Canadian Tire reached a deal to sell Helly Hansen to Kontoor Brands Inc., the U.S.-based owner of the Lee and Wrangler denim brands.Eric Gachet/Supplied
Canadian Tire Corp. Ltd. CTC-T has agreed to sell its global outdoor and activewear brand Helly Hansen in a nearly $1.3-billion deal, as the company seeks to reinvest in the Canadian retail business at a time of “market uncertainty.”
The Toronto-based retailer announced on Wednesday that it reached a deal to sell Helly Hansen to Kontoor Brands Inc., the U.S.-based owner of the Lee and Wrangler denim brands. The deal comes six years after Canadian Tire acquired the Norway-based clothing line from Ontario Teachers’ Pension Plan for $985-million.
The company plans to use the proceeds of the sale to pay down debt, to buy back shares and to invest in its retail stores. The funds also give Canadian Tire “additional flexibility for general corporate purposes, including to address market uncertainty,” according to a press release issued on Wednesday.
Canadian Tire’s chief executive officer was vocal about that uncertainty last week, saying that U.S. President Donald Trump’s threats to impose widespread tariffs on Canadian imports have “substantially erased” any nascent signs of improving consumer sentiment in this country.
In 2022, the company announced the launch of a $3.4-billion, four-year plan it called “Better Connected,” designed to increase sales across its banners. But economic headwinds caused Canadian Tire to slow that spending plan. Canadian Tire has said it will provide an update on its corporate strategy on March 6.
Under Canadian Tire’s leadership, Helly Hansen has significantly increased sales and profits, the company reported. At the time of the acquisition in 2018, the brand generated $500-million in annual revenue and $50-million in earnings before interest, tax, depreciation and amortization (EBITDA), according to the company. Last year, Helly Hansen reported $894-million in worldwide revenue and $102-million in EBITDA.
“As our strategy becomes more singularly focused on great Canadian retail, it is time to pass this iconic brand into global hands,” Canadian Tire president and CEO Greg Hicks said in a statement.
The retailer will continue to stock Helly Hansen products, which are already sold in Canadian Tire, Marks and Sport Chek stores, under a new multiyear supply agreement with Kontoor.
Helly Hansen was founded by a Norwegian sea captain and his wife in 1877. Helly Juell Hansen and Maren Margarethe created water-resistant clothing for sailors by soaking linen in linseed oil. Over the years, the company expanded into raincoats, fleeces and base layers, parkas and footwear. The bulk of the business is in outerwear and activewear, including apparel for winter sports and hiking; while roughly 25 per cent of the business is in work wear such as coveralls and high-visibility jackets.
While Helly Hansen has grown under Canadian Tire’s ownership, its profit margins have lagged some of its global peers. Kontoor executives said on Wednesday that they see an opportunity to double Helly Hansen’s operating margin, including by taking advantage of the company’s existing global sourcing, logistics and distribution capabilities.
“It is an incredibly talented organization at all levels, but it has also been operating as a standalone business without global scale,” Kontoor president, CEO and chairman Scott Baxter told analysts on a conference call Wednesday morning to discuss the deal.
“While Helly has been executing at a high level on its own, we are highly confident it will see significant benefits under our ownership as a more synergistic global brand operator.”
The deal is expected to close by the end of June.