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
 9 Months Ended
Oct. 03, 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® 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 sale represented a strategic shift that was expected to 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, subject to customary adjustments, 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 $4.1 million and $20.9 million for the three months ended September 2026 and September 2025, respectively, and $43.2 million and $68.7 million for the nine months ended September 2026 and September 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 September 2026 and September 2025, previously allocated costs of $3.7 million and $1.3 million, respectively, were reported as "cost of goods sold" in our statements of operations on a continuing operations basis. For the nine months ended September 2026 and September 2025, previously allocated costs of $6.8 million and $2.9 million, respectively, were reported as "cost of goods sold" in our statements of operations on a continuing operations basis. For the three months ended September 2026 and September 2025, previously allocated costs of $12.5 million and $7.6 million, respectively, were reported as "selling, general and administrative expenses" in our statements of operations on a continuing operations basis. For the nine months ended September 2026 and September 2025, previously allocated costs of $35.0 million and $23.2 million, respectively, were reported as "selling, general and administrative expense" 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.
On November 2, 2026, the Company completed the sale of the global Lee® business. Refer to Note 18 to the Company's financial statements in this Form 10-Q for additional information. Net cash proceeds received were approximately $698.2 million, subject to customary adjustments including for cash, indebtedness and working capital as set forth in the Purchase Agreement. In connection with the sale, the Company finalized transition services agreements to provide certain post-closing accounting, tax, treasury, technology and supply chain services on a transitional basis for periods extending up to 12 months, with options to request an extension of certain services.
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 September Nine Months Ended September
(In thousands)
2026 2025 2026 2025
Net revenues $ 187,508  $ 186,743  $ 540,964  $ 552,270 
Cost of goods sold 96,090  101,080  264,193  288,049 
Selling, general and administrative expenses 87,043  59,225  221,533  174,264 
Interest income 57  60  220  258 
Other expense, net (808) (860) (2,013) (2,352)
Income from discontinued operations before income taxes $ 3,624  $ 25,638  $ 53,445  $ 87,863 
Income taxes 433  (4,700) (10,206) (19,119)
Income from discontinued operations, net of tax $ 4,057  $ 20,938  $ 43,239  $ 68,744 
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations as of September 2026, December 2025 and September 2025:
(In thousands) September 2026 December 2025 September 2025
Cash and cash equivalents $ 21,161  $ 31,227  $ 24,510 
Accounts receivable, net 73,630  67,005  86,157 
Inventories 119,256  130,737  160,972 
Prepaid expenses and other current assets 22,258  27,512  29,518 
Total current assets of discontinued operations 236,305  256,481  301,157 
Property, plant and equipment, net 16,037  17,443  17,360 
Operating lease assets 30,284  31,249  34,105 
Intangible assets, net 4,639  4,833  4,823 
Goodwill 79,557  80,131  80,216 
Other assets 28,810  35,401  38,578 
Total other assets of discontinued operations 159,327  169,057  175,082 
Total assets of discontinued operations $ 395,632  $ 425,538  $ 476,239 
Accounts payable $ 58,772  $ 49,554  $ 76,130 
Accrued and other current liabilities 59,264  68,236  71,017 
Operating lease liabilities, current 9,758  11,245  11,944 
Total current liabilities of discontinued operations 127,794  129,035  159,091 
Operating lease liabilities, noncurrent 16,211  21,455  23,535 
Other liabilities 7,003  8,291  10,717 
Total other liabilities of discontinued operations 23,214  29,746  34,252 
Total liabilities of discontinued operations $ 151,008  $ 158,781  $ 193,343