Achieved record revenue and earnings in 2025 driven by the successful integration of Helly Hansen and continued market share gains for Wrangler.

Wrangler's growth was fueled by double-digit gains in female, western, and D2C categories, alongside consistent share expansion in core denim bottoms.

Helly Hansen outperformed initial acquisition expectations, contributing significant revenue and earnings accretion within the first seven months of ownership.

Project Genius reached its halfway point, successfully creating investment capacity and enhancing operational efficiency across the global supply chain.

Lee is undergoing a strategic repositioning involving refreshed brand identity and distribution alignment, with a return to growth expected in the second half of 2026.

Management attributed margin expansion to favorable product mix and the realization of structural synergies from the new multibrand platform.

The China joint venture for Helly Hansen saw a near-doubling of revenue, validating the thesis that the brand was at a major inflection point in that market.

2026 is positioned as a transition year for Lee, with first-half revenue expected to decline at a low single-digit rate before inflecting positively.

Management anticipates Helly Hansen will accelerate growth in 2027 and beyond as geographic, category, and channel expansion initiatives take full effect.

Financial guidance assumes a 15% to 20% reciprocal tariff rate, with plans to fully mitigate the impact over a 12 to 18-month period through pricing and sourcing shifts.

Project Genius is expected to reach a full run rate in the first half of 2026, delivering approximately $100 million in gross savings for the year.

The company plans to prioritize an accelerated deleverage path, targeting a net leverage ratio of less than 1.5x by the end of 2026.

Tariffs represent a gross headwind of over $100 million in 2026, creating a 160 to 180 basis point pressure on gross margins net of mitigating actions.

Retail inventory positions remain suboptimal as partners maintain a conservative posture regarding forward commitments.

A potential trade agreement with Bangladesh could offer material duty-free exemptions for products using U.S. cotton, though this is not yet factored into guidance.

The company implemented a new 'performance-based culture' incentive structure effective January 1, 2026, to drive organizational accountability.

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Management explained that 2026 involves building the U.S. team and seeding distribution, with significant marketing investments starting in the second half.

The 'breakout' growth in 2027 will be driven by these foundational investments and a more robust D2C and wholesale presence in North America.

The company intends to do both, utilizing strong cash flow to pay down $225 million in debt while remaining opportunistic with the $190 million share repurchase authorization.

Management emphasized they are ahead of the original deleverage plan, providing increased optionality.

Mitigation strategies include pricing, transferring production within the supply chain, and strategic supplier partnerships.

While the Bangladesh trade deal is not in the outlook, management noted that 80% of their products from that region use U.S. cotton, making it a potentially material upside.

Identified synergies have increased from $25 million to over $40 million, primarily in sourcing, logistics, and tax platforms.

Full run-rate synergies are expected to be achieved as the company moves into 2027.

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