Canadian Tire signs deal to sell Helly Hansen to Kontoor Brands for $1.3 billion

Shoppers come and go from a Canadian Tire store in Ottawa on Friday, Aug. 11, 2023. THE CANADIAN PRESS/Sean Kilpatrick

TORONTO — Canadian Tire Corp. Ltd. says it has signed an almost $1.3-billion deal to sell Helly Hansen to a U.S. owner of several clothing brands.

Canadian Tire says the agreement announced Wednesday will see the sportswear company wind up in the hands of Kontoor Brands, which owns Wrangler, Lee and Rock & Republic.

Canadian Tire, which also owns SportChek, Mark’s, Party City and Pro Hockey Life, declined an interview request but framed the sale as a way for it to prioritize its Canadian retail portfolio and unlock value for the company and shareholders alike.

“As our strategy becomes more singularly focused on great Canadian retail, it is time to pass this iconic brand into global hands,” Greg Hicks, Canadian Tire’s president and CEO, said in a statement.

Helly Hansen dates back to 1877, when sea captain Helly Juell Hansen enlisted his wife Margrethe to help him find a way to cope with Norwegian weather. The couple produced waterproof jackets, trousers and sou’westers made from linen soaked in linseed oil, but eventually expanded into the ski, snowboard, sailing and workwear markets.

Canadian Tire bought Helly Hansen in 2018 through a $985-million deal with the Ontario Teachers’ Pension Fund, that also saw it assume $50 million of the apparel company’s debt.

Irene Nattel, an analyst with RBC Capital Markets, recalls the transaction was “a head-scratcher for investors” because it marked “a sharp departure” for the retailer.

“Investors questioned whether (Canadian Tire) had the right tools to capitalize on/further develop a global brand,” she wrote in a note to investors.

She remembers that Canadian Tire positioned the addition of Helly Hansen as a way to strengthen its core offering across all its banners and act as a springboard for extending its other brands outside Canada.

Nattel said that springboard “did not materialize as (its) strategic focus shifted solidly toward strengthening its Canadian retail portfolio,” so she thinks it makes sense both strategically and financially for Canadian Tire to sell.

Hicks told analysts on an earnings call last week that his company had noticed consumers recently started to pick up their spending again after a period of economic headwinds, but that progress has been “substantially erased” by tariff threats from the U.S.

Canadian Tire is now bracing for more turmoil coming from the U.S., a cycle of mortgage renewals that could pinch consumer spending and a further drop in the value of the loonie, which would challenge foreign exchange rates.

While Kontoor’s chief financial officer Joe Alkire maintained that Canadian Tire has been “a great steward” of Helly Hansen, he sees his company as a more logical fit.

“The brand’s pain points in many ways are our largest strength,” he told analysts on a Wednesday call.

The pain points he named include supply chain challenges, sourcing, logistics and distribution.

“We’ve got the plumbing built, and now they can plug into our model in a very frictionless way versus investments they really were trying to make on their own as a standalone business,” Alkire said.

He also sees Helly Hansen as a way for Kontoor to diversify. The outdoor market Helly Hansen plays in is “significantly larger” than the denim sector his other brands are in.

Plus, he sees Helly Hansen as “significantly under penetrated relative to its peers” in the U.S., where Kontoor is based. Its global headquarters is in Greensboro, N.C., but it also has major offices in Switzerland and China.

Despite the room to grow outside of Canada, the Helly Hansen deal won’t abandon the country completely. As part of a supply agreement signed in tandem with the sale, Canadian Tire and its brands will continue to sell Helly Hansen products.

The Toronto-based retailer says the deal with Kontoor is expected to close in the second quarter of this year but is subject to regulatory approvals and customary closing conditions, including the supply agreement.

Tara Deschamps, The Canadian Press

This report by The Canadian Press was first published Feb. 19, 2025.