Quick Facts
- Kontoor Brands announced Lee jeans is for sale during Q1 2026 earnings, with multiple parties showing interest
- Lee generated $195 million in Q1 revenue and is expected to reach $750 million for full year 2026
- The divestiture will allow Kontoor to focus on Wrangler and Helly Hansen, with Wrangler targeting $5 billion by 2030s
Kontoor Brands announced Thursday it will sell the Lee jeans business despite recent turnaround efforts. The decision surprised analysts who expected the iconic denim brand to return to growth in the second half of 2026.
The company received multiple offers for Lee during an advanced sale process. CEO Scott Baxter told analysts the decision followed extensive consumer research that showed “Lee brand sits outside of our strategic bull’s-eye.”
Lee generated $195 million in first quarter revenue and expects to reach $750 million for the full year. The brand declined 6% to $791 million in 2024 while sister brand Wrangler grew 3% to $1.81 billion.
Kontoor spent significant resources on Lee through its Project Jeanius initiative, which delivered over $100 million in savings. The company also launched global marketing campaigns and collaborations with Paul Smith, Diesel and Crayola.
“Our decision to divest Lee enables sharper focus on the opportunities with greatest potential to maximize shareholder returns,” Baxter said. The sale will be “immaterial to earnings per share over a 12-to-18-month period,” according to CFO Joe Alkire.
BNP Paribas analyst Laurent Vasilescu questioned the timing, noting Kontoor’s expensive restructuring program for Lee. UBS analyst Mauricio Serna said resources freed from the divestment “could boost underpenetrated segments like women’s and DTC at Wrangler.”
Without Lee, Kontoor will focus on Wrangler and Norwegian outdoor brand Helly Hansen, acquired for $957.5 million in 2024. Baxter projects Wrangler will become a $5 billion brand by the 2030s, targeting growth in women’s denim where it holds just 10% of revenue.
Kontoor shares fell 4% despite beating Q1 revenue estimates and raising full-year guidance. The company authorized a $750 million share repurchase program following the planned divestiture.
