KTB

Kontoor is selling Lee for $750M plus up to $250M in earnouts and earmarking $400M for an ASR that retires ~10% of its shares. At $69.60 the market has paid for the buyback but leaves out most of the growth after it, and the El Nino fear looks overdone. Base: FY27 EPS of $6.00 after the ASR, $81.26. Bull: Helly Hansen hits its 2030 plan, growing past $1.1B at mid-teens margins, $92.32. The $2.12 dividend yields 3.0%, vs 1.04% for the S&P 500.

Tariffs reach the Walmart shelf. Kontoor raises prices, Walmart buys less Wrangler (-$60M of revenue), tariff cost after pricing adds 50 bps to COGS and margin recovery stalls. Revenue grows 2.0% a year after FY27 at a 7.5x EV/EBITDA exit: $56.71, about 19% below the price. If the Lee sale fails, the ASR shrinks or disappears. That is why the rating is Watch rather than Buy, until a Q3 print holds the guide and the Lee close plus the ASR launch land.