Kontoor Brands, Inc. (KTB) Business

ITEM 1. BUSINESS.

Overview

Kontoor Brands, Inc. (collectively with its subsidiaries, "Kontoor," the "Company," "we," "us" or "our") is a global lifestyle apparel company, with a portfolio led by three of the world's most 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 Helly Hansen®. Our products are sold through wholesale and direct-to-consumer channels in the United States ("U.S.") and internationally, primarily in the Europe, Middle East and Africa ("EMEA"), Asia-Pacific (“APAC”) and Non-U.S. Americas regions. We also license the use of our brands in certain regions.

Kontoor is headquartered in the U.S. with a presence in over 90 countries and is focused on leveraging its global platform, strategic sourcing model and supply chain to drive brand growth and deliver long-term value for its stakeholders. Our portfolio of brands has a rich history and heritage of delivering technical and innovative products in the denim, outdoor, workwear, footwear and accessory categories.

We focus on continuously improving the most important elements of our products, which include fit, fabric, finish, technical performance and overall construction, allowing us to engage with more consumers in more places. We leverage innovation and design advancements, as well as the unique heritage and authenticity of our brands to create products that meet our consumers' needs.

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 years ended December 2025, December 2024 and December 2023 correspond to the 53-week fiscal year ended January 3, 2026, and the 52-week fiscal years ended December 28, 2024, and December 30, 2023, respectively. Accordingly, the year ended December 2025 included an extra week when compared to the year ended December 2024.

Acquisition of Helly Hansen

On May 31, 2025, we completed the acquisition of a group of companies that own and operate the Helly Hansen® and Musto® brands, collectively referred to as "Helly Hansen," for initial cash consideration of $1.3 billion Canadian dollars, equivalent to $957.5 million U.S. dollars. The purchase price was funded by indebtedness and cash on hand. Helly Hansen® is a premium global outdoor and workwear brand, and Musto® is a premium sailing and outdoor brand. The acquisition of these brands scales Kontoor's penetration in the large and growing outdoor and workwear markets globally, and diversifies Kontoor's portfolio across geographies, categories, consumers and points of distribution. The results of operations of Helly Hansen have been included in the Company's consolidated financial statements since the completion of the acquisition. Refer to Note 2 to the Company's financial statements in this Form 10-K for additional information.

Macroeconomic Environment

Global macroeconomic conditions that continued to impact the Company during 2025 included inconsistent consumer demand despite recent declines in interest rates, ongoing fluctuations in foreign currency exchange rates, moderating inflation and global supply chain issues. During 2025 and at the beginning of 2026, the U.S. government enacted and continues to enact significant changes to its tariff regime which increased rates on virtually all imports. The ongoing impact of increased tariff rates and uncertainty regarding the outcomes of trade negotiations is contributing to macroeconomic volatility. In addition, on February 20, 2026, the U.S. Supreme Court issued an opinion regarding certain tariffs imposed under the International Emergency Powers Act. It is unclear at this time what impact this decision will have on the Company’s future financial results, including whether we will be able to obtain refunds of amounts previously collected for such tariffs or the level of replacement tariffs the current U.S. administration may impose through other means.

Inflationary and interest rate pressures have lessened in recent quarters. Despite reduced pressure, these rates have continued to impact us, along with recent increases in product costs and tariffs, as compared to 2024. In 2025, 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.

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The increased tariff rates impacted gross margins during 2025 and are expected to continue to impact future periods. 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 2026, including the potential impact of further tariff increases, 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.

Other Recent Developments

During the third quarter of 2025, the Company closed a portion of its manufacturing facilities. A reduction in our manufacturing facilities and diversification in our sourcing footprint, which is part of our ongoing supply chain transformation, will help to promote flexibility, balance costs, improve speed of service and enhance our sourcing capabilities.

Corporate Information

Our principal executive offices are located at 400 N. Elm Street, Greensboro, North Carolina 27401 and our telephone number is 336-332-3400. Our website is www.kontoorbrands.com. Our website and the information contained therein or connected thereto is not incorporated in this Annual Report on Form 10-K.

Our Competitive Strengths

•Iconic Brands With Significant Global Scale

The Wrangler®, Lee® and Helly Hansen® brands are steeped in rich heritage and authenticity, with 79 years, 137 years and 149 years of history, respectively, and have an established global presence in the apparel, outdoor, workwear, footwear and accessories markets across numerous categories and channels of distribution. Products bearing our brands are sold or licensed in more than 90 countries, and we believe they have strong consumer connectivity worldwide with approximately 150 million units sold in 2025. We market our brands and products to highlight their differentiated position and product attributes.

Our Wrangler® and Lee® brands offer lifestyle denim, apparel, footwear and accessories in the U.S., Canada, Mexico, EMEA and APAC through our wholesale and direct-to-consumer businesses and through licensing arrangements. Additionally, we enter into global and regional licensed collaborations to further elevate and support the brands’ positioning and recognition. For example, in 2025, our Wrangler® brand, in support of its growing Western and female categories, launched global new collections with GRAMMY Award-winning country music superstar Lainey Wilson, and our Lee® brand partnered with Crayola® on a global apparel collection featuring retired crayon colors.

Our Helly Hansen® brand offers technical performance apparel, workwear, footwear and accessory products in the U.S., Canada, EMEA and through a joint venture arrangement in China. Many of the Helly Hansen® products are designed for winter sports, sailing, lifestyle outdoor activities and workwear engineered for demanding environments. We have partnered with organizations to reinforce the brand’s heritage and global recognition including Alpine Canada, New York Yacht Club®, Norwegian Ski Federation, The Ocean Race® and Vail Resorts.

We strive to maximize our consumer reach by leveraging each brand's best practices to drive growth across product categories, increasing the brands’ presence in key markets and expanding our overall net revenues and earnings profile.

•Deep Relationships With Leading Brick-and-Mortar and E-Commerce Retailers

The Wrangler® and Lee® brands have long-term relationships with many leading brick-and-mortar and e-commerce retailers, including Amazon, Boot Barn, Target, and Walmart, whom we believe rely on these iconic brands, leading product quality and innovation to address evolving consumer needs in our product categories. The acquisition of Helly Hansen further diversifies our relationships into leading U.S. and international retailers. The rich global heritage across the Wrangler®, Lee® and Helly Hansen® brands also supports strong positions in growing markets, such as the denim, outdoor and workwear categories. By fostering these relationships, we have become an important vendor for many of our customers and have built leading category positions, which in turn supports the availability of our brands to consumers and our ability to introduce new products and categories. We use proprietary insights from our customers to strategically refine our products and adjust our go-to-market approach. We also endeavor to provide sophisticated logistics, consumer insights, planning and merchandising expertise to support our customers, which we believe enables a level of insight that builds more integrated customer relationships.

•End-to-End Integrated Supply Chain Built to Support our Brands

We operate a highly integrated supply network spanning product development, materials procurement, finished goods sourcing and manufacturing, distribution and logistics to serve our global customers and consumers. Through our Project Jeanius transformation initiatives, the supply network has gained additional focus on scale, standardization, flexibility, and productivity to drive improved product availability, cost and operational efficiencies, while maintaining superior quality and faster speed to market. These enhanced operational excellence capabilities are facilitating a rapid and seamless integration of Helly Hansen into our global operating model.

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We leverage our global enterprise resource planning ("ERP") systems to plan and synchronize the supply network end-to-end, across multiple third-party suppliers and vendors, as well as Company-owned operations, thereby optimizing inventory and sourcing while providing flexibility and responsiveness to the markets that we serve.

•Highly Experienced Management Team and Board of Directors

We have a highly experienced senior management team and Board of Directors that continuously demonstrates an unwavering commitment to our employees, our shareholders and our business. Drawing on deep industry knowledge and diverse perspectives, they have helped navigate our business through unprecedented challenges while simultaneously evolving our strategies with agility and flexibility. As we continue our focus on catalyzing growth for our global brands, we believe our management team and Board of Directors will continue to drive the success of our company.

•Resilient Business Model That Delivers Consistent Results

Our business has historically generated consistent margins, strong cash flows and high returns on capital due to our global reach, leading market positions, deep customer relationships, and the flexibility of our supply chain. We believe we offer authentic branded products and quality to our consumers, who respond to our value proposition by consistently purchasing our products over time. Our strong margin profile combined with our diligent approach to operational excellence and capital management have produced strong cash flows. We believe our consistent financial results will provide us with the opportunity to invest in our business and deploy a multi-faceted capital allocation strategy. Despite the macroeconomic pressures faced by the Company in recent years, we have been resilient and agile in responding to shifting market conditions, and have continued to produce forward momentum by executing on our strategic vision discussed below, focusing on cash flow, capital allocation optionality, and revenue and margin growth to drive long-term acceleration of results.

Our Strategies

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 is a strategic focus for the Company, with an emphasis on geographic and category expansion. 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. We believe the following four areas will catalyze profitable revenue growth in the future.

•Enhance and Accelerate Our Core U.S. Wholesale Business

We are focused on continuing to enhance the strength of our brands, improve operating efficiency and increase the overall demand for our products. With our Wrangler® and Lee® brands, we are pursuing strategies to support and grow market share in existing distribution with leading U.S. retailers, drive business opportunities in new channels, such as premium, specialty and sporting goods, as well as accelerate key categories, including female, non-denim, Western and workwear. The acquisition of the Helly Hansen® brand allows us to leverage our expertise and relationships in the U.S. market to accelerate and more fully capture this wholesale growth opportunity. We also have opportunities to further grow our presence in workwear through both the Helly Hansen® and Wrangler® brands.

•Diversify Our Product Mix Through Category Extensions

We continue to enhance our existing product assortment, broaden our product offering and expand into adjacent product categories, with a focus on denim, outdoor and workwear. We see opportunities for the Helly Hansen® brand to expand through technical outdoor, footwear and workwear categories. Within workwear, we are leveraging our strong brand equity and innovation platforms to enter new markets and categories, including professional grade apparel with the addition of the Helly Hansen® brand. Our Wrangler® and Lee® brands continue to diversify their assortments, including product extensions such as non-denim bottoms, tops and female categories, particularly with western lifestyle apparel. In addition, our Wrangler® and Lee® brands license categories such as small leather goods, headwear, socks, home decor, luggage, and jewelry. Successful execution of our product expansion strategies should broaden the appeal of our brands and products to new consumers and ultimately drive the overall net revenues of the business.

•Expand Our Reach Around the Globe

We continue to pursue opportunities to evolve our business with new and existing customers and expand the international distribution of our brands and products into new markets. Our consumer insights highlight growth opportunities for the Helly Hansen® brand in key global markets, including the large and growing outdoor and workwear markets, which diversifies Kontoor's portfolio across geographies, categories, consumers and points of distribution. We continue to pursue opportunities to evolve our business with new and existing customers, including leveraging our relationships with licensees to broaden the distribution of our brands.

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•Elevate Our Direct Connection With Consumers

We are leveraging our leading brand positions to increase our digital presence with our own e‑commerce websites as well as major global retail partners. We also continue to focus on our brick-and-mortar strategy for each brand. We are identifying opportunities for the Helly Hansen® brand to expand its retail footprint in the U.S. and EMEA with both full-price stores and premium outlets. The Wrangler® brand is focused on identifying key locations which align with the brand’s western heritage and its lifestyle denim apparel. In Asia, the Lee® brand continues to execute on its retail excellence initiative with reformatted stores, improved point-of-sale technologies and enhanced assortments. We continue to support these objectives through investments in advanced data analytics and unlocking insights and value through our global ERP infrastructure. In addition, we are stepping up our investment in accretive enablers, such as product and design, innovation, supply chain, consumer insights, talent and belonging, and demand creation.

Our Business Segment Information

Our three reportable segments are Wrangler, Lee and Helly Hansen, which primarily include sales and licensing of branded products, along with various sub-brands and collections. In addition, we present an Other category for purposes of reconciliation of reportable segment net revenues and profits to the Company's consolidated operating results, but the Other category is not considered a reportable segment. See below for additional information on the brands, channels of distribution and geographies included in each segment.

•Wrangler

Wrangler® is an iconic American heritage brand rooted in the western lifestyle, with 79 years of history offering denim, apparel, footwear and accessories. We offer multiple sub-brands, collections and product lines within the Wrangler® brand to target specific consumer demographics and consumer end-users, including: 20X®, Aura from the Women at Wrangler®, Cowboy Cut®, Premium Patch®, Riggs Workwear®, Rock 47®, Rustler®, Wrangler Retro®, Wrangler Rugged Wear® and Wrangler All Terrain Gear®.

•Lee

Lee® is an iconic American brand offering denim, apparel, footwear and accessories, with 137 years of heritage and authenticity. The Lee® brand delivers trend-forward styles with exceptional fit and comfort through innovative fabric solutions and advanced design technology. The Lee® brand offers multiple sub-brands, collections and product lines, making it attractive for a broader consumer base, including: Lee101®, Riders®, Storm Rider®, Lee MVPTM and Lee XTM.

•Helly Hansen

Helly Hansen® is a global technical outdoor and workwear brand headquartered in Oslo, Norway with 149 years of history, which operates a global wholesale and direct-to-consumer business across outdoor and workwear apparel, footwear, and accessories. The brand has a long heritage of developing professional‑grade products in collaboration with professionals working in some of the world’s most challenging conditions and is recognized for its leadership in innovative, technical products engineered for demanding outdoor environments. The Helly Hansen® brand product portfolio spans base layer, lifestyle, mountain, sailing, skiing, urban and workwear categories, delivering purpose‑built solutions utilized by professionals and outdoor consumers worldwide.

•Other

Other includes sales and licensing of the Musto®, Chic® and Rock & Republic® brands, as well as other Company-owned brands and private label apparel. Musto® is a leader in specialized technical apparel in the sailing and adventure categories. We distribute the brand through our e-commerce relationships, specialty wholesale retailers, owned retail stores and our Company-operated website at www.musto.com. Chic® is a traditional apparel brand and is marketed to consumers as a classic comfort solution. We distribute the brand by leveraging our e-commerce relationships. Rock & Republic® is a premium apparel brand and is marketed to consumers as a modern and active lifestyle brand. We distribute the brand through our e-commerce relationships, retail stores and our Company-operated website at www.rockandrepublic.com.

Distribution Channels and Customers

Our distribution channels include U.S. Wholesale, International Wholesale and Direct-to-Consumer.

•U.S. Wholesale

The U.S. Wholesale channel is our largest distribution channel and accounted for approximately 64% of our net revenues in 2025. Within this channel, our Wrangler®, Lee® and Helly Hansen® branded products are marketed and sold by mass merchants, outdoor and sporting goods stores, specialty stores, department stores, Company-operated stores, business-to-business through our workwear and uniform businesses and online, including digital marketplaces. This channel also includes revenues related to Musto®, Chic® and Rock & Republic® products sold in the U.S. A portion of our U.S. Wholesale net revenue is attributable to digital sales from our wholesale partners' websites and third-party e-commerce platforms such as Amazon and other pure-play digital retailers.

Our mass merchant customers include national retailers such as Target and Walmart, as well as various regional retail partners. Our department store customers include national and regional retailers. The specialty store channel, which includes revenue from Wrangler® Riggs Workwear® and Wrangler® Western branded products, consists primarily of national accounts such as Boot Barn,

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Cavender's and Tractor Supply Company as well as upscale modern specialty stores. The outdoor and sporting goods customers of the Helly Hansen® brand include independent specialty retailers, national ski resorts such as Vail Resorts and outdoor specialty retailers such as REI.

Our U.S. Wholesale channel also includes revenues from licensing arrangements where we receive royalties based on a percentage of the licensed products' net revenues. Most of the agreements provide for a minimum royalty requirement. See “Licensing Arrangements” herein for more information.

•International Wholesale

The International Wholesale channel accounted for approximately 21% of our net revenues in 2025. The addition of the Helly Hansen® brand has increased our international footprint, with deep long-standing relationships with wholesale customers in the outdoor and workwear businesses. Our products are available in Canada, Mexico, the United Kingdom, continental Europe, the Middle East and China, and through licensees or distributors in strategic regions across the globe. In China, our Helly Hansen® business is operated through a joint venture arrangement.

The majority of the International Wholesale business is located in EMEA and APAC, where we sell our products to outdoor and sporting goods stores, department store and specialty store wholesale customers, online, including digital marketplaces, as well as through our distribution and license relationships. In Canada and Mexico, our products are primarily marketed through mass merchants, department stores and specialty stores including outdoor and sporting goods stores. A portion of our International Wholesale net revenue is attributable to digital sales from our wholesale partners' websites, third-party e-commerce platforms, and other pure-play digital retailers. Similar to the U.S. Wholesale channel, we use proprietary insights from our wholesale customers to strategically refine our products and adjust our go-to-market approach.

Additionally, our International Wholesale channel includes sales in partnership stores located across EMEA, APAC and South America. Partnership stores are owned and operated by our licensees, distributors and other independent parties. They are retail locations selling our products that have the appearance of Kontoor-operated stores, and as such represent an important vehicle for presenting our brands to international consumers.

Our International Wholesale channel also includes revenues from international licensing arrangements where we receive royalties based on a percentage of the licensed products’ net revenues. Most of the agreements provide for a minimum royalty requirement. See “Licensing Arrangements” herein for more information.

•Direct-to-Consumer

Our Direct-to-Consumer channel accounted for approximately 15% of our net revenues in 2025 and represents sales of our products through our Wrangler®, Lee® and Helly Hansen® branded full-price and outlet stores, online and international concession arrangements.

The Direct-to-Consumer channel allows us to achieve the fullest expression of our brands by displaying our product lines in a manner that supports the brands’ positioning, providing an in-store and online user experience that enables us to address the needs and preferences of our consumers.

As of January 3, 2026, we had 60 Company-operated full-price Wrangler®, Lee®, Helly Hansen® and Musto® branded retail stores, which are located in Asia, Canada, Europe and the U.S. They include mono-brand stores, which carry Wrangler®, Lee®, Helly Hansen® or Musto® branded products, and dual-brand stores, which carry a mix of our Wrangler® and Lee® branded products. We also had 72 Company-operated premium outlet and clearance centers as of January 3, 2026, primarily in the U.S., as well as outlets in Canada, Europe and Mexico.

As of January 3, 2026, we had 208 concession retail and outlet stores in Europe and Asia. Under a typical concession arrangement, we have a dedicated sales area, pay a concession fee for use of the space based on a percentage of retail sales and, in many cases, manage staffing for operation of the sales area. The concession model provides dedicated sales areas for our brands and helps differentiate and enhance the presentation of our products, generally with lower overhead than opening a separate store.

We continue to prioritize serving our customers through digital platforms that enhance the user experience and drive customer interaction in digital and physical environments. Sales from our own websites represent a growing portion of our net revenues and help elevate the consumer connection with our brands. Wrangler®, Lee®, Helly Hansen® and Musto® branded products are currently available through our own websites in 20 countries.

Licensing Arrangements

We seek to maximize our brands' market penetration and consumer reach by entering into licensing agreements with strategically selected partners. Pursuant to these licensing agreements, we typically grant our licensing partner an exclusive or non-exclusive license to use one or more of our brands in connection with specific licensed categories of products in specific geographic regions. Our licensing partners leverage the strength of our brands and our customer relationships to sell products in their licensed categories and geographic regions. We currently have licensing agreements in categories including denim, apparel, footwear, accessories and home decor.

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On May 31, 2025, as part of the Helly Hansen acquisition, the Company acquired a 50% noncontrolling financial interest in a joint venture that distributes Helly Hansen® products in China. The Helly Hansen® brand has a licensing arrangement with the joint venture where it receives royalties based on a percentage of the joint venture's net revenues.

We retain oversight and approvals of the design, quality control, advertising, marketing and distribution of licensed products to help maintain our brand and product quality standards. License agreements are for fixed terms, which are determined by the nature of the partner and the importance of the geographic region. Agreements typically vary in length from three to ten years. In addition to longer-term licensing arrangements, we also enter into strategically focused shorter-term collaboration agreements.

Each licensee pays royalties based on its sales of licensed products in accordance with the terms of the agreement. Licensing net revenue was $57.7 million in 2025.

Global Sourcing Strategy

We manage our sourcing operations from hubs located in Hong Kong and Panama. To ensure product quality and responsible sourcing, these hubs coordinate material deliveries, manufacturing schedules and finished goods distribution across our third-party suppliers, contract manufacturers, and our owned manufacturing facilities in Mexico.

We continually evaluate and refine the performance of our sourcing configuration to maximize operational efficiency and mitigate current and emerging supply and trade risks.

Product Innovation, Design, Sustainability and Development

Consumer-centric product innovation, design, and development are fundamental to creating a unique product mix in support of business growth across our iconic Wrangler®, Lee® and Helly Hansen® brands.

We leverage the extensive experience and expertise of our innovation centers in Greensboro, North Carolina, and Oslo, Norway to conduct advanced product technology research in our material science labs. Our technical development centers in Greensboro, China and Bangladesh are staffed with dedicated scientists and engineers who combine material technologies with consumer insights and market trends, creating new products and enhancing the attributes of existing ones to meet consumers' needs.

Sourcing, Manufacturing and Distribution

Our global supply chain organization is responsible for the operational planning, sourcing, manufacturing, and distribution of products to our customers. We believe we have developed a high degree of expertise in managing the complexities associated with a global supply chain. During 2025, we manufactured or sourced approximately 157 million units of finished goods inventory.

•Material Procurement and Manufacturing

We purchase fabric and trims from numerous U.S. and international suppliers to meet our production needs. Raw materials include products made from cotton, polyester, spandex, lycra and other man-made fibers. Trims include buttons, snaps and zippers. We rely on a broad base of suppliers, with the top three suppliers representing approximately 13% of total cost of goods sold. We source products from approximately 330 contract manufacturing facilities across 28 countries, which accounted for approximately 77% of the total units acquired during 2025. The remaining 23% of the units were supplied from our owned manufacturing facilities in Mexico. The combined sourcing approach provides flexibility, responsiveness and cost effectiveness, and is constantly evaluated to consider factors such as source of raw materials, production lead times, production costs, duties and tariffs, product complexity, and demand volatility.

•Distribution and Logistics

We utilize a network of Company-owned and third-party distribution centers and logistics carriers to support a highly reliable flow of materials to manufacturing facilities and finished goods to regional distribution centers. Our strategically located distribution network in the U.S., EMEA, APAC and Non-U.S. Americas regions is configured to provide speed and service to our customers, retail stores, and e-commerce consumers at the most efficient cost possible. Our long-term relationships with third-party suppliers ensure optimization of capacity, connectivity, responsiveness and global service coverage.

Inventory Management

Our regional planning control functions develop brand-specific demand requirements in close collaboration with the U.S., EMEA, APAC and Non-U.S. Americas markets, capturing channel-specific supply needs that feed into our ERP planning systems. We closely monitor changes in demand and supply, and synchronize operations to deliver optimized inventory levels while meeting customer requirements. We take timely action, as needed, to ensure optimal availability of inventory while balancing the cash flow needs for our business.

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Advertising and Customer Support

Our advertising and marketing efforts focus on differentiating our brands' positioning and highlighting our product qualities. We are focused on creating globally unified brand messages with appropriate regional nuances in order to maximize our brand recognition, and drive brand demand from initial end-consumer awareness to long-term loyalty. By utilizing global heads of marketing, we continue to develop integrated, multi-channel marketing strategies designed to effectively reach the target consumers of each of our brands. We pursue this strategy through our use of a variety of media channels and other public endorsements, including traditional media such as television, print and radio, as well as digital media channels such as display, online video, social media, live streaming, paid search, influencers and brand ambassadors. We leverage marketing analytics to optimize the impact of advertising and promotional spending, and to identify the types of spending that provide the greatest return on our marketing investments. Our strategy also includes collaborating with other influential brands, engaging in brand partnerships and sponsorships and developing new advertising campaigns that drive consumer awareness and brand equity.

We also participate in cooperative advertising on a shared cost basis with major retailers in print and digital media, radio and television. We generally provide our wholesale customers with point-of-sale fixtures and signage to enhance the presentation and brand image of our products. Our websites, www.wrangler.com, www.lee.com, www.hellyhansen.com, www.musto.com, www.rockandrepublic.com and corresponding regional websites, enhance consumer understanding of our brands and help consumers find and buy our products. We employ a support team for each brand that is responsible for customer service at the consumer level as well as a sales force that manages our customer relationships.

Seasonality

Our operating results are generally subject to some variability due to seasonality, with net revenues typically being slightly higher during the fall/winter and holiday shopping seasons. This limited variation results primarily from the differences in seasonal influences on revenues among our segments. With changes in our mix of business and the growth of our direct-to-consumer operations, historical quarterly revenue and profit trends may not be indicative of future trends. Working capital requirements vary throughout the year. Working capital typically increases early in the year as inventory builds to support peak shipping periods and then moderates later in the year as those inventories are sold and accounts receivable are collected. Cash provided by operating activities is usually substantially higher in the second half of the year due to higher net income during that period and reduced working capital requirements.

Competition

The apparel industry is highly competitive, highly fragmented and characterized by low barriers to entry with many local, regional and global competitors. We compete in the apparel and accessories sector by leveraging our brands, scale and ability to develop high-quality, innovative products at competitive prices that meet consumer needs.

Our primary branded competitors are large, globally focused apparel companies that also participate in a variety of categories, including, but not limited to, denim, athletic wear, exclusive or private labels, casual lifestyle apparel, outerwear and workwear. Some of the key brands we compete with include Arc'teryx, Ariat, Calvin Klein, Carhartt, Columbia, Dickies, Levi's, Patagonia, The North Face and Tommy Hilfiger. Additionally, we see an increasing reliance on private label apparel created for our largest retailer partners.

Intellectual Property

Trademarks, trade names, patents and domain names, as well as related logos, designs and graphics, provide substantial value in the development and marketing of our products, and are important to our continued success. We have registered the intellectual property associated with our brands in the U.S. and other countries where our products are manufactured and/or sold, including trademark registrations for our three key brands, Wrangler®, Lee® and Helly Hansen®. Although the laws vary by jurisdiction, in general, trademarks remain valid and enforceable provided that the marks are used in connection with the related products and services and the required registration renewals are filed. Typically, trademark registrations can be renewed indefinitely as long as the trademarks are in use. We also place high importance on product innovation and design, and a number of these innovations and designs are the subject of patents. However, we do not regard any segment of our business as being dependent upon any single patent or group of related patents.

Human Capital

We understand that our greatest asset is our global employees. As of January 3, 2026, we had approximately 10,600 employees worldwide. Geographically, approximately 1,200 employees are located in APAC, approximately 1,500 are located in EMEA, approximately 5,000 are located in Latin America and Mexico, primarily supporting our manufacturing facilities, and approximately 2,900 are located in the U.S. and Canada. Approximately 4% of employees in international markets are covered by trade-sponsored or governmental bargaining arrangements.

Supported by a leadership team that fosters a culture of collaboration, performance and entrepreneurial spirit, our employees are dedicated to harnessing design, innovation and sustainable practices to create apparel that meets the needs of our customers today, while also igniting interest from the next generation of consumers. With pride in our rich heritage and an eye toward ongoing business success, we continue to develop a high-performance culture that makes Kontoor an employer of choice in the apparel industry. We believe in developing a culture of innovation, collaboration and growth where team members have a strong sense of belonging that fuels their passion for winning. We are dedicated to putting our purpose, mission and values at the forefront of everything we do.

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Moving forward, we will continue to focus our efforts on: (i) attracting and retaining high-performing people who reflect our communities and consumers, (ii) providing career development and advancement opportunities and (iii) fostering belonging through an environment where employees feel welcomed, valued and heard.

We consider health and safety to be core values in all our operations. We do not jeopardize the well-being of our employees, contractors or supply chain partners to complete any tasks, projects or other priorities. We believe the people involved in the development of our products are our most important assets; therefore, we have created and implemented strong health and safety policies and procedures that go beyond governmental standards. Our operations have an Occupational Safety and Health Administration recordable incident rate ("RIR") significantly below the average RIR of our industry; however, we strive to reach zero injuries.

Corporate Sustainability and Social Responsibility

Corporate sustainability and social responsibility are top priorities for our Company and Board of Directors. We are focused on advancing worker well-being, sourcing products and materials from companies that share our values and limiting our negative impacts on the environment while adhering to the highest ethical standards. These principles align with the essence of our brands and represent the right course of action. The Board of Directors promotes responsible corporate citizenship and oversees compliance with Kontoor's standards. The Nominating and Governance Committee regularly reviews and evaluates the progress of sustainability, social and governance strategies, which fosters responsible growth.

At Kontoor, sustainability represents a dynamic process of continual improvement aligned with our strategic pillars of People, Product, Planet and Prosperity. We have established actions and goals for each pillar, including the preferred sourcing of raw materials for our products, reducing the use or generation of hazardous chemicals in the sourcing or manufacturing of our products, a science-based target related to our reduction of greenhouse gas emissions and savings in water consumption across our supply chain.

We articulate our corporate sustainability and social responsibility commitments in our Code of Conduct and in our 2024 Sustainability Progress Report which can be found on our website at www.kontoorbrands.com. Our website and the information contained therein or connected thereto is not incorporated in this Annual Report on Form 10-K.

Governmental Regulations

We are subject to U.S. federal, state and local laws and regulations that could affect our business, including those promulgated under the Federal Trade Commission Act, the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission and various environmental laws and regulations, including laws and regulations relating to generating emissions, water discharges, waste, product and packaging content and workplace safety. Our international businesses are subject to similar laws and regulations in the countries in which they operate. Our business operations also are subject to various international trade agreements and regulations. These regulations may change or become more stringent, or unforeseen events may occur, any of which could have a material adverse effect on our financial position or results of operations.