The quarter was a modest EPS beat, but a clear revenue miss. Adjusted diluted EPS from continuing operations was $1.06 versus a published consensus of roughly $1.04, while revenue was $584.3 million versus roughly $611 million expected. The beat therefore came from profitability rather than demand running ahead of estimates.
| Metric | Q2 2026 | Q2 2025 / expectation | Read |
|---|---|---|---|
| Revenue | $584.3M | $492.6M; ~$611M consensus | +19% reported, below consensus (Income Statement; Consensus) |
| Adjusted EPS from continuing operations | $1.06 | $0.94 prior year; ~$1.04 consensus | Beat (Non-GAAP reconciliation) |
| Adjusted gross margin | 53.8% | 46.7% prior year | +710 bps (Adjusted margin table) |
| Adjusted operating income | $93.6M | $78.4M prior year | +19% (Non-GAAP reconciliation) |
| FY adjusted EPS outlook | $5.25–$5.35 | $5.15–$5.25 prior outlook | Raised by $0.10 at both ends (Outlook) |
| FY adjusted gross margin outlook | 49.8%–50.0% | 48.3%–48.5% prior outlook | Raised by 150 bps at midpoint (Outlook) |
Helly Hansen supplied the headline growth, but its contribution was better than feared. The brand added $106.8 million of quarterly revenue versus $26.7 million a year earlier, while Wrangler grew only 2% to $469.0 million (Segment results). Helly Hansen still produced a $0.06 adjusted EPS drag, but management said that loss was significantly better than expected; the result also helped support the raised full-year outlook.
Underlying organic growth was much less impressive than reported growth. Excluding Helly Hansen, organic revenue was $470.4 million versus $463.4 million a year earlier, roughly 1.5% growth (Adjusted organic results). Wrangler's U.S. revenue rose just 1%, with U.S. wholesale flat, so the 19% consolidated revenue increase is primarily acquisition-driven rather than evidence of broad-based acceleration.
Margin execution was the real upside surprise. Adjusted gross margin expanded to 53.8% from 46.7%, helped by Project Jeanius, mix, pricing, and Helly Hansen (Adjusted margin table). Management is also adding approximately $25 million of growth investment and about $0.36 per share of incremental investment to the updated outlook, yet still raised adjusted EPS guidance to $5.25–$5.35 (Outlook). That makes the guidance increase more meaningful than a simple benefit from cost restraint.
The net read is mildly positive because profit expectations moved up despite softer top-line delivery. The company maintained revenue guidance at $2.66–$2.71 billion but raised EPS and gross-margin guidance, while excluding future Lee-divestiture buybacks from the outlook (Outlook). The planned $400 million accelerated share repurchase and additional debt repayment are meaningful capital-allocation details, but they remain contingent on the Lee sale closing in the fourth quarter rather than being current-quarter results (Capital allocation and Outlook).
Read the original 8-K on SEC EDGAR ↗