KTB 10-K & 10-Q changes, risk factors and insider trading

We anticipate continued uncertainty related to the macroeconomic environment during 2025,2026, including the potential impact of future tariff increases, and we continue to closely monitor macroeconomic conditions, including consumer behavior and the impact of these factors on consumer demand. Continuing or worsening inflation and/or supply chain disruptionsconditions may have a material adverse impact on our results of operations, cash flows and/or financial condition.

The success of our business depends on consumer spending on apparel, and there are a number of factors that influence consumer spending, including actual and perceived economic conditions, disposable consumer income, consumer discretionary spending patterns, tariffs and import/export regulations, interest rates, inflation, recessionary concerns, consumer credit availability and consumer debt levels, tariffs and import/export regulations, fuel and other energy costs, unemployment, stock market performance, weather conditions and tax rates in the international, national, regional and local markets where our products are sold.

The current global economic environment is unpredictable,unpredictable and volatile, and adverse economic trends or other factors could negatively impact the level of consumer spending, which could have a material adverse impact on us.

A small portion of our customers account for a significant portion of net revenues. Sales to our ten largest customers accounted for 62%53% of total net revenues in 2024,2025, and our top customer, Walmart, accounted for 36%30% of our total net revenues in 2024,2025, 20232024 and 2022.2023. We expect that these customers will continue to represent a significant portion of our net sales in the future. Sales to our wholesale customers are generally on a purchase order basis and not subject to long-term agreements. A decision by any of our major wholesale customers to significantly decrease the volume of products purchased from us, cease purchases from us, cancel orders, reduce advertising for our products or change the manner of doing business with us, whether motivated by economic conditions, financial difficulties, competitive conditions, or otherwise, could substantially reduce net revenues and have a material adverse effect on our results of operations, cash flows and financial condition. Our larger customers generally have the scale to develop supply chains that enable them to change their buying patterns, or develop and market their own private label and other Kontoor Brands, Inc. 2024 Form 10-K 9 economy brands that compete with some of our products. This ability also makes it easier for them to resist our efforts to increase prices, reduce inventory levels and, potentially, discontinue our products. Many of our largest customers have already developed significant private label brands under which they design and market apparel and accessories that compete directly with our products. These retailers have assumed an increasing degree of inventory risk in their private label products and, as a result, may first cancel advance orders with us in order to manage their own inventory levels downward during periods of unseasonable weather or weak economic cycles. In addition, if any of our customers devote less selling space to our categories of apparel, our sales to those customers could be reduced even if we maintain our share of their apparel business. Any such reduction in our categories of apparel selling space could result in lower sales, and our results of operations, cash flows and financial condition may be adversely affected.

Additionally, from time to time certain customers have experienced financial and operational difficulties. For example, our wholesale customers experienced significant business disruptions as a result of the COVID-19 pandemic and the macroeconomic pressures that resulted from the pandemic. There can be no assurance that our wholesale or other customers have adequate financial resources and/or access to additional capital to withstand prolonged periods of adverse economic conditions. To the extent one or more of our largest customers experience significant financial difficulty, bankruptcy, insolvency or cease operations, this could have a material adverse effect on our sales, our ability to collect on receivables and our results of operations, cash flows and financial condition.

The apparel industry is subject to significant pricing pressure caused by many factors, including intense competition, consolidation in the retail industry, rising commodity and conversion costs, tariffs, pressure from retailers to reduce the costs of products, the impact of inflation, elevated interest rates, tariffs, changes in consumer demand and continued or accelerated shifting to online shopping and purchasing. Customers may increasingly seek markdown allowances, incentives and other forms of economic support. If these factors cause us to reduce our sales prices to retailers and consumers, and we fail to sufficiently reduce our product costs or operating expenses, our profitability will decline. This could have a material adverse effect on our results of operations, cash flows and financial condition.

Our success to date has been due in large part to the growth of our brands’brands' images and our customers’customers' connection to our brands. If we are unable to timely and appropriately respond to changing consumer demand, including customers’customers' desire for sustainable products, the names and images of our brands may be impaired. Even if we react appropriately to changes in consumer preferences, consumers may consider our brands’ images to be outdated or associate our brands with styles that are no longer popular. In addition, brand value is based in part on consumer perceptions on a variety of qualities, including merchandise quality and corporate integrity. Negative claims or publicity regarding us, our brands or our products could adversely affect our reputation and sales Kontoor Brands, Inc. 2024 Form 10-K 11 regardless of whether such claims are accurate. Social media, which accelerates the dissemination of information, can increase the challenges of responding to negative claims. In the past, many apparel companies have experienced periods of rapid growth in sales and earnings followed by periods of declining sales and losses. Our businesses may be similarly affected in the future. In addition, we have sponsorship contracts with a number of athletes, musiciansmusicians, celebrities and celebritiesorganizations and feature those individuals or organizations in our advertising and marketing efforts. Actions taken by those individuals or organizations associated with our products could harm their reputations, which could adversely affect the images of our brands.

•we may not be able to successfully achieve the expected growth or cost savings of our Wrangler®, Lee® and LeeHelly Hansen® brand platforms;

We arecontinue into the process of implementingimplement Project Jeanius, which seeks to simplify and transform our processes, systems and global operating model, and challenges with the implementation of this initiative may negatively impact our business and operations.

We arecontinue into theexecute process of implementingon Project Jeanius, which seeks to simplify and transform our processes, systems and global operating model, with particular focus on enhancing and optimizing our supply chain, reducing operating complexity and integrating our business across global shared services. This initiative has involved, and will continue to involve, substantial expenditures. The continued implementation of Project Jeanius may prove to be more difficult, costly or time consuming than expected, and it is possible that the initiative will not yield the gross profit improvement and selling, general and administrative expense savings in the amounts or on the timeline originally anticipated. In addition, we may experience operational challenges such as delays or errors in implementation, security failures such as loss or corruption of data, reputational harm or other significant disruptions. Any disruptions, delays or deficiencies in the implementation of this initiative could negatively impact our operations and adversely affect our ability to operate our business. This could have a material adverse effect on our results of operations, cash flows and financial condition.

During 2024,2025, approximately 70%77% of our units were purchased from independent manufacturers primarily located in Asia, with our largest number of units sourced from Bangladesh, and substantially all of the remainder produced by company-ownedCompany-owned and -operated manufacturing facilities located in Mexico. Any of the following could impact our ability to produce or deliver our products or our cost of producing or delivering products and, as a result, our profitability:

We rely on owned or independently-operated distribution facilities to warehouse and ship product to our customers. Our distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures. Because substantially all of our products are distributed from a relatively small number of locations, our operations could also be interrupted by public health crises or natural or man-made disasters like earthquakes, floods or fires affecting our distribution centers. We maintain business interruption insurance, but it may not adequately protect us from the adverse effects that could be caused by significant disruptions in our distribution facilities, such as the long-term loss of customers or an erosion of brand image. In addition, our distribution capacity is dependent on the timely performance of services by third parties, including the transportation of product to and from our distribution facilities. Transportation of our products may be interrupted due to events such as marine disasters, bad weather or natural disasters, mechanical or electrical failures, public health crises, grounding, capsizing, fire, explosions and collisions, theft, piracy, cyber-attacks, human error and war and terrorism resulting in delays, damages or losses. If we encounter problems with our distribution system, our ability to meet customer expectations, manage inventory, complete sales and achieve operating efficiencies could be materially adversely affected.

In the normal course of business, we collect, store, use, process, disclose and transmit (“Process”) certain sensitive, personal, regulated and/or confidential employee and customer information, including credit card and other payment information, over public networks. There is a significant concern by consumers and employees over the security of personal information, including with respect to identity theft and user privacy. Cyber-attacks, including phishing and other forms of social engineering, denial-of-service attacks and the deployment of ransomware and other malware, are increasingly sophisticated and may utilize artificial intelligence,intelligence. and ifIf unauthorized parties gain access to our networks or databases, or those of our third-party service providers, they may be able to steal, access, publish, use, delete or modify confidential and sensitive information, including credit card information and personal information, that we have obligations to protect. Despite the security measures we currently have in place and our commitment to risk management practices, our facilities and systems and those of our third-party service providers may be vulnerable to, and unable to anticipate, detect or mitigate, data security breaches and other cybersecurity incidents. In addition, employees or third-party service providers may intentionally or inadvertently cause data security breaches, through failing to follow policespolicies or otherwise, that result in the unauthorized access to or release or use of personal, sensitive or confidential information. We take, and require our third-party service providers that Processprocess personal, confidential or sensitive information on our behalf to take, measures designed to protect such information and comply with applicable laws, regulations and industry standards related to information security and privacy. However, we cannot control the efforts of third-party service providers and cannot guarantee the compliance of their systems and processes. We and our customers could suffer harm if valuable business data or employee, customer and proprietary information were corrupted, lost, accessed or misappropriated by third parties due to a security failure in our systems or one of our third-party service providers. It could require significant expenditures to remediate any such failure or breach, severely damage our reputation and our relationships with customers, result in unwanted media attention and lost sales and expose us to risks of litigation and liability. In addition, as a result of security breaches at a number of prominent retailers, the media and public scrutiny of information security and privacy has become more intense and the regulatory environment has become increasingly uncertain, rigorous and complex. As a result, we may incur significant costs to comply with current and future state, federal and international laws regarding the protection and unauthorized disclosure of personal and other sensitive information such as the General Data Protection Regulation in the European Union, the United Kingdom General Data Protection Regulation, and state laws in the U.S. related to information security and privacy such as the California Consumer Privacy Act and China's Personal Information Protection Law. As the regulatory environment relating to information security and privacy becomes increasingly more demanding with many new requirements surrounding the processing and protection of personal, confidential and sensitive information, the increased complexity in these types of laws and inherent conflicts between jurisdictions may result in our inability or failure to comply with applicable requirements, despite our focus and efforts. Any failure to comply with the laws and regulations surrounding the protection of personal information could subject us to legal and reputational risks, including significant fines for non-compliance, any of which could have a negative impact on revenues and profits.

Changes to trade policy, including tariff and import/export regulations, have had, and may havecontinue ato materialhave, an adverse effect on our results of operations, cash flows and financial condition.

Changes in policies governing foreign trade and manufacturing in the countries where we currently sell our products or conduct our business have in the past and could in the future adversely affect our business. The U.S. government has instituted and proposed changes in trade policies that include the imposition of higher tariffs on imports into the U.S., the negotiation or termination of trade agreements, economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business. ItThese changes in policy, along with the recent U.S. Supreme Court decision to strike down certain tariffs imposed under the International Emergency Economic Powers Act have created uncertainty as to the scale and short and long-term effects these tariffs may have and it may be time-consuming and expensive for us to alter our operations in order to adapt to or comply with any such changes.

The Organisation for Economic Co-operation and Development (“OECD”) in a joint initiative with G20, has developed a two-pillar framework on Base Erosion and Profit Shifting (“BEPS”). Pillar One contains revised profit allocation and nexus rules while Pillar Two provides proposed global anti-base erosion (“GloBE”) rules. The GloBE rules implement a new global minimum tax of 15% on all large multinational corporations with revenues above certain thresholds. Under Pillar Two, adopting countries have the right to impose “top-up taxes” on low-taxed foreign income earned by multinational companies to which they have a connection, up to the agreed 15%. These new global minimum tax rules began taking place in 2024. Certain countries in which we operate have adopted legislation or are in the process of introducing legislation to implement Pillar Two. TheIn Companyparticular, further to the statement released by the G7 on June 28, 2025 which confirmed that agreement has been reached concerning the operation of a “side-by-side” solution to the application of Pillar Two to U.S. parented groups, we will continueevaluate the Administrative Guidance published by the OECD on January 5, 2026 in relation to monitorthe side-by-side package and other matters (including safe harbors and other simplification measures). We are currently monitoring the developingdevelopments lawsof the two-pillar plan and regulations.are evaluating its potential impact on our financial results, though the implementation of any new legislation could negatively impact us.

Some of our brands, such as Wrangler®, Lee® and LeeHelly Hansen®, enjoy significant worldwide consumer recognition. The higher pricing of those products creates additional risk of counterfeiting and infringement, misappropriation or other violation by third parties. The counterfeiting of our products or the infringement, misappropriation or other violation of our intellectual property rights by third parties could diminish the value of our brands and adversely affect our net revenues.

Fluctuations in the price, availability and quality of fabrics such as denim, including cottons, blends, synthetics and wools, or other raw materials used by us in our manufactured products, or of purchased finished goods, could have a material adverse effect on our cost of goods sold and/or our ability to meet our customers’customers' demands. The prices we pay depend on demand and market prices for the raw materials used to produce them. The price and availability of such raw materials may fluctuate significantly, depending on many factors, including general economic conditions and demand, tariffs, supply chain disruptions, crop yields, energy prices, weather patterns, freight rates and speculation in the commodities markets. Prices of purchased finished products also depend on wage rates in Asia and other geographic areas where our independent contractors are located, as well as freight costs from those regions. Inflation can also have a long-term impact on us because increasing costs of materials and labor may impact our ability to maintain satisfactory margins. For example, the cost of the materials that are used in our manufacturing process, such as oil-related commodity prices and other raw materials, such as cotton, dyes and chemicals, and other costs, such as fuel, energy and utility costs, can fluctuate as a result of inflation and other factors. Similarly, a significant portion of our products are manufactured in other countries, and declines in the value of the U.S. dollar may result in higher manufacturing costs. In addition, fluctuations in wage rates required by legal or industry standards could increase our costs. In the future, we may not be able to offset cost increases with other cost reductions or efficiencies or pass higher costs on to our customers. This could have a material adverse effect on our results of operations, liquidity and financial condition.

On November 18, 2021, we entered into an indenture (the “Indenture”) pursuant to which we issued $400.0 million of unsecured senior notes due 2029, bearing interest at a rate of 4.125% per annum and concurrentlywas enteredpreviously intoparty to an amended and restated credit agreement (the “2021 Credit Agreement”), which providesprovided for (i) a five-year $400.0 million term loan A facility ("2021 Term Loan A") and (ii) a five-year $500.0 million revolving credit facility, with the lenders and agents party thereto. The Indenture and the Credit Agreement contain a number of restrictive covenants customary for these types of financings that impose restrictions on us and may limit our ability to operate our business and may limit our ability to react to market conditions or take advantage of potential business opportunities that may arise, including restrictions on our ability to:

If the Company fails to comply with any covenants or restrictions under the Indenture or the 2025 Credit Agreement, it could result in an event of default under the applicable indebtedness, which may allow the creditors to accelerate the related debt, and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event our lenders or noteholders accelerate the repayment of our borrowings, this could restrict our future business strategies and could adversely impact our future results of operations, cash flows or financial condition and we and our subsidiaries may not have sufficient assets to repay that indebtedness.

•General economic, industry and stock market conditions, including inflation and elevated interest rates;

Kontoor Brands, Inc. (collectively with its subsidiaries, "Kontoor," the "Company," "we," "us" or "our") is a global lifestyle apparel companycompany, headquarteredwith ina portfolio led by three of the Unitedworld's Statesmost ("U.S.")iconic consumer brands: Wrangler®, Lee® and Helly Hansen®. The Company designs, manufactures, procures, sells and licenses apparel, footwear and accessories, primarily under the brand names Wrangler®, Lee® and LeeHelly Hansen®. The Company'sOur products are sold in the United States ("U.S. through mass merchants, specialty stores, department stores, company-operated stores") and online, including digital marketplaces. The Company’s products are also sold internationally, primarily in the Europe, Middle East and Africa ("EMEA"), Asia-Pacific (“APAC”) and Non-U.S. Americas regions,regions. throughWe departmentalso stores,license specialtythe stores,use company-operatedof stores,our concessionbrands retailin stores,certain independently-operated partnership stores and online, including digital marketplaces.regions.

The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each year. For presentation purposes herein, all references to periodsyears ended December 2024,2025, December 2024 and December 2023 and December 2022 correspond to the 53-week fiscal year ended January 3, 2026, and the 52-week fiscal years ended December 28, 2024, and December 30, 20232023, andrespectively. Accordingly, the year ended December 31,2025 2022,included respectively.an extra week when compared to the year ended December 2024.

References to fiscal 20242025 foreign currency amounts herein reflect the impact of changes in foreign exchange rates from fiscal 20232024 and the corresponding impact on translating foreign currencies into U.S. dollars and on foreign currency-denominated transactions. The Company's most significant foreign currency translation exposure is typically driven by businessthe conductedNorwegian inkrone, euro-basedthe countries,euro, the Chinese yuan and the Mexican peso. However, the Company conducts business in other developed and emerging markets around the world with exposure to other foreign currencies.

The Company has respondedcontinues to ongoingevaluate macroeconomicmitigating conditionsactions, byincluding controllingthe expenses,transfer adjustingof pricingproduction and proactively managingwithin our global supply chain.chain, transformation of our supply chain capabilities, pricing adjustments for our products, supplier partnership initiatives and inventory management. While we anticipate continued uncertainty related to the macroeconomic environment during 2025,2026, including the potential impact of further tariff increases on product costs,increases, we believe we are appropriately positioned to successfully manage through operational challenges thatand maycost pressures should they arise. We continue to closely monitor macroeconomic conditions, including consumer behavior and the impact of these factors on consumer demand.

•U.S. WholesaleNet revenues of $3.2 billion increased 1%21% compared to the year ended December 2023,2024, and representedincluded 73%a of$475.5 totalmillion revenuescontribution infrom the currentHelly year.Hansen acquisition and an approximate 2% benefit from the 53rd week.

•Non-U.S.U.S. Wholesale revenues decreasedincreased 7% compared to the year ended December 2023,2024, and included a $66.3 million contribution from the Helly Hansen acquisition and an approximate 2% benefit from the 53rd week. U.S. Wholesale revenues represented 15%64% of total revenues in the current year.

28 Kontoor Brands, Inc.Inc 20242025 Form 10-K 27

Gross margin increased 28070 basis points, primarily relateddriven toby 36040 basis points ofattributable favorabilityto Helly Hansen, a 90 basis point increase from favorable product costs,and channel mix and product mix and 6080 basis points due tofrom the out-of-periodbenefits dutyof expenseProject recorded in 2023.Jeanius. These benefits to gross marginincreases were partially offset by 90a 60 basis pointspoint fromnet lowerimpact due to tariffs, product cost increases and pricing andadjustments proactivefor inventoryour management actionsproducts and 40an 80 basis pointspoint fromimpact due to increased restructuring and transformation charges.costs from the closure of a portion of our manufacturing facilities.

Selling, general and administrative expenses increased $50.7$267.3 million, from 29.5%31.4% to 31.4%34.5% of net revenues, driven by athe $24.7impact of $193.7 million increaseof inoperating incentiveexpenses compensationattributable expense,to Helly Hansen, representing a $14.4220 basis point increase. In addition, expenses increased due to $50.8 million increaseof in restructuringacquisition and transformationintegration-related chargescosts, and $14.4$16.9 million of higher investments in our direct-to-consumer business,business and demand creation and informationa technology.$34.3 Thesemillion increasesincrease in restructuring and transformation charges, which were partially offset by a $4.2 million reductiondeclines in distributiondiscretionary spending and freightbenefits costs.of Project Jeanius.

The effective income tax rate for the year ended December 2025 was 24.3% compared to 18.5% for the year ended December 2024. The effective tax rate without discrete items for the year ended December 20242025 was 20.0%24.4% compared to 19.1%20.0% for the year ended December 2023.2024. The increase was primarily due to changes in our jurisdictional mix of earnings.earnings and estimated non-deductible 30 Kontoor Brands, Inc 2025 Form 10-K transaction costs incurred in conjunction with the Helly Hansen acquisition. Our effective income tax rate for foreign operations was 8.2%16.2% and 9.2%8.2% for the years ended December 20242025 and December 2023,2024, respectively.

28 Kontoor Brands, IncInc. 20242025 Form 10-K 31

The Company's twothree reportable segments are Wrangler®Wrangler, Lee and Lee®.Helly Hansen. Refer to Note 34 to the Company's financial statements in this Form 10-K for additional information.

Global revenues for the Wrangler® brand increased 3%,6%, due to growth in the U.S. Wholesale and Direct-to-Consumer channels,channels. partiallyWrangler offsetglobal by a declinerevenues in 2025 included an approximate 2% benefit from the Non-U.S.53rd Wholesale channel.week.

•Revenues in the AmericasU.S region increased 3%,6%, primarily due to growth in our wholesaleU.S. Wholesale channel and U.S. direct-to-consumer businesses.business. Growth in wholesale was driven by anbroad-based increasecategory growth in Western, workwear, non-denim products and female along with increases in our digital wholesale and U.S. licensing businesses. Growth in our U.S. digital wholesale business and category growth. Growth in our direct-to-consumer business was attributableprimarily todriven by higher e-commerce and retail store sales.

Careful consideration of the risk factors set forth under Part I, Item 1A, “Risk Factors,” of our 2025 Annual Report on Form 10-K should be made. ThereExcept for the addition of the risk factors set forth below, there have been no material changes to the risk factors from those disclosed in Part I, Item 1A of our 2025 Annual Report on Form 10-K.

The Company commenced a sale process of its global Lee® brand and associated business (the "Lee® business") during the first quarter of 2026, with an expectation of completing a transaction during fiscal 2026. AtOn theMay end of the first quarter of20, 2026, the Company determinedentered thatinto a Stock Purchase Agreement (the "Purchase Agreement") with ABG-Storm LLC, a Delaware limited liability company, an affiliate of Authentic Brands Group ("Buyer"), to sell the Lee® business metfor held-for-sale$750.0 criteriamillion andin reportedcash at closing with an additional $250.0 million earnout opportunity based on the future performance of the Lee® business over a five-year period. The assets and liabilities of the Lee® business are reported as held-for-sale in the Company's balance sheets for all periods presented. Additionally, the planned sale represents a strategic shift that will have a major effect on the Company's operations and financial results. Accordingly, the Company reported the Lee® business as discontinued operations in its statements of operations and statements of cash flows for all periods presented. Certain corporate overhead costs and segment costs previously allocated to the Lee® business for segment reporting purposes did not qualify for classification within discontinued operations and have been reported in continuing operations for all periods presented. Prior to the first quarter of 2026, the Lee® business was reported as a separate operating segment in our financial statements. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional information. The Lee® business was previously reported as a separate operating segment in our financial statements.

On May 31, 2025, we completed the acquisition of Helly Hansen (the "Acquisition"), and the results of operations have been included in the Company's financial statements since that date. The three-month period ended June 2026 includes the operating results of the Acquisition for the entire quarter compared to one month of operating results included in the three-month period ended June 2025. The six-month period ended June 2026 includes the operating results of the Acquisition for the entire six months compared to one month of operating results included in the six-month period ended June 2025. Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.

The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each year. Accordingly, this Form 10-Q presents the firstsecond quarter of the Company's fiscal year ending January 2, 2027 ("fiscal 2026"), which is a 52-week fiscal year. For presentation purposes herein, all references to periods ended MarchJune 2026, December 2025 and MarchJune 2025 correspond to the fiscal periods ended AprilJuly 4, 2026, January 3, 2026, and MarchJune 29,28, 2025, respectively.

References to fiscal 2026 foreign currency amounts herein reflect the impact of changes in foreign exchange rates from the prior year comparable period when translating foreign currencies into U.S. dollars. The Company's most significant foreign currency translation exposure is typically driven by business conducted in the Norwegian krone, the euro, the Chinese yuan and the Mexican peso. However, the Company conducts business in other developed and emerging markets around the world with exposure to other foreign currencies.

Global macroeconomic conditions that continued to impact the Company during the firstsecond quarter of 2026 included geopolitical impacts, global supply chain issues, inconsistent consumer demand, continued declines in interest rates,demand and ongoing fluctuations in foreign currency exchange rates, interest rates and inflation. Broader macroeconomic impacts also continued to influence consumer demand.

Geopolitical impactstensions in the Middle East arising from the U.S. - Iran conflict have increased uncertainty in global trade and transportation. Although we do not operate directly in the region of conflict, our supply chain and product availability are impacted by disruptions to commercial shipping routes, higher freight, fuel and energy costs and delays at our suppliers in the production or movement of goods.

As discussed below, the U.S. government continues to enact significant changes to its tariff regime.regime remains fluid. The ongoing impact of tariff rate changes and uncertainty regarding the outcomes of trade negotiations is contributing to macroeconomic volatility. Interest rate pressures have moderated in recent quarters and inflationary pressures remained elevated during the second quarter of 2026, primarily due to energy costs and ongoing tariffs. Retailers continued to conservatively manage inventory levels as a result of this uncertain macroeconomic environment.

The Company has responded to ongoing macroeconomic conditions by controlling expenses, instituting pricing adjustments for our products, investing in our brands and executing our Project Jeanius business transformation. Additionally, the Company continues to evaluate mitigating actions, including the transfer of production within our global supply chain, transformation of our supply chain capabilities, pricing adjustments for our products, supplier partnership initiatives and inventory management. While we anticipate continued uncertainty related to the macroeconomic environment during the remainder of 2026, including the potential impact of further tariff increases,rate changes, we believe we are appropriately positioned to successfully manage through operational challenges and cost pressures should they arise. We continue to closely monitor macroeconomic conditions, including consumer behavior and the impact of these factors on consumer demand.

DuringBeginning in 2025 and at the beginning ofthrough 2026, the U.S. government enacted and continued to enact significant changes to its tariff regime which impacted rates on virtually all imports. In February 2026, the U.S. Supreme Court issued a ruling that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the United States were unauthorized, effectively invalidating IEEPA tariffs that had been in effect since the second quarter of 2025. Immediately following the Supreme Court ruling, the U.S. government initiated new tariffs under Section 122 of the Trade Act ("Section 122 tariffs"), which expired in July 2026 and have been inreplaced effectby sincenew Februarytariffs 24,under 2026.Section 301 of the Trade Act.

In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs. In April 2026, the CBP released a new system to process IEEPA tariff refunds, allowing importers to submit refund claims. WeIn believethe first quarter of 2026, we concluded it iswas probable that we willwould recover the IEEPA tariffs previously paid and have recognized a net receivable under the loss recovery accounting model of $53.7 million as of March 2026,million, on a consolidated basis. During the threefirst monthsquarter ended Marchof 2026, we reduced cost of goods sold by approximately $49.0 million, representing the expense for IEEPA tariffs on inventory sold to customers since the tariffs were enacted in the second quarter of 2025, including $29.0 million relating to 2025 tariff payments. Additionally, we reducedDuring the carryingthird valuequarter of inventory2026, onthe handCompany asbegan to receive refunds and expects to collect all remaining amounts by the end of Marchfiscal 2026 by $4.7 million for tariffs previously capitalized as cost of inventory.2026. There continues to be uncertainty and legal challenges to current and proposedprior tariff regimes, including a ruling in May 2026 by the CIT that the new Section 122 tariffs are also invalid.invalid, which is under appeal by the U.S. government, along with an appeal of certain CIT orders related to the refund process for IEEPA tariffs. We continue to monitor U.S. tariff-related developments.developments and ongoing legal proceedings.

We are focused on delivering long-term value to our stakeholders, including our consumers, customers, shareholders, suppliers and communities around the world, by accelerating growth, expanding operating margin, increasing capital allocation optionality and establishing the Company as the employer of choice in the industry. Additionally, the integration of Helly Hansen provides focus towards our growth-oriented brands, with an emphasis on geographic and category expansion. The contemplatedplanned sale transaction of the Lee® business further emphasizes our focus on functional and activity-based brands. The Company continues to execute on Project Jeanius, a multi-year comprehensive end-to-end business transformation focused on simplifying processes, optimizing systems and enhancing our global operating model with the goal of creating significant investment capacity through gross and operating margin expansion. In addition, our capital allocation strategy allows us the option to (i) invest in our business, (ii) pay down debt, (iii) provide for a superior dividend payout, (iv) effectively manage our share repurchase authorization and (v) act on strategic acquisition opportunities that may arise.

During the firstsecond quarter of 2026, the Company incurred integration-related costs of $12.7 million related to Helly Hansen, comprised primarily of professional and other fees, which are reported in "selling, general and administrative expenses". We expect to incur additional costs in future periods asprimarily werelated completeto the information technology integration of Helly Hansen.

29 Kontoor Brands, Inc. Q1Q2 FY26 Form 10-Q 32

•The Company commenced a sale process for the global Lee® business during the first quarter of 2026 and determined thatreported the Lee® business should be presented as discontinued operations.operations Accordinglyin theits statements of operations and statements of cash flows for all periods presented. The following discussion relates to our continuing operations.

•The Helly Hansen acquisitionAcquisition was completed on May 31, 2025, and the results of operations have been included since that date. DuringThe three-month period ended June 2026 included the threeoperating monthsresults of the Acquisition for the entire quarter compared to one month of operating results included in the quarter ended MarchJune 2026, the Company incurred $12.8 million of charges related to integration-related activities.2025.

•Net revenues increased 45%19% to $613.3$584.3 million, a $91.7 million increase compared to the three months ended MarchJune 2025, and included $176.0 millionprimarily attributable to increased revenue of $84.7 million from the Helly Hansen Acquisition.

•U.S. Wholesalewholesale revenues increased 6%3% or $10.1 million compared to the three months ended MarchJune 2025, driven by increased revenue of $10.7 million from the Acquisition, and represented 58%68% of total revenues in the current period. Helly Hansen U.S. wholesale revenues were $17.0 million.

•International Wholesalewholesale revenues increased 258%101% or $56.4 million compared to the three months ended MarchJune 2025, primarily attributable to increased revenue of $53.8 million from the Acquisition, and represented 26%19% of total revenues in the current period. Helly Hansen international wholesale revenues were $109.2 million.

•Direct-to-ConsumerDirect-to-consumer revenues increased 136%51% or $25.2 million compared to the three months ended MarchJune 2025, primarily attributable to increased revenue of $20.2 million from the Acquisition, and represented 15%13% of total revenues in the current period. Helly Hansen direct-to-consumer revenues were $49.8 million.

•Gross margin increased 810970 basis points to 53.7%56.2% compared to the three months ended MarchJune 2025 and includes benefits attributablefrom toproduct and channel mix, Project Jeanius, Helly Hansen's higher margin business and a 260 basis point benefit from a $15.4 million gain on the Hellysale Hansenof Acquisitiona andmanufacturing the IEEPA tariff receivable.facility.

•Selling, general and administrative expenses increased to 40.7% as a percentage of net revenues increased to 39.0% compared to 38.1%35.0% for the three months ended MarchJune 2025, anda included$65.5 $79.4million increase, primarily attributable to $42.3 million of operating expenses attributable toincreased Helly Hansen operating expenses, the incremental costs previously allocated to the Lee® business and the integration-related charges incurred during the period as discussed above.period.

•Income from continuing operations increaseddecreased 496%3% toor $61.0$1.7 million compared to $57.0 million for the three months ended MarchJune 2025,2025. andThe quarter ended June 2025 included $18.1a pre-tax gain of $33.0 million of net income attributablerelated to Hellyforeign Hansen.currency exchange contracts to hedge the purchase price of the Acquisition which did not recur in the 2026 period.

•Diluted earnings per share from continuing operations was $1.09$1.03 in the firstsecond quarter,quarter of 2026, compared to $0.18$1.05 in the same period last year,year. andThe quarter ended June 2025 included $0.32a gain related to foreign currency exchange contracts to hedge the purchase price of dilutedthe earningsAcquisition perwhich sharedid attributablenot torecur Hellyin Hansen.the 2026 period.

Additionally, the following table presents a summary of the changes in net revenues for the three and six months ended MarchJune 2026 as compared to MarchJune 2025:

Net revenues increased 45%,19%, primarily attributable to the inclusion of Helly Hansen Acquisitionfor andthe growthentire three-month period ended June 2026. Growth in Wrangler, whichWrangler was driven by Western and female categories and a 17%7% increase in international wholesale revenuesrevenues, andincluding a 1%30% increase in non-U.S. Americas wholesale revenues due to higher sales in Canada. Wrangler U.S. wholesale revenues withwere categoryflat growthfor inthe Western, outdoor and female.period. Wrangler global direct-to-consumer revenues increased 11%13% driven by higher retail store and e-commerce sales.

Additional details on changes in net revenues for the three months ended MarchJune 2026 as compared to MarchJune 2025 are provided in the section titled “Information by Business Segment.”

Gross margin increased 810970 basis points, primarily related to 400 basis points from favorable channel mix, product mix and pricing, a 350260 basis point benefit from U.S.the tariffsgain refunds,on sale of a manufacturing facility, 230 basis points from the cost reduction benefits of Project Jeanius,Jeanius 210and 80 basis points attributable to favorable mix from Helly HansenHansen's andhigher 70margin basis points related to channel and product mix,business, partially offset by a 30 basis point increase in restructuring costs and 30 basis points from increased product costs, net of pricing actions.costs.

Selling, general and administrative expenses increased $77.9$65.5 million, drivenfrom by35.0% $79.4to 40.7% of net revenues, primarily attributable to $42.3 million of increased operating expenses due to the inclusion of Helly Hansen operatingfor expensesthe andentire $4.6three-month period ended June 2026, $10.4 million from higher investments in our direct-to-consumer businessbusiness, demand creation and demandtechnology creation,and $4.7 million of incremental costs previously allocated to the Lee® business, which were partially offset by benefits from Project Jeanius.Jeanius and lower restructuring and transformation costs.

Other expense,(expense) income, net reflected aan favorableunfavorable change of $7.7$34.3 million, driven by $8.9a $33.0 million of losses during the three months ended March 2025,gain related to foreign currency exchange contracts to hedge the purchase price of the Acquisition.Acquisition during the three months ended June 2025 that did not recur during the three months ended June 2026.

31 Kontoor Brands, Inc. Q1Q2 FY26 Form 10-Q 34

The following tables present a summary of the changes in segment revenues and segment profit for the three and six months ended MarchJune 2026 as compared to the three and six months ended MarchJune 2025:

Global revenues for the Wrangler® brand increased 4%,2%, due to growth in the U.S.international Wholesale, International Wholesalewholesale and Direct-to-Consumerdirect-to-consumer channels.