Dept Stores / Specialty Softlines Model Update

Research evidence excerpt

Dept Stores / Specialty Softlines Model Update

Matthew R. Boss, CPA AC North America Equity Research

(1-212) 622-2630 26 June 2026 J P M O R G A N

matthew.boss@jpmorgan.com

Investment Thesis, Valuation and Risks

Kontoor Brands (Overweight; Price Target: $90.00)

Investment Thesis

Importantly, we see the portfolio at an inflection point, notably with Helly Hansen set for

“breakout growth” (= +DD% opportunity vs. +HSD% TTM) and “early” innings Wrangler

growth opportunities building atop the core denim replenishment category (+MSD%

revenue growth opportunity > +3% TTM), with the portfolio transformation over the last

5 years (including most recently divesting the Lee brand) setting the foundation for annual

+mid-single-digit(+) revenues and a +mid-teens TSR profile.

Valuation

Our Dec’27 price target of $90 is unchanged & based on 8.5x our CY28 EBITDA (= peer

regression analysis, with KTB’s +mid-single-digit topline growth profile on ~20% adj.

EBITDA margins ~600bps above our non-distressed/global brand retail peers currently

trading at ~7x EV/EBITDA).

Risks to Rating and Price Target

• Discretionary Consumer Spending Risk: Kontoor’s reliance on discretionary goods

makes it vulnerable to macroeconomic downturns that reduce consumer spending

power and confidence.

• Low Brand Awareness: Helly Hansen’s very low US brand awareness means revenue

growth depends heavily on the success of marketing investments and new category

expansion, which may underperform.

• Wholesale Partners: High customer concentration, with the top ten customers

representing 53% of revenues and one customer alone accounting for ~30%, creates

significant risk if any large partner reduces purchases.

• Sourcing: The absence of long-term supplier contracts and reliance on three North