Kontoor Brands has amassed a lot of cash since being spun off from VF Corp. in 2018. On Wednesday, it found a place to invest that money.
The Greensboro, N.C.-based parent company of Wrangler and Lee has made a deal to acquire Helly Hansen, the Norwegian sports and lifestyle brand, for $900 million: $700 million in new debt financing and $200 million in excess cash on hand. The price reflects an approximate 11-times transaction multiple based on Kontoor’s full-year 2025 adjusted earnings before interest, taxes, depreciation and amortization outlook for the brand.
Kontoor expects Helly Hansen to generate more than $680 million in sales and $80 million of adjusted EBITDA for the full-year 2025. In 2024, the brand had sales of $650 million, nearly triple that of 10 years ago, and EBITDA of $75 million. The sport/active category accounts for about 75 percent of the business and premium workwear the remaining 25 percent.
The deal marks the first acquisition for Kontoor Brands and will increase its sales to more than $3.2 billion.
“We’ve waited a long time to make our first acquisition,” Kontoor’s president, chief executive officer and chairman Scott Baxter told WWD. “On every quarterly conference call, the analysts always want to know what we’re going to do with our cash.”
Now they know.
Baxter said Kontoor has looked at a wide variety of potential acquisitions over the past few years, but never found one that fit the bill — until now. “We’ve always liked the brand and when we heard it was available, we reacted very quickly,” he said.
Helly Hansen, which was founded in Norway in 1877, has been owned by Canadian Tire Corp. since 2018.
“It ticks all the boxes for us,” Baxter said, pointing to Helly Hansen’s expertise in both outdoor and workwear, the cornerstones of Kontoor’s business. “We get that in one fell swoop.”
In a call with analysts Wednesday morning, Baxter said that while mergers and acquisitions had always been on the company’s radar, “the bar is very high. It needed to be an authentic brand in strategically attractive categories [in] large growing addressable markets with structural tailwinds that afford meaningful long-term growth.”
The majority of Helly Hansen’s business is in Europe, which accounts for 60 percent of revenue, Canada and the U.S. It’s best known in America for its skiwear, but internationally, its reach extends to camping, hiking, workwear and other categories of business, including premium workwear, Baxter said. Its business in the U.S. accounted for about $150 million in 2024.
“It’s really underpenetrated in the U.S.,” he said. But because Kontoor already has strong relationships in both the outdoor and workwear markets in America, Baxter expects to be able to significantly expand its distribution in those sectors, which are “growing faster than the denim business” right now, he said.
The goal, the company said, is to grow the brand at a double-digit rate in the U.S. through wholesale expansion, select retail openings and strong digital growth.
Asia Pacific is also seen as a growth opportunity for the brand, Kontoor said. Helly Hansen entered the China market in 2021 through a joint venture and projections call for double-digit sales growth through 2027.
“Given our global platform and proven track record of operational excellence in owning brands rooted in heritage, quality, authenticity and innovation, Kontoor Brands is uniquely positioned to partner with Helly Hansen management to scale and elevate the business globally,” Baxter said.
From Kontoor’s perspective, the deal will increase its direct-to-consumer and international penetration and provide access to a younger and more affluent customer worldwide. Similar to Kontoor, wholesale represents 75 percent of Helly Hansen’s sale with DTC making up the remainder.
The acquisition also marks a move into a different product category for Kontoor, which is focused on denim. Kontoor was spun out of VF so the latter could focus on its Vans, Timberland and The North Face operations. The Helly Hansen acquisition puts it in direct competition with The North Face and its former parent.
Scott Baxter
Courtesy
But Baxter doesn’t look at it that way. “That didn’t enter into our decision at all,” he said. “We’ve been gone from VF since 2018. But what did enter into the decision was my knowledge of the business and the customer.” Baxter spent nearly 12 years at VF before moving over to Kontoor overseeing outdoor, action sports, licensed sports and jeanswear.
“Helly Hansen has such a strong balance sheet and will be accretive in Year One,” Baxter added. “It’s such a clean, really good deal and when you have so much uncertainty in the world, it’s time for businesses to step up and make bold decisions.”
He credited the team at Canadian Tire as highly professional and “great stewards of the business.” Baxter also said the team within Helly Hansen, led by Carrie Ask, a former executive with Tailored Brands, has built a strong “culture of innovation.” The team, as well as Ask, who joined Helly Hansen as CEO in October 2021, will remain with the company and its headquarters will continue to be in Oslo. “There’s a lot to really like about this brand,” he said.
Baxter added that Kontoor’s scale, strong supply chain and systems are expected to help Helly Hansen grow and he is prepared to “bring investment into the business” to further extend its reach in the $300 billion outdoor and $30 billion workwear categories.
The deal is expected to close in the second quarter.
Also on Wednesday, Kontoor reported preliminary fourth-quarter results. For the period ended Dec. 28, 2024, the company posted earnings-per-share of about $1.14 and adjusted EPS of about $1.38, an increase of 2 percent compared to the prior year. Sales increased 4 percent to about $699 million.
“I am pleased with our strong finish to the year, driven by better-than-expected revenue, earnings, and cash generation,” Baxter said. “Full-year 2024 was an incredible year for Kontoor, driven by consistent execution, investments in our brands, and the remarkable efforts of our global team. Supported by the benefits of Project Jeanius and the acquisition of Helly Hansen announced this morning, as we look ahead to 2025 we are well positioned to deliver another year of strong returns and value creation.”
Project Jeanius is an initiative announced one year ago to simplify and transform its processes, systems and global operating model. It is expecting to realize between $50 million and $100 million of gross profit improvement.
The full results will be released on Feb. 25.
