estimate improvement of 3% over the past 60 days [15]

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, but identifying stocks that can sustain this growth is challenging [1] Group 1: Company Overview - Kontoor Brands (KTB) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] - The company is known for its Wrangler and Lee apparel brands [3] Group 2: Earnings Growth - Kontoor's historical EPS growth rate is 13.6%, with projected EPS growth of 9.5% this year, significantly outperforming the industry average of 0.4% [5] Group 3: Asset Utilization - Kontoor has an asset utilization ratio (sales-to-total-assets ratio) of 1.58, indicating it generates $1.58 in sales for every dollar in assets, compared to the industry average of 1.19 [6] Group 4: Sales Growth - The company's sales are expected to grow by 1.1% this year, while the industry average is stagnant at 0% [7] Group 5: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Kontoor, with the Zacks Consensus Estimate for the current year increasing by 2.9% over the past month [9] Group 6: Investment Potential - Kontoor has achieved a Growth Score of B and a Zacks Rank of 2, indicating it is a solid choice for growth investors and a potential outperformer [11]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying those that can fulfill their potential is challenging [1] Group 1: Company Overview - Kontoor Brands (KTB) is currently recommended as a growth stock by the Zacks Growth Style Score system, which evaluates a company's real growth prospects beyond traditional metrics [2] - The company has a favorable Growth Score and a top Zacks Rank, indicating strong potential for growth investors [2] Group 2: Earnings Growth - Kontoor's historical EPS growth rate is 13.6%, with projected EPS growth of 9.5% this year, significantly outperforming the industry average of 1.8% [4] Group 3: Asset Utilization - Kontoor has an asset utilization ratio (sales-to-total-assets ratio) of 1.58, indicating that the company generates $1.58 in sales for every dollar in assets, compared to the industry average of 1.19 [5] Group 4: Sales Growth - The company's sales are expected to grow by 1.1% this year, surpassing the industry average growth of 0.8% [6] Group 5: Earnings Estimate Revisions - The current-year earnings estimates for Kontoor have increased by 2.9% over the past month, reflecting a positive trend in earnings estimate revisions [7] Group 6: Investment Potential - Kontoor has achieved a Zacks Rank of 2 and a Growth Score of B, suggesting it is a potential outperformer and a solid choice for growth investors [9]

Financial Data and Key Metrics Changes - The company reported flat global revenue compared to the prior year, consistent with expectations, with adjusted gross margin expanding by 200 basis points to 47.7% due to lower input costs and favorable mix [29][34] - Adjusted earnings per share (EPS) was $1.20, including an $0.11 impact from acquisition-related stock-based compensation, while excluding this expense, adjusted EPS was $1.31, a 13% increase compared to the prior year [37][49] - Inventory decreased by 12% to $443 million, with a strong focus on managing working capital prudently [38] Business Line Data and Key Metrics Changes - Wrangler's global revenue increased by 3%, with a notable 40% growth in the female segment, while Lee's global revenue decreased by 8% as brand repositioning continues [15][18][32] - The female business of Wrangler, now at 10% of global revenue, is expected to drive long-term growth opportunities [16] - Lee's U.S. revenue decreased by 8%, but digital sales grew by 12%, indicating a shift towards online engagement [33][19] Market Data and Key Metrics Changes - The U.S. market remains the largest outdoor apparel and footwear market, with significant growth opportunities identified for Helly Hansen, expected to contribute approximately $425 million to full-year revenue [6][24] - International revenue for Wrangler increased by 4%, driven by a 6% growth in wholesale [31] Company Strategy and Development Direction - The acquisition of Helly Hansen is expected to enhance growth, cash flow, and capital allocation options, with a focus on increasing operating margins and leveraging global supply chain efficiencies [5][9][27] - The company aims to establish itself as an employer of choice in the industry, emphasizing talent retention and cultural fit with Helly Hansen [10] Management's Comments on Operating Environment and Future Outlook - Management noted an increase in macro volatility but expressed confidence in the company's operational agility and ability to navigate challenges [12][41] - Recent trends in POS (point of sale) have shown improvement, with March and April indicating a positive shift after a slowdown in February [30][41] Other Important Information - The company expects full-year revenue to be in the range of $3.06 billion to $3.09 billion, representing growth of 17% to 19%, with organic revenue growth expected at 1% to 2% [43][44] - The adjusted gross margin outlook for the full year is now expected to be between 45.9% and 46.1%, reflecting an increase compared to the previous year [47] Q&A Session Summary Question: State of U.S. Consumer - Management characterized the U.S. consumer as resilient, with positive trends observed in March and April, indicating a recovery from earlier volatility [60][63] Question: Guidance for 2Q and 2026 Outlook - The company expects 2Q revenue growth of approximately 4%, with organic growth driven by new programs and distribution expansion [45][66] Question: Lee Brand Transition - Management expressed confidence in the Lee brand's transition, highlighting improvements in product quality and digital engagement, with expectations for growth in 2026 [76] Question: Gross Margin Drivers - The significant gross margin outperformance was attributed to a favorable mix, lower product costs, and benefits from Project Genius, with expectations for continued positive contributions [77][79] Question: Tariff Impact and Mitigation - The unmitigated tariff impact for 2025 is now estimated at $50 million, with proactive measures being implemented to offset potential costs [51][84]

Financial Data and Key Metrics Changes - The company reported flat global revenue compared to the prior year, consistent with expectations, with adjusted gross margin expanding by 200 basis points to 47.7% driven by lower input costs and favorable mix [29][34][42] - Adjusted earnings per share (EPS) was $1.31, a 13% increase compared to the prior year, exceeding previous expectations [36][47] - Net debt was reported at $379 million, with a net leverage ratio of 0.9 times trailing twelve-month adjusted EBITDA, below the targeted range ahead of the Helly Hansen acquisition [38][39] Business Line Data and Key Metrics Changes - Wrangler's global revenue increased by 3%, with a notable 40% growth in the female segment, while Lee's global revenue decreased by 8% [15][31][32] - The company gained 70 basis points of market share in the men's and women's bottoms category during the first quarter [18][31] - The Lee brand is undergoing a repositioning strategy, with expectations for sequential improvement in revenue [18][19] Market Data and Key Metrics Changes - The U.S. market remains the largest outdoor apparel and footwear market, with significant growth opportunities identified for Helly Hansen [6][7] - International revenue for Wrangler increased by 4%, driven by a 6% growth in wholesale [31] - The company noted a resilient consumer environment, with improvements in point-of-sale (POS) trends observed in March and April [13][30] Company Strategy and Development Direction - The acquisition of Helly Hansen is expected to enhance revenue growth, earnings, and cash flow, with a focus on accelerating the brand's growth and improving operating margins [5][6][9] - The company aims to establish itself as an employer of choice in the industry, emphasizing talent retention and cultural fit with Helly Hansen [10][11] - Project Genius is expected to contribute to significant cost savings and operational efficiencies, with a full run rate anticipated by 2026 [14][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic volatility, highlighting operational agility and a strong supply chain as competitive advantages [12][41] - The outlook for 2025 includes expected revenue growth of 17% to 19%, with Helly Hansen contributing approximately $425 million [42][44] - Management remains cautious about retail inventory levels and consumer behavior, planning conservatively for the year [43][49] Other Important Information - The company has established a value creation framework with four pillars to drive growth and improve profitability [6][9] - Tariff impacts are being actively managed, with expectations to mitigate the effects within a 12 to 18-month period [49][52] - The company plans to continue its share repurchase program once acquisition-related debt is reduced [38][39] Q&A Session Summary Question: State of U.S. Consumer - Management described the U.S. consumer as resilient, with positive trends observed in March and April following a strong start to the year [56][58] Question: Guidance for 2Q and 2026 - The company expects organic revenue growth of 1% to 2% for the full year, with second-half growth driven by new programs and distribution expansion [61][62] Question: Lee Brand Transition - Management expressed confidence in the Lee brand's product quality and digital performance, anticipating a positive inflection in growth by 2026 [68][73] Question: Gross Margin Drivers - The significant gross margin outperformance was attributed to favorable product mix, lower product costs, and benefits from Project Genius [74][76] Question: Tariff Impact and Mitigation - The unmitigated tariff impact has been revised to approximately $50 million, with Mexico's tariff exemption contributing to the reduction [80][81] Question: Helly Hansen Contribution - Helly Hansen is expected to contribute approximately $425 million in revenue for the full year, with double-digit growth anticipated in the second half [24][87]

Financial Data and Key Metrics Changes - The company reported flat global revenue compared to the prior year, consistent with expectations, with adjusted gross margin expanding by 200 basis points to 47.7% due to lower input costs and favorable mix [28][33][41] - Adjusted earnings per share (EPS) was $1.20, including an $0.11 impact from acquisition-related stock-based compensation, while excluding this expense, adjusted EPS was $1.31, a 13% increase compared to the prior year [35][41] Business Line Data and Key Metrics Changes - Wrangler's global revenue increased by 3%, with a notable 40% growth in the female segment, while Lee's global revenue decreased by 8%, aligning with expectations [30][31][17] - The company gained 70 basis points of market share in the men's and women's bottoms business during the first quarter [17][30] Market Data and Key Metrics Changes - The U.S. market showed resilience, with revenue growth of 3% driven by a 2% increase in wholesale and a 14% increase in direct-to-consumer (DTC) sales [30][31] - International revenue for Wrangler increased by 4%, supported by a 6% growth in wholesale [31] Company Strategy and Development Direction - The acquisition of Helly Hansen is expected to enhance revenue growth, earnings, and cash flow, with a target contribution of approximately $425 million to full-year revenue [4][23] - The company aims to double Helly Hansen's operating margin from high single digits to mid-teens through gross margin expansion and SG&A benefits [7][25] Management's Comments on Operating Environment and Future Outlook - Management noted an increase in macro volatility but expressed confidence in the company's operational agility and supply chain strength to navigate challenges [11][12] - The outlook for 2025 includes expected revenue growth of 17% to 19%, with organic revenue growth projected at 1% to 2% excluding Helly Hansen [41][42] Other Important Information - The company has reduced SKUs by approximately 20% in the U.S. over the past twelve months, contributing to improved inventory health [34] - The net leverage ratio was reported at 0.9 times, below the targeted range, with expectations to return to under two times net leverage within twelve months post-acquisition [37] Q&A Session Summary Question: State of U.S. Consumer - Management characterized the U.S. consumer as resilient, noting a strong bounce back in March and April, with positive trends continuing into May [56][58] Question: Guidance for 2Q and 2026 - The company expects second half growth of approximately 3%, driven by new programs and distribution expansion, while organic growth for 2026 is anticipated to be positive [61][63] Question: Lee Brand Transition - Management expressed confidence in the Lee brand's product quality and digital engagement, with expectations for a positive inflection in growth by 2026 [70][73] Question: Gross Margin Drivers - The significant gross margin outperformance was attributed to a favorable mix, lower product costs, and benefits from Project Genius, with expectations for sustainability in the second half [74][76] Question: Tariff Impact - The unmitigated tariff impact for 2025 is estimated at $50 million, with mitigating actions expected to reduce this significantly [49][51] Question: Helly Hansen Contribution - Helly Hansen is expected to contribute approximately $425 million in revenue for the full year, with double-digit growth anticipated in the second half [23][87]

Financial Data and Key Metrics Changes - In 2024, global revenue increased by 5%, with Wrangler's revenue growing by 9% and Lee's revenue declining by 5% [24][26][20] - Adjusted gross margin expanded by 160 basis points to 44.7%, driven by lower input costs and mix [30] - Adjusted earnings per share (EPS) was $1.38, representing a 2% increase compared to the prior year [31] Business Line Data and Key Metrics Changes - Wrangler's global revenue grew 9% in the fourth quarter, with notable growth in outdoor (29%) and female segments (19%) [17][25] - Lee's direct-to-consumer (DTC) revenue grew double digits, while wholesale revenue declined significantly [20][27] - Non-denim categories accounted for approximately one-third of global revenue, with outdoor business growing at a mid-teens rate [9] Market Data and Key Metrics Changes - The U.S. market saw a 9% growth in Wrangler revenue, while Lee's U.S. revenue decreased by 6% [24][26] - In Asia, revenue performance was better than expected, while Europe performed as anticipated [24][29] - Point of Sale (POS) trends showed a decline in February after a strong start to the year, reflecting consumer conservatism [42][101] Company Strategy and Development Direction - The company is focused on Project Genius, aiming for $100 million in savings, with benefits expected to flow through in 2025 [11][34] - Plans to explore shop-in-shop concepts in key retailers to enhance consumer experience [9] - The addition of Helly Hansen is expected to drive growth and enhance the brand portfolio [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current uncertain environment, emphasizing operational strength and brand investments [6][23] - The company anticipates a transition year for Lee in 2025, focusing on repositioning for growth [20][21] - Management noted that consumer sentiment is currently cautious due to various macroeconomic factors [101] Other Important Information - The company returned $198 million to shareholders through dividends and share repurchases in 2024 [33] - Inventory decreased by 22% to $390 million, achieving an annual turnover target of approximately 3.5 times [32] - The company expects cash from operations to exceed $300 million in 2025 [47] Q&A Session Summary Question: Details on Lee's performance and DTC vs. wholesale dynamics - Management explained that DTC growth reflects successful new product introductions, while wholesale performance lags due to pipeline filling [50][53] Question: Gross margin expectations and seasonal dynamics - Management clarified that gross margin is expected to increase by 30 basis points in Q1, with a moderation in Q2 due to seasonal dynamics and product cost inflation [51][52] Question: Insights on consumer segmentation for Lee - Management indicated a shift towards targeting a more fashion-conscious consumer, moving away from overly aspirational segments [91][92] Question: Impact of potential tariffs on operations - Management discussed that tariffs would begin to impact the P&L in late Q2, with mitigating actions expected to show results in late 2025 and early 2026 [94][95]