Executive Summary

Q4 2024 revenue rose 4% YoY to $699.3M, adjusted gross margin expanded to 44.7% (+160bps YoY), and adjusted EPS was $1.38; Wrangler grew 9% while Lee declined 6% .
FY 2025 outlook: revenue +1–3% to $2.63–$2.69B, adjusted EPS $5.20–$5.30, adjusted operating income $400–$408M, cash from operations >$300M; Jeanius run-rate savings raised to >$100M (from $100M prior) .
Management flagged tariff risk (proposed 25% on Mexico imports): unmitigated 2025 operating profit impact ~$50M, with planned mitigations to largely offset within 12–18 months; Mexico ~25% of 2025 U.S. production volume .
Balance sheet strengthened: inventory -22% YoY to $390.2M; cash $334.1M; net leverage 1.0x; quarterly dividend maintained at $0.52 per share .

What Went Well and What Went Wrong

What Went Well

Wrangler momentum: global revenue +9% in Q4 with broad-based channel and geography growth; outdoor category >$200M and +15% in 2024; female +19% in Q4 .
Structural margin progress: adjusted gross margin +160bps to 44.7% driven by lower input costs, supply chain efficiencies, and DTC mix .
Cash generation and ROIC: cash from operations $368.2M in 2024; trailing 12-month adjusted ROIC 32%, +550bps YoY .

Quoted management:

“Our better than expected fourth quarter was driven by stronger revenue, earnings, and cash generation.” — Scott Baxter, CEO .
“We raised our expected savings target to $100 million… now see an upside.” — Scott Baxter on Project Jeanius .
“Adjusted return on invested capital was 32%.” — Joe Alkire, CFO .

What Went Wrong

Lee softness: global revenue -6% in Q4; U.S. wholesale -10% and international wholesale -11%, affected by mid-tier channel challenges and exit from club channel (~3ppt impact) .
Macro and POS variability: February POS declined low-single digits after January +4%; retailers remain conservative on inventory; FX adds ~100bps headwind vs 120 days ago .
Tariff uncertainty: potential 25% Mexico tariff would impose unmitigated ~$50M operating profit impact in 2025; mitigation actions will take time to flow through P&L .

Financial Results

Core P&L (absolute values; oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$606.9	$670.2	$699.3
Reported EPS ($)	$0.92	$1.26	$1.14
Adjusted EPS ($)	$0.98	$1.37	$1.38
Adjusted Gross Margin %	45.2%	45.0%	44.7%
Adjusted Operating Margin %	13.1%	15.9%	14.5%
Consensus Revenue	Unavailable (S&P Global)	Unavailable (S&P Global)	Unavailable (S&P Global)
Consensus EPS	Unavailable (S&P Global)	Unavailable (S&P Global)	Unavailable (S&P Global)

Estimates context: Wall Street consensus data from S&P Global was unavailable at time of writing due to API limits; no estimate comparisons shown. Values retrieved from S&P Global.*

YoY change (company-disclosed)

Metric	Q2 2024 YoY	Q3 2024 YoY	Q4 2024 YoY
Revenue YoY %	-1%	+2%	+4%
Adjusted EPS YoY %	+27%	+12%	+2% (≈+23% ex discrete tax benefit)

Segment and Mix

Segment	Q4 2023 Revenue ($MM)	Q4 2024 Revenue ($MM)	YoY %
Wrangler	$461.0	$503.1	+9%
Lee	$205.8	$193.5	-6%
Other	$3.0	$2.6	-13%
Total	$669.8	$699.3	+4%

Segment Profit	Q4 2023 ($MM)	Q4 2024 ($MM)	YoY %
Wrangler	$83.9	$105.6	+26%
Lee	$20.7	$17.8	-14%
Total Reportable Segment Profit	$104.6	$123.4	+18%

Channel/Geography (Q4 2024)

Channel	Wrangler ($MM)	Lee ($MM)	Total ($MM)
U.S. Wholesale	$404.4	$93.7	$500.4
Non-U.S. Wholesale	$40.8	$51.8	$92.5
Direct-to-Consumer	$58.0	$48.1	$106.3
Total	$503.1	$193.5	$699.3

Geography	Wrangler ($MM)	Lee ($MM)	Total ($MM)
U.S.	$455.3	$111.2	$569.2
International	$47.8	$82.3	$130.1
Total	$503.1	$193.5	$699.3

KPIs and Balance Sheet

KPI	Q4 2024
Inventory ($MM)	$390.2
Cash and Equivalents ($MM)	$334.1
Long-term Debt ($MM)	$740.3
Net Debt ($MM)	~$406 (LT debt – cash)
Cash from Operations FY ($MM)	$368.2
Adjusted ROIC (TTM)	32.4%
Dividend per Share	$0.52 declared

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	Prelim: H1’25 revenue growth ~4% (constant currency)	$2.63–$2.69B (+1–3% YoY; ~1% FX headwind; 53rd week immaterial)	Quantified full-year range; FX headwind added; growth drivers detailed
Adjusted Gross Margin	FY 2025	Prelim: expansion via mix, supply chain, Jeanius	45.3%–45.5% (+20–40bps YoY)	Maintained expansion; range specified
Adjusted SG&A	FY 2025	Prelim: modest Jeanius 1H benefit	Increase low-single digits YoY (adjusted)	Maintained investment cadence with Jeanius offset
Adjusted Operating Income	FY 2025	Prelim: growth to outpace revenue	$400–$408M (+5–7% YoY)	Quantified range; slight raise vs 2024 base
Adjusted EPS	FY 2025	No prior numeric provided	$5.20–$5.30 (+6–8% YoY; excludes buybacks; ~FX negative)	New quantified range
Cash from Operations	FY 2025	Robust cash generation expected	>$300M	Reiterated, quantified
Capex	FY 2025	Not specified	~$35M	New
Effective Tax Rate	FY 2025	2024 ETR ~20% (context)	~20%	Maintained
Interest Expense	FY 2025	2024 interest ~$32–35M (context)	~$30M	Lowered
Other Expense	FY 2025	2024 other $12–14M (context)	~$11M	Lowered
Avg Diluted Shares	FY 2025	~56–57M (context)	~56M	Slightly reduced
Project Jeanius Run-rate	Ongoing	$100M prior target	Raised to >$100M; full run-rate by end of 2026; ~$30M 2025 gross savings before reinvestment	Raised
Helly Hansen Accretion	FY 2025	Not previously quantified	~$0.15 to adjusted EPS in FY25 (2H weighted); synergies excluded	New
Dividend	Ongoing	Raised to $0.52 in Oct’24	Regular quarterly $0.52 declared (Mar 20, 2025 payable)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Project Jeanius (transformation)	Early benefits expected 2H’25; focus on mix, supply chain	“Fueled by Jeanius,” momentum building; investment capacity rising	Run-rate savings raised >$100M; ~$30M 2025 gross savings; 10–20bps GM benefit; $10–$15M OI net of reinvestment	Strengthening, more quantified
Supply chain & product costs	Proactive efficiencies drove GM expansion	GM expansion via lower costs and supply chain efficiencies	GM +160bps; tailwinds in Q1 shift to headwinds later; Jeanius offsets in 2H	Mixed: early tailwind, later headwind managed
Tariffs/macro	Macro caution, retailer inventory management	Outlook raised despite uncertainty; conservative retailer stance	Mexico tariff risk unmitigated ~$50M; mitigation timeline 12–18 months; consumer softness in Feb	Elevated risk; mitigations planned
Product performance	Wrangler DTC +10%; Lee -7% overall	Wrangler +4%; Lee -3%; stronger DTC	Wrangler +9% (female +19%, outdoor +15% FY); Lee -6%, mid-tier pressure; DTC double-digit growth	Wrangler accelerating; Lee reset ongoing
Regional trends	International -6% (Asia -13%)	U.S. +5%; International -5%	U.S. +6%; Europe +1% (DTC +5%); Asia -2% (DTC +4%)	U.S. strong; Europe stabilizing; Asia uneven
Technology/ERP/data	Investments in DTC and technology	Jeanius improving platform capabilities	ERP complete; enhanced data capabilities under Jeanius back-end	Capability build-out progressing

Management Commentary

“2024 was a landmark year…continued market share gains, accelerating business fundamentals…We enter 2025 from a position of strength.” — Scott Baxter, CEO .
“We have moved firmly into the execution phase [of Project Jeanius] and now see an upside to our $100 million…savings.” — Scott Baxter .
“Adjusted gross margin expanded 160 basis points to 44.7%, driven by lower input costs and mix.” — Joe Alkire, CFO .
“Wrangler gained 130bps share in 2024, accelerating to 220bps in Q4…the 11th consecutive quarter of market share growth.” — Tom Waldron, COO .

Q&A Highlights

Lee strategy and distribution: Exit from club channel (~3ppt Q4 impact); focus on elevating distribution, new innovation platforms; DTC as leading indicator of recovery; transitional year in 2025, aiming for growth in 2026 .
Gross margin phasing: Q1 ~46% GM (+30bps YoY); Q2 moderates due to cost inflation; Jeanius benefits build in 2H (heaviest in Q4) .
Jeanius savings math: ~~$30M 2025 gross savings (~~$10M GM, ~$20M SG&A), reinvest ~50%, net OI +$10–$15M; larger scale in 2026; potential resequencing with Helly integration .
Tariff impact timing: With ~100 days inventory, P&L impact would start late Q2; mitigating actions show late 2H 2025 into early 2026 .
Consumer health and POS: January POS +4% and share gains; February POS softened due to weather and macro uncertainty; variability across months persists .

Estimates Context

S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to API request limits at the time of writing; therefore, comparisons vs Street estimates are not shown. Values retrieved from S&P Global.*
Company-provided Q1 2025 guideposts: revenue ~$625M; EPS ~$1.16; GM ~46% .

Key Takeaways for Investors

Wrangler-driven topline resilience and mix shift continue to underpin margin expansion; watch female and outdoor category growth as incremental drivers .
Lee remains a 2025 transition story; DTC strength and brand reset are positives, but wholesale/mid-tier normalization will take time; monitor distribution elevation and innovation launches (Lee X, MVP Heritage) .
Project Jeanius is a tangible margin and earnings lever: >$100M run-rate by 2026; ~$10–$15M 2025 operating income uplift net of reinvestment; back-half weighted benefits .
Tariffs on Mexico pose near-term risk (~$50M unmitigated OI impact), but diversified sourcing and pricing actions should largely offset within 12–18 months; expect impacts to start late Q2 if implemented .
FY 2025 guide is measured: revenue +1–3% (FX headwind), adjusted EPS $5.20–$5.30, cash from operations >$300M; dividend maintained at $0.52, with buybacks paused pending Helly close .
Helly Hansen adds portfolio breadth; 2025 accretion ~$0.15 EPS (2H weighted), with upside from synergies and working capital under KTB ownership .
Balance sheet/working capital discipline remains a strength: inventory -22% YoY; net leverage 1.0x; sustained ROIC improvement to 32% .

*Estimates note: S&P Global consensus data unavailable at time of writing due to API limits; any estimates referenced are company guidance, not Street consensus. Values retrieved from S&P Global.

Kontoor Brands, Inc. (KTB)·Q4 2024 Earnings Summary