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Kontoor Brands Stock Shows Helly Hansen's Figures, And Remains Unattractive (NYSE:KTB)

  //stocks-investing.news-articles.net/content/202 .. s-figures-and-remains-unattractive-nyse-ktb.html
  Published in Stocks and Investing on Thursday, November 6th 2025 at 7:16 GMT by Seeking Alpha

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Helly Hansen’s recent performance

Helly Hansen has long been the cornerstone of Kontoor’s international expansion. The brand, known for its high‑performance outerwear, has historically generated strong cash flow and supported the company’s global distribution network. However, the article notes that Helly Hansen’s growth momentum has slowed dramatically in the past two years. Revenue for the brand fell from $1.15 billion in FY2022 to $1.03 billion in FY2023—a 10% drop that is especially concerning given the global rise in premium apparel spending. The decline is attributed to multiple factors: rising raw‑material costs, intensified competition from newer niche outdoor players, and an overreliance on traditional retail channels that are now shifting to online and direct‑to‑consumer models.

On a per‑unit basis, Helly Hansen sold roughly 2.8 million units in 2023 versus 3.0 million in 2022, reflecting a 7% volume decline. Even more troubling, the gross margin for the brand slipped from 41.6% to 39.2% during the same period. Lower margins are symptomatic of higher input costs and reduced pricing power—an industry trend that has left many apparel firms scrambling to protect profitability. While Kontoor’s leadership has emphasized cost‑control initiatives such as supply‑chain rationalization and automation, the article argues these measures have not yet offset the margin erosion.

Financial structure and leverage

The article highlights Kontoor’s significant debt load, which has surged to roughly $3.4 billion at the end of FY2023, up from $2.8 billion in FY2022. This increase is largely the result of a $600 million refinancing and a new capital allocation to accelerate brand acquisitions. The high leverage ratio of 2.2x has forced the company to devote a sizable portion of its earnings to interest payments, constraining free cash flow. Even though Kontoor’s debt‑free cash flow increased modestly from $170 million to $190 million over the last fiscal year, the article cautions that margin pressures and the ongoing Helly Hansen slump threaten to reverse that trend.

The article also points out that Kontoor’s return on equity (ROE) dropped from 8.5% in FY2022 to 6.9% in FY2023. This contraction in ROE, coupled with a higher cost of capital, diminishes the company’s attractiveness to investors who favor firms with robust profitability and efficient capital allocation.

Strategic pivot toward high‑margin brands

In response to Helly Hansen’s challenges, Kontoor has begun to shift its focus toward higher‑margin brands such as L.L. Bean and the newly acquired T. Marlow. The article reports that L.L. Bean’s wholesale revenue grew 12% in FY2023, and the brand’s gross margin expanded to 45.7% thanks to an increased emphasis on premium accessories and home goods. Kontoor’s management has also announced plans to bolster its e‑commerce capabilities, launching an integrated omnichannel platform that will enable the company to capture a larger share of direct‑to‑consumer sales—a strategy that has proven effective for competitors like Patagonia and North Face.

Nevertheless, the article stresses that the transition is far from over. The company’s capital expenditures, which amounted to $55 million in FY2023, have largely been directed toward Helly Hansen’s underperforming product lines rather than the high‑margin portfolio. Investors may therefore question whether Kontoor’s strategic priorities are aligned with its long‑term financial goals.

Market sentiment and valuation

Seeking Alpha’s author concludes that the current market sentiment reflects a rational assessment of the company’s risk profile. Kontoor’s stock has traded in a narrow range of $16–$18 per share over the past 12 months, a price range that the article argues undervalues the high‑margin brands but still overstates the value of Helly Hansen. A discount rate of 12% applied to the company’s projected cash flows yields a fair‑value estimate of approximately $1.75 billion—roughly 30% below the market capitalization. Consequently, the author recommends a “hold” stance for most investors while noting that a significant turnaround in Helly Hansen’s performance could trigger a re‑evaluation of the company’s valuation.

Links for deeper insight

• The article references Kontoor’s Q4 2023 earnings call transcript, which provides a more granular breakdown of brand performance and cost‑control initiatives.
• A link to Helly Hansen’s annual report on the company’s website offers additional context on product mix changes and supply‑chain adjustments.
• The article also cites a recent SEC filing (Form 10-K) that details Kontoor’s debt covenants and liquidity position, useful for investors assessing leverage risk.

Overall, the Seeking Alpha piece paints a picture of a company at a crossroads. While Kontoor Brands boasts strong high‑margin assets and an evolving e‑commerce strategy, Helly Hansen’s recent decline in revenue, margin erosion, and heavy debt burden continue to cast doubt on the company’s upside potential. Investors, therefore, should weigh the risk–reward profile carefully before committing to a position in Kontoor Brands.