What drove KTB's declining EPS surprises through 2024?

Kontoor Brands (KTB) experienced a decline in EPS surprises from 2023 to 2024, primarily due to increased dividend payments and a significant acquisition that impacted financial performance.

1. **Increased Dividend Payments**: KTB's Board of Directors declared a regular quarterly cash dividend of $0.52 per share in 2024, an increase of $0.02 or 4 percent from the previous quarter. This increase in dividends resulted in a higher payout ratio, leaving less earnings per share (EPS) for surprise or retention for future growth. Dividend payments of $0.52 per share represent a significant portion of the EPS, reducing the surprise component.
2. **Acquisition of Helly Hansen**: KTB's acquisition of Helly Hansen in 2024, while strategic, came with a significant purchase price and added leverage to the company's balance sheet. Helly Hansen, a global outdoor and workwear brand, was purchased for approximately $900 million, reflecting an 11x transaction multiple based on Kontoor’s full year 2025 adjusted EBITDA outlook. This substantial acquisition contributed to a dilution of EPS and added complexity to the company's financials, making it challenging to achieve the same level of EPS surprise as in prior years.

In summary, the decline in EPS surprises for KTB from 2023 to 2024 is primarily due to the impact of increased dividend payments and the significant acquisition of Helly Hansen. These factors together have reduced the company's earnings per share available for surprise or future growth.