S&P Global Ratings has revised its outlook on Kontoor Brands from “negative” to “stable” and affirmed its “BB” issuer credit rating on the company. It has affirmed in addition a “BB-” issue-level rating on Kontoor’s unsecured notes, setting a recovery rating of “5” – to indicate modest recovery (10%-30%, or 15% rounded) in the event of a payment default.
The company having announced that it intends to repay additional debt in 2026, S&P expects Kontoor to “lower its S&P Global Ratings-adjusted debt to EBITDA to comfortably below 3x in 2026.”
Spun off from VF Corp. in 2019, Kontoor is the owner of Wrangler, Lee and, as of last June, the Norwegian outdoor brand Helly Hansen (HH). S&P grounds the change in outlook on its “expectation that Kontoor will continue integrating HH and grow overall sales 9% in 2026, even as the probability of a U.S. recession over the next 12 months is rising, potentially reducing discretionary apparel demand.” It views the integration so far as smoother than anticipated and expects HH to provide Kontoor with “improved scale, growth prospects, and diversification.”
According to its latest Form 8-K, filed with the SEC, Kontoor’s long-term debt stood at $1.13 billion in December 2025 (vs. $740m a year earlier), with cash and cash equivalents at $108 million (vs. $334m). Its debt-to-equity ratio about 3.57x with total liabilities in the equation and at about 2.02x with long-term debt.
