Kontoor Brands acquires outerwear name, aiming to expand the brand's global presence
Canadian Tire Corporation Limited has agreed to sell its Helly Hansen business to Kontoor Brands, Inc. for approximately $1.3bn, as reported by BNN Bloomberg.
Kontoor Brands, known for owning Wrangler, Lee, and Rock & Republic, will acquire the Norwegian-based sportswear company to enhance its portfolio in the outdoor and workwear markets.
Canadian Tire, which also owns SportChek, Mark’s, Party City, and Pro Hockey Life, stated that the sale allows the company to concentrate on its core Canadian retail operations.
“As our strategy becomes more singularly focused on great Canadian retail, it is time to pass this iconic brand into global hands,” said Greg Hicks, Canadian Tire's president and CEO, in a statement.
Canadian Tire acquired Helly Hansen in 2018 for $985m from the Ontario Teachers’ Pension Plan, assuming an additional $50m in debt.
At the time of the acquisition, Canadian Tire aimed to strengthen its product offerings across all its banners and considered using Helly Hansen as a platform for international expansion.
However, the company has since shifted its focus toward bolstering its Canadian retail portfolio.
Irene Nattel, an analyst with RBC Capital Markets, noted that the initial acquisition was “a head-scratcher for investors” and that the decision to sell aligns with Canadian Tire's strategic priorities.
Recently, Hicks informed analysts that consumer spending had begun to recover after a period of economic challenges but was “substantially erased” by tariff threats from the United States.
Canadian Tire is now preparing for potential disruptions from US trade policies, upcoming mortgage renewals that could impact consumer spending, and a potential decline in the Canadian dollar's value, which could affect foreign exchange rates.
Joe Alkire, Kontoor's chief financial officer, acknowledged Canadian Tire's stewardship of Helly Hansen but believes Kontoor is better positioned to address the brand's challenges, including supply chain issues, sourcing, logistics, and distribution.
“The brand's pain points in many ways are our largest strength,” Alkire told analysts.
He emphasized that Kontoor's established infrastructure would allow Helly Hansen to integrate seamlessly, reducing the need for standalone investments.
Kontoor views the acquisition as an opportunity to diversify its portfolio, noting that the outdoor apparel market is “significantly larger” than the denim sector.
Additionally, Helly Hansen has considerable growth potential in the US market, where it remains underrepresented.
Kontoor, headquartered in Greensboro, North Carolina, also maintains major offices in Switzerland and China.
Despite the sale, Helly Hansen products will continue to be available in Canadian Tire stores.
The companies have signed a supply agreement ensuring that Canadian Tire and its associated brands will keep selling Helly Hansen merchandise.
The transaction is expected to close in the second quarter of this year, pending regulatory approvals and customary closing conditions, including the supply agreement.
Helly Hansen, founded in 1877 by sea captain Helly Juell Hansen and his wife Margrethe, began by producing waterproof gear and has since expanded into ski, snowboard, sailing, and workwear markets.
