Quarterly report [Sections 13 or 15(d)]

ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS

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ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS
 6 Months Ended
Jul. 04, 2026
Discontinued Operations and Disposal Groups [Abstract]  
ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS
The Company continuously assesses the composition of its portfolio to ensure it is aligned with its strategic objectives and positioned to maximize growth and returns to shareholders.
The Company commenced a sale process of its global Lee® brand and associated business during the first quarter of 2026, with an expectation of completing a transaction during fiscal 2026. At the end of the first quarter of 2026, the Company determined that the Lee® business met held-for-sale criteria and reported the assets and liabilities of the Lee® business as held-for-sale in the Company's balance sheets for all periods presented. Additionally, the planned sale represents a strategic shift that will have a major effect on the Company's operations and financial results. During the second quarter of 2026, the Company entered into a Purchase Agreement with the Buyer to sell the Lee® business for $750.0 million in cash at closing with an additional $250.0 million earnout opportunity based on the future performance of the Lee® business over a five-year period. Accordingly, the Company reported the Lee® business as discontinued operations in its statements of operations and statements of cash flows for all periods presented. The results of the Lee® business were historically reported in the Lee segment. Income from discontinued operations, net of tax was $7.8 million and $15.2 million for the three months ended June 2026 and June 2025, respectively, and $39.2 million and $47.8 million for the six months ended June 2026 and June 2025, respectively.
During the first quarter of 2026, the Company determined that the decision to pursue a sale transaction of the Lee® business was a triggering event that required impairment testing of goodwill, the indefinite-lived intangible asset and long-lived assets of the Lee reporting unit. No impairment charges were required to be recorded as a result of the testing performed. Refer to Note 11 to the Company's financial statements in this Form 10-Q for additional details regarding the impairment testing related to the Lee® business.
Certain corporate overhead costs and segment costs previously allocated to the Lee® business for segment reporting purposes did not qualify for classification within discontinued operations and have been reported in continuing operations for all periods presented. For the three months ended June 2026 and June 2025, previously allocated costs of $1.6 million and $0.6 million, respectively, were reported as cost of goods sold in our statements of operations on a continuing operations basis. For the six months ended June 2026 and June 2025, previously allocated costs of $3.1 million and $1.6 million, respectively, were reported as cost of goods sold in our statements of operations on a continuing operations basis. For the three months ended June 2026 and June 2025, previously allocated costs of $12.6 million and $7.8 million, respectively, were reported as selling, general and administrative expenses in our statements of operations on a continuing operations basis. For the six months ended June 2026 and June 2025, previously allocated costs of $22.4 million and $15.6 million, respectively, were reported as "selling, general and administrative expenses" in our statements of operations on a continuing operations basis. These previously allocated costs are reported within corporate and other expenses in the segment reporting reconciliation in Note 5 to the Company's financial statements in this Form 10-Q. Separation and related expenses associated with the sale of the Lee® business are reported as a component of "income from discontinued operations, net of tax" in our statements of operations.
Summarized Discontinued Operations Financial Information
The following table summarizes the major line items for the Lee® business that are included in income from discontinued operations, net of tax, in the Company's statements of operations:
Three Months Ended June Six Months Ended June
(In thousands)
2026 2025 2026 2025
Net revenues $ 159,168  $ 165,627  $ 353,456  $ 365,527 
Cost of goods sold 76,628  89,971  168,103  186,969 
Selling, general and administrative expenses 71,636  54,067  134,490  115,039 
Interest income 66  77  163  198 
Other (expense) income, net (938) (785) (1,205) (1,492)
Income from discontinued operations before income taxes $ 10,032  $ 20,881  $ 49,821  $ 62,225 
Income taxes (2,251) (5,708) (10,639) (14,419)
Income from discontinued operations, net of tax $ 7,781  $ 15,173  $ 39,182  $ 47,806 
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations as of June 2026, December 2025 and June 2025:
(In thousands) June 2026 December 2025 June 2025
Cash and cash equivalents $ 22,360  $ 31,227  $ 21,568 
Accounts receivable, net 53,751  67,005  67,231 
Inventories 129,899  130,737  142,385 
Prepaid expenses and other current assets 22,313  27,512  24,572 
Total current assets of discontinued operations 228,323  256,481  255,756 
Property, plant and equipment, net 16,622  17,443  17,188 
Operating lease assets 30,541  31,249  33,647 
Intangible assets, net 4,711  4,833  4,840 
Goodwill 79,691  80,131  80,463 
Other assets 30,652  35,401  38,635 
Total other assets of discontinued operations 162,217  169,057  174,773 
Total assets of discontinued operations $ 390,540  $ 425,538  $ 430,529 
Accounts payable $ 51,459  $ 49,554  $ 48,727 
Accrued and other current liabilities 51,885  68,236  56,108 
Operating lease liabilities, current 10,212  11,245  11,361 
Total current liabilities of discontinued operations 113,556  129,035  116,196 
Operating lease liabilities, noncurrent 17,712  21,455  23,693 
Other liabilities 9,314  8,291  10,978 
Total other liabilities of discontinued operations 27,026  29,746  34,671 
Total liabilities of discontinued operations $ 140,582  $ 158,781  $ 150,867