Helly Hansen to grow in the U.S. as Kontoor targets expansion and margin gains
With Kontoor Brands finalizing its acquisition of Helly Hansen, the American apparel group—owner of Lee and Wrangler—is integrating the Norwegian outdoor brand into its global portfolio and laying out plans for expansion and profitability. Kontoor expects Helly Hansen to improve its margins by tapping into the group's operational infrastructure.
During Kontoor's first-quarter earnings call, CEO Scott Baxter outlined four strategic priorities for Helly Hansen's future.
'First, we're accelerating Helly Hansen's growth. The opportunities are significant. The U.S. is the largest outdoor apparel and footwear market in the world. While it's currently the brand's fastest-growing market, its penetration remains well below that of competitors. By combining wholesale and retail expansion, strong digital growth, and demand-generation investments, we see a clear path to double-digit growth in our home market,' Baxter said. 'Beyond the U.S., we also see major opportunities in direct-to-consumer sales, China, workwear, and category expansion.'
Kontoor also aims to enter high-potential geographic markets while doubling Helly Hansen's operating margin to approximately 15%. Using its own global structure, the company expects to lower Helly Hansen's freight costs by 10% to 20%.
'We will leverage our global operating model, supply chain, and technology platforms. This will allow both organizations to benefit from meaningful scale advantages while enhancing operational efficiency, decision-making, and investment capabilities to support growth initiatives,' said Baxter. In the near term, Kontoor plans to boost profit and improve working capital to reduce its net debt-to-equity ratio by 50% over the next 12 months.
The company's fourth strategic focus is integrating Helly Hansen's talent and brand identity. 'We remain impressed with their organization. There's talent at every level, along with humility, drive, and a desire to do things right. These are the same qualities we value at Kontoor,' Baxter said, adding that Kontoor is the first owner of the brand in two decades with roots in the textile industry.
Kontoor expects Helly Hansen to generate $425 million in revenue during its first fiscal year under new ownership, with stronger performance forecast in the years ahead. However, the group also faces challenges related to U.S. import tariffs.
'Helly Hansen sources all of its U.S. products from Southeast Asia, including China, Vietnam, Bangladesh, and Cambodia,' said CFO Joe Alkire. 'Remember, the brand generates about 75% of its global revenue outside the United States. However, if proposed tariff rates apply across all imports, the group could face an estimated $50 million hit to its 2025 operating profit, with Helly Hansen contributing roughly $15 million to that total.'
Despite this challenge, Kontoor does not expect tariffs to derail Helly Hansen's long-term strategy, as most players in the outdoor apparel sector also rely on Southeast Asian manufacturing.
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